Shaky Ground

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.

This is the first title from Columbia Global Reports, a new publishing imprint from Columbia University that is producing six short, ambitious works of journalism and analysis a year, each on a different under-reported story in the world. We commission authors to do original on-site reporting around the globe on a range of stories and ideas, including politics, finance, science and culture. Our books offer new ways to look at and understand the world that can be read in a few hours. We are thrilled to launch with a new work from one of the best financial journalists at work today, Bethany McLean. She is known for her reporting on the Enron scandal and the financial crisis of 2008. She co-authored the bestsellers THE SMARTEST GUYS IN THE ROOM (with Peter Elkind) and ALL THE DEVILS ARE HERE (with Joe Nocera). She is a contributing editor at Vanity Fair, a columnist for Fortune.com and a contributor to CNBC. She lives in Chicago.