CBS Marketwatch

Mortgage finance giant Fannie Mae dismissed Chief Executive Officer Franklin Raines and Chief Financial Officer Timothy Howard late Tuesday in the wake of accounting errors that will force a massive earnings restatement, according to media reports.

Fannie executives came under intense pressure after last week's U.S. Securities and Exchange Commission finding that the company violated accounting rules related to the hedging of its derivatives.  The company has said that it may be forced to take a $9 billion loss if it restates earnings from the past four years.

The spotlight has focused on Raines and Howard, who defended the company's accounting practices at an October congressional hearing.

While the tenures of Raines and Howard have been under intense scrutiny, Sanford Bernstein analyst Jonathan Gray said the company remains an attractive long-term investment even if there is a management purge.

A change of officers "will not alter the company's fundamental character and health and growth," Gray said Tuesday.  Gray owns shares of the Washington-based company which holds nearly $1 trillion in assets.

Fannie Mae also reportedly dismissed its auditor, KPMG.

Last Wednesday, the SEC agreed with Fannie's regulator, the Office of Federal Housing Enterprise Oversight, that the company had violated accounting rules.  The SEC's investigation is ongoing, and the Justice Department is conducting its own probe.  The company also faces numerous lawsuits lodged by shareholders.