Through three chief executives over 22 years at Fannie Mae, J. Timothy Howard has been a constant, rising from chief economist when first hired in 1982 by David O. Maxwell to one of the housing finance giant's top executives under Franklin D. Raines.

Howard, 56, who was praised as a brilliant asset manager when he was named the company's chief financial officer in 1990, has not had a high public profile. But the power he has amassed during his tenure at the company make him second in influence only to Raines himself, observers of the company say. It's clout he hasn't been timid to exercise over a host of key company functions, according to federal regulators, including which home loans Fannie will buy, how it manages risk, how it applies accounting standards and how it reports its financial condition to investors.

Now those regulators are questioning the job Howard has done. The Office of Federal Housing Enterprise Oversight alleges in a newly released report that the many hats Howard wears create conflicts of interest that have been a prime ingredient in what regulators call the company's failure to develop sound accounting policies and adequate checks and balances. The report said the company has engaged in suspect accounting practices that may have painted an inaccurate picture for investors.

As regulators at OFHEO and the Securities and Exchange Commission continue a months-long probe into whether Fannie Mae manipulated financial statements, a key issue is whether accounting decisions were influenced by the fact that executive bonuses are linked to meeting earnings targets, according to sources familiar with the investigation who spoke on condition of anonymity because the probe is ongoing.

Howard, through a Fannie Mae spokesman, has declined repeated requests for comment on the allegations the report makes about his leadership.

Nor would he comment on his decision to instruct his broker to exercise over the past six months 84,000 of up to 92,800 options he holds on Fannie Mae stock, and to then immediately sell that stock. Howard has made $4.7 million before taxes from the transactions, according to the company and to Kevin Schwenger, insider-transaction analyst for the research firm Thomson Financial Inc. The options were slated to expire in November; he still holds options to purchase an additional 620,648 shares of common stock. He and his family own 240,071 shares.

In a public filing in February with the SEC, Howard disclosed his intention to exercise the options and sell the stock. Janice Daue, a Fannie Mae spokeswoman, said the transactions are structured to comply with securities law, which forbids executives of publicly traded companies from trading securities on non-public information. She said it is a coincidence that he initiated the transactions after government regulators began their probe but before they released potentially damaging information about the company stemming from that investigation.

"I can tell you with all sincerity that the reason Mr. Howard entered into this plan was to exercise the options that were maturing and to sell the stock without regard to any external or internal events," Daue said.

Jeffrey A. Sonnenfeld, associate dean and a professor specializing in corporate governance at the Yale School of Management, questioned the timing.

"What is especially alarming is to have the CFO or any officer not realize the symbolic and real consequences of unloading their own holdings amid public controversy while out of the other side of their mouth denying a problem," Sonnenfeld said. "It shows a lack of faith in his own company. And it suggests that this is a bad investment because there's a bad event coming, such as a government investigation that going to reveal a problem."

In its report, OFHEO said that by allowing Howard to make decisions about both what business transactions to undertake and how to account for those transactions, Fannie Mae contradicted public assurances by Raines that these duties were separated.

"Those entering into business transactions and accountable for business results do not determine the accounting of those transactions," Raines said in a statement on the company's Web site, the report noted.

The report also details Howard's authority to approve "aggressive" accounting policies that helped Howard maintain a "stable pattern of earnings" over the years that he told Raines and the board was a "requirement for Fannie Mae if it were to be perceived" by Wall Street as a "low-risk" enterprise.

Within the same industry, the stock prices of lower-risk companies tend to be higher than higher-risk ones. Millions of dollars in yearly bonuses for Raines, Howard and others, which included stock options, have been pegged to the company meeting certain earnings targets.

Among the accounting policies he approved were some that OFHEO officials say violate the generally accepted accounting principles that publicly traded companies must follow. The report also says that Howard did not inform the board about some disagreements about accounting among his staff, but it says Raines and the rest of the Fannie Mae board are ultimately responsible for management failures.