The sorry story of rigged accounting at Fannie Mae is drawing to a close, reports the New York Times. The regulators have completed a final report on the company’s accounting back into the 1990s and sources tell the paper a deal to settle the complaints will be announced this afternoon.

The basic charge remains that the mortgage company used “cookie jar” reserves to enhance it results and thus provide to executives with the maximum “performance” bonuses. The main beneficiaries have already left the company but one director who headed the Audit Committee will be replaced soon with a former chairman of the Financial Accounting Standards Board.

The interesting thing in all this is that the company seemed more focused on Washington connections to protect itself - with appointments of former Clinton insiders like Franklin Raines - instead of doing its sums the old-fashioned way so that two plus two always added up to four. And so despite the efforts to schmooze official Washington, the final punishment may be that Congress devises a tougher regulatory scheme.

Hmmm. Is that the way to go here? Maybe it would be better to reconsider the whole Fannie and Freddie thing. The original rationale was that the mortgage market needed to be kept liquid and that by recycling the money, more mortgage money would be available. But in today’s market, where banks and other lenders are falling all over themselves to lend money to anyone who can sign their own name, is mortgate liquidity a problem? Maybe now is the time to sell of these hybrid companies and let them sink or swim on their own.

If we still had the stodgy and ultra-secure lending standards of a few decades back, then we might need these companies. Nowadays, it seems like something the market can do quite well for itself.

And if you want to see what the market can do, take a look at this report from Bloomberg. The Chicago Mercantile Exchange rolled out a new derivative Monday: futures contracts based on indexes that track house prices.

The product was delayed so it could be tweaked to allow for variance across different local markets and products but critics remain skeptical. The L.A. contract fell 3.9 percent, which is hardly a surprise. The Mercantile Exchange contracts will be due in August, November, February and May. Under the new derivative, the buyer gets paid if the housing price index goes up and the seller gets the money if the index goes down.

But the Chicago Board Options Exchange is promising a rival contract that ill include prices in New York, Los Angeles, Chicago and Las Vegas. Stay tuned.