Fannie Mae, the mortgage giant accused of inflating its earnings while rewarding executives with rich bonuses, reached an agreement with the federal government today to pay a $400 million fine. Accusing former Fannie Mae executives of operating an arrogant and unethical" corporate culture, federal regulators condemned the company in a report today that detailed a pattern of systematic financial manipulation at the company's highest levels. "Senior management manipulated accounting; reaped maximum, undeserved bonuses; and prevented the rest of the world from knowing." Fannie Mae's financial results during that time were "illusions deliberately and systematically created by senior management. Senior executives worked strenuously to hide Fannie Mae's operational deficiencies, significant risk exposures, and improper earnings management" the report said. As part of the settlement, Fannie Mae neither admitted nor denied wrongdoing. Because of Fannie Mae's sheer size and reach into the American economy, however, there are limits to how much the company's clout could be curtailed, [said] Jonathan Koppell, a professor of politics and management at Yale. "Their business reaches into every Congressional district," he said. Fannie Mae's $400 million settlement is more than three and a half times the fine Freddie Mac, its smaller rival in the mortgage business, paid in 2003.