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Fannie Mae and Freddie Mac Paperback – 12 Sep 2013

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Product details

  • Paperback: 430 pages
  • Publisher: Bloomsbury Academic; Rev Upd edition (12 Sep 2013)
  • Language: English
  • ISBN-10: 1780935234
  • ISBN-13: 978-1780935232
  • Product Dimensions: 15.5 x 3 x 23.4 cm
  • Average Customer Review: 5.0 out of 5 stars  See all reviews (4 customer reviews)
  • Amazon Bestsellers Rank: 1,347,830 in Books (See Top 100 in Books)
  • See Complete Table of Contents

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It is astonishing and somewhat unsettling that the best scholarly work about Fannie Mae and Freddie Mac and their role in the 2008 financial crisis should have produced by Oonagh McDonald, a British student of the financial markets. The book is doubly useful because Ms McDonald cannot be accused of bias on an issue that has become excessively politicized in the US. If you want to know how US government housing policy led to the financial crisis, it is in these pages. -- Peter J. Wallison, Arthur F. Burns Fellow in Financial Policy Studies, American Enterprise Institute, USA Finally, an accurate portrayal of the causes of the 2008 financial crisis... Ms. McDonald lays out how good intentions and contributory negligence of political power-players converted the American Dream from a reward for hard work into an entitlement for those who failed. -- Louis S. Harvey, President, Dalbar, Inc. USA More than any book I have read on the financial crisis, this captures the perils of politically driven lending. Oonagh McDonald shows how ideology, in this case a misplaced belief that home ownership is always good, deterred both public scrutiny of Fannie Mae and Freddie Mac and market discipline. Supposed regulators became cheer-leaders and executives lined their pockets in the name of the American dream. And it remains unclear whether the monsters at the heart of the sub-prime crisis - now in state care - will be killed off, as this book rightly suggests they should be. -- Jane Fuller, co-director of the CSFI (Centre for the Study of Financial Innovation) think-tank and former financial editor of the Financial Times The collapse of Fannie Mae and Freddie Mac was a crucial part of the Great Meltdown in financial markets. Dr McDonald has now traced with great care and accomplished expertise the story behind this saga. Her meticulous research and her clarity in telling the story will be a great help to all readers in understanding what happened and why. I recommend this book highly to all who are in any way interested in the events of the Great Meltdown. -- Professor Meghnad Desai, London School of Economics and Political Science, UK There could be no better guide through the sub-prime crisis which triggered the great financial and economic collapse of 2008 than Oonagh McDonald. She possesses all the gifts - financial acumen and experience, an insider's knowledge of politics and government and the forensic talents of a top flight scholar. This book will endure as long as the fall of Fannie Mae and Freddie Mac is remembered -- Professor Peter Hennessy, Queen Mary, University of London, UK A serious study and done in enough depth to appeal to academics and researchers but ... accessible enough to appeal to the general public given the obvious importance of the topic. Her practical knowledge of politics and financial services is very illuminating throughout. Thorough and interesting and written with very perceptive insights from an experienced politician and regulator. -- Professor Robert Hudson, Newcastle University Business School, UK From any perspective the current financial crisis should interest both practitioners and academics, there is much to learn and digest, and Oonagh's book will provide invaluable insights for many generations to come. It is highly readable and contains a wonderful blend of thorough scholarship and a detailed appreciation of the intertwining of politics and markets. Oonagh has laid bare the root causes of the subprime crisis and she highlights the dangers of politicians interfering in markets they do not understand. This is a thought provoking book and a timely reminder that markets and their specific politics always need close scrutiny if untold costs are to be avoided. -- Professor Kevin Keasey, Head of Accounting and Finance, Leeds University Business School, UK The McDonald book is remarkable for its relentless foc --Lord Lawson Financial Times 20121116

About the Author

Oonagh McDonald is a former UK Member of Parliament and an international regulatory expert

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1 of 2 people found the following review helpful By Nick Lincoln on 27 Oct 2012
Format: Hardcover
If you are considering getting this book, be warned. It is NOT a light read. McDonald has a forensic grasp of the minutiae of the American housing system and it shows. That is not a criticism: this is an extremely complicated and tangled web and McDonald's book is superb at leading the reader through it but this will take an investment on behalf of said reader in terms of time and concentration (at least it did for this one!)

In essence this book skewers the lazy MSM view that bankers caused the credit crunch and ensuing global financial crisis. Yes, they were heavily implicated but this book sets the scene that allowed the bankers to run riot with their CDOs, chumminess with inept rating agencies etc. McDonald posits that the highly socialised US housing market (where Government regulators, pressure groups and legislators have their grubby fingerprints ALL over it) was a disaster waiting to happen - and happen it did.

Encouraged by various US Presidents (but accentuated markedly by Clinton) the US housing market by the mid-2000's became an environment where - if you had a pulse - you could get a mortgage. Banks weren't lending under normal market rules; they were told by the authorities to relax lending criteria in order to promote "affordable housing". Implicit in this was that quasi-Government agencies Fannie Mae and Freddie Mac would then buy these mortgages and guarantee them and then package them on - enter the bankers and Mortgage Backed Securities, CDOs etc.

This book should be required reading for all politicians as to how NOT to do something. Yet again the dead hand of the State caused enormous damage.
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1 of 2 people found the following review helpful By Ivor R. B. Hibbitt on 27 July 2012
Format: Hardcover
Fannie Mae and Freddie Mac

# by Oonagh McDonald
The shock waves of the financial catastrophe is still reverberating around the world yet it was not fraud on a massive scale that caused the disaster but a speech to help low income families in l995, and a seemingly benevolent one by the then President Bill Clinton.He outlined a plan, the National Home Ownership Strategy to set up organizations that turn a dream into reality.Events and naive scrutiny from so called regulators turned the dream into a nightmare. Step forward two government backed bodies, Fannie Mae and Freddie Mac and at least one ambitious and politically savvy Chief Executive who saw billions of dollars flowing into his hands from the Federal Government.Fannie was launched in the Depression, the day of Buddy can you spare a dime and Freddie was launched as competition for it in the Seventies. Once a Community Act was passed to encourage lending to poor minority groups the dye was cast. Everyone joined in, selling subsidized mortgages to the poor, raking in fees and generally operating as private banks,with Wall Street banks joining in the feeding frenzy. The scheme, well intentioned as it was, was a time bomb in the American housing market and it exploded in 2007 when mortgages packaged as CDOs- Collateralized Debt Obligations and bought and sold on to investors collapsed under the huge weight of thousands of home foreclosures.
Many Fannie Mae and Freddie Mac chiefs ended us millionaires. Wall Street banks fell and today the market is still struggling to survive. Fannie and Freddie had loses of two and three million dollars each.
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0 of 1 people found the following review helpful By Sir John Caines on 4 Aug 2012
Format: Hardcover Verified Purchase
Equipped with the analytical skills and research acumen of a professional academic, the experience and insights of a professional politician and the knowledge and understanding of a professional financial regulator Oonagh McDonald is uniquely well placed to provide a profound, well informed and readable account of how the best of intentions nearly led to the collapse of the world's financial system. The politicians of today need to learn the lessons of the politicians of not so long ago which are contained in the pages of this excellent book
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0 of 1 people found the following review helpful By R. J. Reid on 23 July 2012
Format: Hardcover
At last a book that takes a neutral stance and looks at the flaws in the system how they came about and who was involved- gives the best reason yet why politicians should not be allowed near long term strategy
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Most Helpful Customer Reviews on (beta) 7 reviews
16 of 20 people found the following review helpful
Brilliant Analysis of What Went Wrong at Fannie and Freddie 14 July 2012
By Robert England - Published on
Format: Hardcover
Kudos to Oonagh McDonald. She digs deep into the history of Washington's housing policies, especially the policies and regulations that govern Fannie Mae and Freddie Mac. She makes a persuasive and conclusive argument that these housing policies pursued mostly through Fannie Mae and Freddie Mac, created a mountain of toxic mortgages, both at the two government-sponsored enterprises as well as in the private sector. She comes to this conclusion from the left-of-center side of the political spectrum and as a deeply-informed and expert observer from another nation.

With this book, we see in ever more detail that Fannie and Freddie are the poster children of America's tawdry descent into crony capitalism. Having seen officials at Fannie Mae and Freddie Mac get away with massive accounting fraud designed to line their pockets and be vigilantly protected by politicans and regulators from prosecutioin, Wall Street would-be felons said, "Hey, let me get a little bit of that."

This 473-page book is exhaustively researched. There are 32 pages of end notes, 75 pages of appendices.

The book's most important contribution is its bold conclusion that "affordable housing ideology" is the primary driver of the huge run up in toxic mortgages -- whose creation and existence on a large scale is the underlying cause of the crisis.

Commenting on the huge surge in bad mortgage lending pursued by Fannie, Freddie and others, McDonald writes, "A few voices in Congress, outside in the community and in the banking sector were raised in protest, but they were not heard whilst more and more people could buy their homes: the affordable housing ideology blinded the rest."

And so even today, there are people who see any serious challenge to this affordable housing ideology as a threat to their own power and influence and so they fight the people, like Oonagh McDonald, who dare tell the truth. But the truth is out. And, Bravo! to Ooonagh for telling it! Brilliant book!
5 of 5 people found the following review helpful
Giving up reading after 75 pages 25 Oct 2012
By Jack Daniel - Published on
Format: Hardcover
I am giving up reading this book after 75 pages. The book is incredibly dry and difficult to get through. The author really has no sense for how to write for a popular audience. She raises a minor point and then spends sometimes multiple pages providing evidence and discussion, so that it can be extremely difficult to keep hold of the line of argument. Much of the dry discussion could and should have been left out, which would also have made the book less long than its almost 500 pages. So I give up.

The other thing about page 75 is that the author says, in a section on HUD, that President Clinton "appointed as Secretary, Henry Cisneros, four times Mayor of Clinton's home town of San Antonio, Texas [sic] and only the second Hispanic to hold that office."

The book seems to have badly needed another (or simply an) editor to be on the lookout for such an obvious factual error, but above all to make the book more readable for a non-academic audience. For a more readable treatment of this subject area, I can strongly recommend Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon.
great book 13 May 2014
By Jay Stamboolian - Published on
Format: Paperback Verified Purchase
I really enjoyed the in-depth research and details. a completely unvarnished report on the origins of the Great Recession. The lesson learnt is that Fannie Mae and Freddie should be closed now.
A U.K. Sophisticate Looks Causes of recent U.S. Residential Mortgage Loan Bust 22 Mar 2014
By Taoiseach Da Caisel - Published on
Format: Hardcover Verified Purchase
It is good to have friendly outsiders take a look at our politico-society
and permit us to learn from her insights. Sometime Member of Commons
Oonagh McDonald did a very nice job with data she uncovered and there
Is much to learn from her. Alas, she seems innocent of OTS' techniques for
leaning on regulated thrifts to abandon traditional community roles, to "go public,"
to originate loans for rapid resale to "securitization" packagers including
denying annual safety & soundness clearances until "fair lending auditors"
were satisfied, and running "educational" programs for Thrift Bankers.

This is not criticism of the author who deserves praise for intent, research and
formulation. The Congress hasn't figured out what happened and it has investigatory
powers she lacks.
Incredible depth and detail of research. Wow! Outrageous Gov't manipulation and bungling... 12 Sep 2013
By D. Kamp - Published on
Format: Hardcover Verified Purchase
This stuff just blows my mind!

Just consider that during the Johnson era this sourcer's apprentice of big government (Fannie mae) was shoved off the federal budget. For gosh sakes, this makes "the smartest guys in the room" (Enron), look like a bunch of wanna be cub scouts. With a stoke of the pen, the perfect devil's playground with no Gov't accountability was established.

Then in the 90's, the Gov't manipulation began in earnest. HUD pushed the off-the-books enterprises to take on more and more risk. Things really got supercharged when our government pulled another rabbit out of the hat and let Fannie and Freddie (along with the big bankers) to peddle this greater risk to the Chinese.

Funny, but I often wonder: back in '08, when things really started to unravel, our Gov't leaders seemed like they just wanted to walk away from the whole mess like a spoiled child tosses an expensive toy aside. But does anyone besides me suspect that they got a hot line call from the Chinese leaders telling them to wise up or they will come over and repo a huge amount of real estate and kick the freeloaders out? How do you spell coup d'état?

But the final big question still remains: when will the freaking progressives ever learn their lesson?! They are like the Borg Collective! These jerks have had their spoiled way for over a whole century now, and things seem to go from bad to worse. Holy Cats! Back in the 1800's, when the economy got into a pickle, JP Morgan would go to the Feds and say, "How much do you need?". Six months later the economy would be back roaring again. Now, with the progressives in full charge, the pain goes on seemingly forever. Where the rich used to give freely, nowadays, our leaders can't seem to extort enough money from them to get by. They have to mortgage our great grand children's futures.

We have an alphabet soup of agencies looking out for the people, yet the Ponzi scammers are still making off with the loot while our officials are busy watching internet porn. Will the people ever wise up and say, "This has gone too far. We need to slim down this federal monstrosity. And for God sakes! Forget trying to heal the sick and raise the dead (Obama care). And don't even think about taking charge of our weather (Global Warming Initiatives). You've done enough damage. Either fix what you've already started (SS, and Medicare), or don't start anything new."
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