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

September 14, 2015


Financial journalist Bethany McLean tackles one of strangest unsolved mysteries of the global financial crisis: Fannie Mae and Freddie Mac.

"The housing sector is a house of cards. So economics writer McLean—who having covered Enron in The Smartest Guys in the Room and the financial meltdown of 2008 knows a thing or two about such constructs—reveals in this report from the trenches.... 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

"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

Over the last decade, two of the defining business books of our era were co-authored by financial journalist Bethany McLean: The Smartest Guys in the Room (with Peter Elkind) and All The Devils are Here (with Joe Nocera). Acclaimed must-reads for anyone who wanted to understand the Enron Scandal and the seeds of the financial crisis, these books pieced together complex events and exposed the truth behind them in a way that had not been done before.

Now in her new book, Shaky Ground: The Strange Saga of the U.S. Mortgage Giants (Columbia Global Reports; September 14; original paperback; $12.99), McLean tackles one of the last remaining –and certainly strangest – unsolved mysteries of the global financial crisis: Fannie Mae and Freddie Mac, the mortgage giants that the U.S. government put into "conservatorship" in 2008. This was meant to be temporary, but here we are seven years later and the government still has not figured out how to resolve the limbo. Nor, writes McLean, has there been a much-needed conversation over the role Washington plays in America's cult of homeownership.

In Shaky Ground, McLean takes the reader through the twists and turns of the last several decades that led to this strange state of affairs ("I've come to believe that in the world of Fannie and Freddie, strange is actually normal," remarks McLean in her Preface). She explains how the two gigantic companies were taken over and how their profits are being used to reduce the budget deficit, leaving them dangerously low on financial reserves, even though they guarantee most Americans' home mortgages. She explains the important role of powerful hedge funds, which are heavily invested in the two firms and are now suing the U.S. government over how it has handled them. She sheds light on why this is a potential global disaster, since China and Japan are among the countries heavily invested in Fannie and Freddie bonds.

McLean makes it clear that we now face two stark choices: abolish Fannie and Freddie and come up with something better, or fix what we have. She weighs these choices and assesses the challenges ahead for Washington and for American homeowners, who have a much more intimate relationship with Fannie and Freddie than they probably realize and need to understand the stakes.

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.


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 and a contributor to CNBC. She lives in Chicago.


Columbia Global Reports is a publishing imprint from Columbia University under the direction of Nicholas Lemann that commissions authors to do original on-site reporting around the globe on a wide range of issues. The resulting novella-length books offer new ways to look at and understand the world that can be read in a few hours. Most readers are curious and busy. Our books are for them.

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