‘Guaranteed to Fail’, a book by four NYU Stern professors is reviewed in The Economist.
A shorter but heavier book, “Guaranteed to Fail”, co-written by four
professors at New York University’s Stern School of Business, one of
whom used to sit on Freddie’s board, is a worthy complement to Ms
Morgenson’s and Mr Rosner’s narrative-based work. It offers two useful
things that are not to be found in the other book (apart from lots of
charts and statistics). The first is a comparison of America’s mortgage
system with those of other countries. Few have anything like the same
level of state support, yet many have comparable levels of home
ownership and housing affordability.
The financial collapse of Fannie Mae and Freddie Mac in 2008 led to one of the most sweeping government interventions in private financial markets in history. The bailout has already cost American taxpayers close to $150 billion, and substantially more will be needed. The U.S. economy–and by extension, the global financial system–has a lot riding on Fannie and Freddie. They cannot fail, yet that is precisely what these mortgage giants are guaranteed to do. How can we limit the damage to our economy, and avoid making the same mistakes in the future?