Shaky Ground

Shaky Ground
The Strange Saga of the U.S. Mortgage Giants

Fannie Mae and Freddie Mac were created by Congress to serve the American Dream of homeownership. By the end of the century, they had become extremely profitable and powerful companies, instrumental in putting millions of Americans in their homes.

So why does the government now want them dead?

In 2008, the U.S. Treasury put Fannie and Freddie into a life-support state known as “conservatorship” to prevent their failure—and worldwide economic chaos. The two companies, which were always controversial, have become a battleground. Today, Fannie and Freddie are profitable again but still in conservatorship. Their profits are being redirected toward reducing the federal deficit, which leaves them with no buffer should they suffer losses again. China and Japan are big owners of Fannie and Freddie securities, and they want to ensure the safety of their investments—which helps explain why the government is at an impasse about what to do. But the current state of limbo is unsustainable.

Based on comprehensive reporting and dozens of interviews, Shaky Ground chronicles the story of Fannie and Freddie seven years after the meltdown, and tells us why homeownership finance is now one of the biggest unsolved issues in today's global economy—and why it must be placed on firmer ground.

Praise for Shaky Ground:

A Washington Post Notable Nonfiction of 2015
Washington Post Bestseller Nov. 22, 2015
A 800-CEO-Read 2015 Business Book Award Longlist

"Bethany McLean has written an insightful guide to one of the fascinating true-financial-crime cases of our time." —Simon Johnson, Washington Post

"Seven years after the housing crisis, a look at what happened, how well the government fix worked, and where are we now." —PBS Newshour

"In a short, lucid paperback (or e-book) from a new publishing arm of Columbia University, McLean explains how the topsy-turvy world of Fannie and Freddie came to be and why government control of them likely will limp along indefinitely as the major unresolved issue of the financial crisis." —USA Today

"An excellent new book that attempts to make sense of the senseless history of Fannie and Freddie." —Fortune

"Bethany McLean romps through the well-intentioned founding of Fannie and Freddie, via their gradual corruption to the current unhappy limbo, with the government and hedge funds fighting over the scraps in the courts ... McLean deftly steers a sensible course through the competing claims." —Tom Braithwaite, Financial Times

"McLean ably describes a situation where, seven years past the brink of economic collapse, Fannie and Freddie are severely undercapitalized, faced with investor lawsuits, and caught up in political infighting that prevents either comprehensive reform or their ultimate abolition." —Publishers Weekly

"Readers of this maddening, sharp report will rightly wonder why Fannie Mae and Freddie Mac have been allowed to survive and why we can’t do better." —Kirkus Reviews

"Based on in-depth reporting and dozens of interviews with key players in Washington and Wall Street, Shaky Ground vividly describes how we got into this unsustainable situation—and why everyone should care. This is business journalism at its best and a must-read for anyone concerned about a full recovery from the financial crisis." —800-CEO-Read

"The latest very smart finance book by McLean ... [who] found a very good [topic] in our deeply flawed home mortgage system." —The National Book Review

Additional coverage:
New York Times
Washington Post

Yahoo Finance
CNBC
Marketplace
Quartz
Columbia Journalism Review
800-CEO-Read
Columbia Spectator

Shaky Ground
  • ISBN: 978-0-9909763-0-1
  • Price: $12.99
  • E-Book price: $8.99
  • E-book ISBN: 0990976300
  • On Sale: September 14, 2015
  • Pages: 160

About the author

Bethany McLean
© Steven Laxton

Bethany McLean is the co-author of the bestseller The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron with her Fortune colleague Peter Elkind. Her second book, which she co-authored with New York Times columnist Joe Nocera, is All the Devils are Here: The Hidden History of the Financial Crisis. She is a contributing editor at Vanity Fair, a columnist for Fortune.com and a contributor at CNBC. She lives in Chicago.

@bethanymac12

9/14/2015, Bethany McLean

The Biggest Remaining Risk in Today's Financial System, Hiding in Plain Sight

The Biggest Remaining Risk in Today's Financial System, Hiding in Plain Sight

“If the housing market tanks, so does the stock market. No matter who you are, this is hugely impactful. And no one is talking about it. No one realizes it.” —Ryan Israel, partner at Pershing Square Capital Management. On a bitterly cold gray day in December 2014, there was a strangely large crowd at the… more

9/14/2015, Bethany McLean

I've Written Books about Enron and the Financial Crisis, but Fannie Mae Is the Scariest of Them All

I've Written Books about Enron and the Financial Crisis, but Fannie Mae Is the Scariest of Them All

What are the risks remaining to the global financial system in the wake of the crisis of 2008? I have thought a lot about this topic, but I’ve always believed that trying to forecast the cause of the next meltdown is an exercise in futility. One rule about financial crises that seems to hold true… more