How did the U.S. economy get swept up in the madness of an unsustainable home-lending binge? How can we make sure such foolishness doesn’t happen again? The best place to turn for answers is The Fateful History of Fannie Mae, a lucid and meticulously reported book by one of the Wall Street Journal’s ace reporters, James R. Hagerty. His book epitomizes history with a purpose: showing how seventy years of good intentions, inertia and greed combined to create a financial catastrophe like no other.
—George Anders, contributing writer at Forbes magazine and author of The Rare Find
This is an important book that settles once and for all what Fannie Mae’s role was in the mortgage crisis. The problem was recognized as early as the Eisenhower administration, yet no one—neither Democrat nor Republican—managed to head it off. We should study this book, learn from our mistakes and kill the next budding disaster while there is still time.
—Paul Carroll, coauthor of Billion Dollar Lessons
Hagerty makes a valuable contribution to the lessons learned from the financial crisis with his untangling of the complex history of Fannie Mae. His treatment is clear, interesting and fair-minded without being wishy-washy.
—Urban C. Lehner, former editor of the Wall Street Journal Asia
In a book that is rigorous, complete and well told, Hagerty explains how Fannie Mae evolved from its inconsequential birth during the Great Depression to a massive financial institution whose demise nearly took down the entire global economy.
—Mark Zandi, chief economist, Moody’s Analytics
In 1938, the administration of Franklin Delano Roosevelt created a small agency called Fannie Mae. Intended to make home loans more accessible, the agency was born of the Great Depression and a government desperate to revive housing construction. It was a minor detail of the New Deal, barely recorded by the newspapers of the day.
Over the next seventy years, Fannie Mae evolved into one of the largest financial companies in the world, owned by private shareholders but with its nearly $1 trillion of debt effectively guaranteed by the government. Almost from the beginning, critics repeatedly warned that Fannie was an accident waiting to happen. Then, in 2008, the housing market collapsed. Amid a wave of foreclosures, the company’s capital began to run out, and the U.S. Treasury seized control.
From the New Deal to the administration of President Obama, author James R. Hagerty explains this fascinating but little-understood saga. Based on his reporting for the Wall Street Journal, personal research and interviews with executives, regulators and congressional leaders, Hagerty charts the course of Fannie Mae. With The Fateful History of Fannie Mae, he explains the politics, economics and human frailties behind seven decades of missed opportunities to prevent a financial disaster.
President Hoover escorting his successor, Franklin D. Roosevelt, to the Capitol in 1933. Courtesy of the Library of Congress.
