The Office of Federal Housing Enterprise Oversight (now, there's a mouthful!) released its report not too long ago on Fannie Mae. The report can be accessed at: http://www.ofheo.gov/media/pdf/FNMfindingstodate17sept04.pdf . We now learn some sordid details about how the executives at this government-sponsored entity pulled feats of accounting magic. These tricks were more of the same bag of tricks: recognizing revenue early or late, as needed to maximize management bonuses, and juggling derivatives contracts whichever way was more beneficial to these executives. The managers are just acting like the greedy, narcissistic, egos that they are.

I am not going to delve into the mechanics of the book cooking that Franklin Raines and the other crooks engaged in. The recipes are old and insipid. Someday the diners are going to wise up and try a different restaurant.

Instead of reviewing the actual scam, there are three other issues that fundamentally are more important. First, why is it that no executive, no auditor, no corporate counsel, and no director can admit of any wrong doing? I realize that the acknowledgment of misconduct or sleeping on the job or any other error might open one to legal penalties, but I find the business world verging on group insanity when everybody claims that the business world has done nothing wrong. Raines asserts that "These accounting standards are highly complex and require determinations over which experts often disagree." Even if correct, Mr. Raines should explain his opportunistic behaviors that always select those applications that were in his best interests rather than in the best interests of the stockholders.

Even a notable personage such as Walter Wriston had the audacity to state that the solution to accounting scandals was to make accounting rules simpler. It likely won't happen, given the current trajectories of the FASB and the IASB, but then it doesn't matter. Whether the FASB and the IASB enacts simpler or even more complex rules doesn't change the hearts and the souls of business executives. If managers truly cared for the investment community, they would not engage in self-dealing activities and report transactions in opaque clouds that merely distort whatever shreds of truth still exist. And their facilitators follow suit.

Second, too many of us are ignoring the fundamental aspects to this problem of accounting frauds. Unfortunately, no technical solution will step forward and disentangle society from this mess, but ignoring the matter won't ease the pain or prevent future accounting scandals.

I listened to a speech recently by William McLucas, a partner with Wilmer Cutler Pickering Hale and Dorr who previously worked at the SEC's Division of Enforcement. While he spoke on "Corporate America as Defendant," his analysis was peculiar. He concentrated on the increased percentage of households owning securities and on the growth of business news outlets such as CNBC and a host of internet sites. In the end, Mr. McLucas seemed to say that America collectively expressed so much angst over the accounting scandals because of our ownership interests and because of our increased information. At no time did he condemn managers or auditors or corporate counsel or directors for their part in these scandals, nor did he provide any sense that these things will not occur in the future.

So no one did anything wrong and we have increased household stock ownership as well as have access to lots of business news outlets. If these points accurately state the response of corporate America, we move to my third point. Why do investors keep their money with these thieves? We are going to be burnt again. When that happens, we may have a few executives "sacrificed" as fall guys for the good of economy, as we have this time, but the majority of liars and thieves run away scot-free. Are we investors that foolish?

Fannie Mae wanted to deceive us about her economic history. She did. And Franklin Raines and his associates led us down this path. By hiding behind the complexity of accounting rules, he is demonstrating that he will accept no responsibility for the sins of Fannie Mae. Let's watch the investment community and see whether it will grow in wisdom.

J. EDWARD KETZ is accounting professor at The Pennsylvania State University. Dr. Ketz's teaching and research interests focus on financial accounting, accounting information systems, and accounting ethics. He is the author of Hidden Financial Risk, which explores the causes of recent accounting scandals, and columnist of The Accounting Cycle for SmartPros.com.