Regulators are demanding that Fannie Mae and Freddie Mac retain all records to allow regulators a peek at accounting any time, said the Office of Federal Housing Enterprise Oversight on Wednesday.

OFHEO said that Fannie and Freddie should maintain "complete and accurate" records that can be immediately accessed by regulators for an on-demand check of the books.

Last week, OFHEO and the Securities and Exchange Commission fined Fannie Mae $400 million for mishandling company accounting in order to maximize executive bonuses. Freddie Mac has been plagued by an accounting scandal of its own and is just now getting its financial reporting in order.

"Under the proposal, the enterprises will have an obligation to maintain and promptly produce records useful in regulatory examinations and other proceedings," said OFHEO Director James Lockhart. The proposal will have a 60-day comment period.

Separately, a House Financial Services subcommittee announced on Wednesday that Lockhart will testify on June 6 regarding OFHEO's report on Fannie Mae's accounting errors.

"ORHEO's examination of Fannie Mae revealed breaches of propriety and judgment so deplorable in nature and pervasive in reach that it's almost as if we were barely scratching the surface," said Rep. Richard Baker (R-LA). Baker hopes that the report will lead to tightened legislation for the two companies.

Fannie Mae and Freddie Mac are government sponsored agencies that buy mortgages with the purpose of freeing lending capital for banks and mortgage firms. They then repackage the mortgages for sale as securities.

The House has passed legislation to create a new regulator for Fannie and Freddie, which is waiting Senate approval.