Fannie Mae chief executive Franklin D. Raines invited reporters to his Wisconsin Avenue headquarters a year ago to complain good-naturedly that recent disclosures of accounting manipulations at smaller rival Freddie Mac had unjustly hurt his company.

"I've jokingly said to friends that I now know what the definition of collateral damage is, and we have suffered a lot of that, I think unfairly," Raines said. "Unlike Freddie Mac, we didn't do any of these things."

Now, the credibility of Raines -- and Fannie Mae Chief Financial Officer J. Timothy Howard -- is being challenged, after yesterday's release of a report by the Office of Federal Housing Enterprise Oversight and news that securities regulators are probing whether Fannie Mae manipulated its financial statements. The probe is also focusing on whether results may have been structured to meet earnings targets that in turn triggered millions of dollars in bonuses for Raines and other top managers.

Raines -- who was head of the Office of Management and Budget under President Bill Clinton -- was not available for comment yesterday. He issued a three-sentence statement through a company spokesman that management would assist a special board committee looking into the regulators' findings.

Howard -- who has been chief financial officer since 1990 under several chairmen, having worked his way up after joining the company as chief economist in 1982 -- also was unavailable, a Fannie Mae spokesman said.

It is Howard who figures most prominently in the regulators' report. They found that Howard provided only incomplete disclosure to the board's audit committee of critical accounting policies now being questioned. The regulators also criticize Howard's multiple roles, saying they did not allow for proper checks and balances. For example, regulators said Howard "was instrumental in setting financial targets as Vice Chairman, and had the authority to meet these targets as Chief Financial Officer."

Particularly of interest to federal investigators at OFHEO, the company's financial regulator, and at the Securities and Exchange Commission, which oversees publicly traded companies, are promises of double-digit earnings growth that Raines made when he became chairman and chief executive of the company in 1999, according to sources familiar with the investigations.

Those goals were approved by Fannie Mae's board in 2000 and "supported by everyone in the company," company spokesman Janice Daue said yesterday. Regulators have worried that such promises could tempt executives to cut corners to meet them, said the sources, who spoke on the condition that their names not be used because the investigations are ongoing.

"What does the future look like for Fannie Mae and our investors?" Raines said in a speech to investors and analysts during his first year in office. He said his predecessor, James A. Johnson, had fulfilled predictions of "double-digit earnings growth" for years, and Raines assured the audience that as the new head of the company, he would preserve that tradition.

"Fannie Mae will continue to deliver double-digit [earnings per share] growth," he said. "In fact, I expect that Fannie Mae's EPS growth over the next five years will match or exceed the average 13.6 percent EPS growth of the past five years."

Fannie Mae's published financial statements since 1999 say the company, under Raines, has met or exceeded those goals every year through 2003. The issues federal investigators are now raising are whether those statements are accurate or whether they portrayed a rosier or steadier earnings picture than was the case.

"The people on the board should have been questioning the promises he was making of double-digit earnings growth," said corporate governance expert Nell Minow of the Corporate Library, an independent research firm. "The nature of the business Raines is in lends itself to lots of creative accounting."

Fannie Mae's troubles began more than a year ago, when Freddie Mac disclosed its executives had manipulated financial statements for years to deliver the smooth profit growth investors love, contributing to as much as $5 billion of accounting errors and distortions.

The news prompted Wall Street executives, federal regulators and congressional overseers to ask questions about Fannie Mae, given that it is in the same business as Freddie Mac -- buying and reselling home loans.

Behind the scenes, Raines and other Fannie Mae executives were furious that Freddie Mac had called such attention to their multitrillion-dollar industry, according to industry and company sources. Publicly, Raines maintained his image as a cool, calm spokesman not only for Fannie Mae -- one of the nation's largest financial institutions -- but for the Business Roundtable, a powerful lobby group for chief executives of the country's largest firms.

On the Roundtable's behalf, for example, he has argued against a pending SEC proposal to give shareholders more say in who is elected to company boards. Advocates say it would be an important tool to guard against corporate abuses.

Now Fannie Mae stands accused by its regulator of a variety of accounting transgressions, including apparently deferring expenses to meet earnings targets, in efforts that may have benefited management. Fannie Mae "maintained a corporate culture that emphasized stable earnings at the expense of accurate financial disclosures," OFHEO said in a letter to Fannie's board this week.

Congress created Fannie and Freddie to buy home loans from banks and other lenders. They are publicly traded and for-profit, but their congressional charters provide them with advantages over other financial institutions: They don't have to register the securities they sell with the SEC, an exemption that some economists say saves them an estimated $500 million a year. They also are not required to file financial statements with the SEC, though Fannie has begun to do so. They do not pay state or local income taxes. And their special government status has given them lower borrowing costs than other companies because of a perception that Congress would not let them fail.

In his session with reporters in July 2003, Raines was asked if Fannie Mae had done anything to circumvent accounting rules. "The answer to that is clearly no," he said. "We have not. If we had, I would have violated the law in certifying our financial results."

Raines got support yesterday from at least one former board member, Anne M. Mulcahy, chairman and chief executive of Xerox Corp., who resigned this week from the Fannie Mae board after serving on it five years to join the board of Citigroup Inc. She praised Raines as an "experienced executive" who she believes has the "highest" ethical standards.

Staff writers David Hilzenrath and David A. Vise contributed to this report.

When he became chairman and chief executive of Fannie Mae in 1999, Franklin D. Raines promised investors double-digit growth in earnings.