Why America's public-private mortgage giants threaten the world
economy--and what to do about it
The financial collapse of Fannie Mae and Freddie Mac in 2008 led to one
of the most sweeping government interventions in private financial
markets in history. The bailout has already cost American taxpayers
close to $150 billion, and substantially more will be needed. The U.S.
economy--and by extension, the global financial system--has a lot riding
on Fannie and Freddie. They cannot fail, yet that is precisely what
these mortgage giants are guaranteed to do. How can we limit the damage
to our economy, and avoid making the same mistakes in the future?
Guaranteed to Fail explains how poorly designed government guarantees
for Fannie Mae and Freddie Mac led to the debacle of mortgage finance in
the United States, weighs different reform proposals, and provides
sensible, practical recommendations. Despite repeated calls for tougher
action, Washington has expanded the scope of its guarantees to Fannie
and Freddie, fueling more and more housing and mortgages all across the
economy--and putting all of us at risk. This book unravels the
dizzyingly immense, highly interconnected businesses of Fannie and
Freddie. It proposes a unique model of reform that emphasizes
public-private partnership, one that can serve as a blueprint for better
organizing and managing government-sponsored enterprises like Fannie Mae
and Freddie Mac. In doing so, Guaranteed to Fail strikes a cautionary
note about excessive government intervention in markets.
