With all the self-righteousness from the left that attended the fall of Enron, it sure is going to be interesting to see how the Democrats react to the accounting scandal that is unfolding at Fannie Mae. That is the mortgage finance company whose chairman and chief executive is Franklin Raines, who was the director of the White House Office of Management and Budget during the Clinton administration. Mr. Raines earned $20 million last year, in part for achieving financial targets that were reached by improperly deferring expenses, a federal oversight probe said yesterday.

Bloomberg news was noting yesterday that after accounting errors came to light at another government-sponsored mortgage company, Freddie Mac, Mr. Raines held a two-hour press conference in July 2003 where he said, “We don’t have any of the same issues.” Right.

About the dangers of this, we’re tempted to say, we told you so. In an editorial issued June 19,2002,and headlined “Housing Hazard,” we wrote, “Fannie and Freddie protest that they aren’t federally guaranteed, but any institutions that big with a name that begins with ‘federal’ – that’s what the ‘F’ in Fannie and Freddie stands for – are not going to fail without a taxpayer bailout.” In a September 30, 2002, editorial headlined “Schumer’s Loan,” we wrote, “The ‘F’ in Fannie is for federal, and, though Fannie insists it’s independent, you can bet it’s the federal taxpayers who will be paying for an eventual bailout.”

We were critical of President Bush for appearing with Mr. Raines in Atlanta back in 2002 to tout something called the “Single Family Affordable Housing Tax Credit.” And we were critical of Senator Schumer for using Fannie Mae to make homes with extremely low down-payments available to some buyers in the suburbs of New York. The Wall Street Journal editorial page and the American Enterprise Institute have been particularly prescient on Fannie and Freddie’s case.

Honest accounting errors are certainly possible, and what Mr. Raines or any other executive is paid is a matter that we’d ordinarily say should be left to his company’s shareholders and directors. But most financial companies are headquartered in financial capitals like New York. Fannie is based in Washington, D.C. It spent $8.7 million on lobbying in 2003, according to a report in the Hill newspaper. Lately Fannie has been venturing into foreign policy, announcing a joint venture with the Egyptian government. Fannie and Freddie compete with private firms that aren’t as closely tied to the government. It’s all a reminder of the risks of the federal government getting into the real estate business.