W hen all the smoke has cleared, my guess is that there will be a lot less to the so-called accounting scandal at Fannie Mae than the news now suggests.

That's not to say that Fannie Mae doesn't deserve some of the licking it's now taking.

This is what happens when an enterprise chartered to provide liquidity and stability to the mortgage market turns itself into a growth stock, promising Wall Street double-digit earnings growth delivered in smooth, quarterly increments.

It's what happens when a private firm gets a government license to print money -- and uses its resources to ensure it is lightly and incompetently regulated.

And it's what happens when an organization becomes so arrogant that, even in the face of a changed and hostile political environment, it fails to accept a reasonable set of new restrictions that would have been far less damaging than what is now about to befall it.

But let's be clear: Fannie Mae is not a financial house of cards. It is a highly profitable business with a solid balance sheet and sophisticated risk management. And whatever else you might think about the people who run Fannie -- an executive team rich with Washington experience, and outside directors that include a former White House chief of staff, the chief executive of a corporation that barely survived its own accounting scandal and the former dean of the Wharton School of Business -- it is inconceivable they could have watched what happened at Enron and WorldCom and Freddie Mac without making damn sure that the company's accounting policies were sound.

It is worth noting that the accounting issues here don't bear on Fannie's core business of buying and packaging mortgages. Rather, they center on complex new rules that require the company to constantly re-estimate the market value of financial derivatives used to hedge its interest rate risks -- instruments for which there is no ready market and which they have no intention of selling.

Even now, there is considerable debate about the value of making these guesstimates and running the changes through the quarterly operating statement. But there is no question that these rules have greatly increased the volatility of Fannie's earnings and encouraged the kind of "earnings management" games of which Fannie is now accused.

And don't kid yourself -- it's not just Fannie Mae. If regulators were to use the same criteria in evaluating every accounting decision at Citigroup or J.P. Morgan or GE Capital in the past six years, they surely would have found exactly the same game-playing. That doesn't excuse it, but it does put this so-called scandal in a different light.

The other thing to understand is that the agency raising these issues suffers from its own credibility gap. Two years ago, the Office of Federal Housing Enterprise Oversight told Congress that Fannie's method for implementing the new rules on derivative accounting was "deliberative and well documented," producing valuations that were "sound" and "reliable." Now it says they're all wrong. The harsh truth is that OFHEO has always been over its head in regulating enterprises as large and sophisticated as Fannie and Freddie. That's why Congress and the White House both vowed to replace it with a much stronger regulator. But after they couldn't agree how, Director Armando Falcon Jr. saw a chance to salvage his job and his agency, hiring outside lawyers and auditors to do what he should have done years ago.

Their critical report may wind up being nothing more than a difference of opinion among accountants. But it will surely give aid and comfort to competitors and right-wing ideologues who for years have campaigned to "privatize" Fannie and Freddie. To me what it suggests, however, is not the need to cut government ties, but the value of getting government more involved -- keeping closer watch, setting clearer rules and making sure that these enterprises strike a better balance between the sometimes conflicting goals of maximizing profits and increasing the efficiency of the mortgage market.

Steven Pearlstein will host a Web discussion at 11 a.m. today at www.washingtonpost.com. He can be reached at pearlsteins@washpost.com.