Guaranteed to Fail
Fannie, Freddie, and the Debacle of Mortgage Finance
Forthcoming January 2011, Princeton University Press
Authors:
Viral V. Acharya, Professor of Finance, NYU Stern School of Business, NBER and CEPR
Matthew Richardson, Charles E. Simon Professor of Applied Financial Economics,
NYU Stern School of Business and NBER
Stijn Van Nieuwerburgh, Associate Professor Finance, NYU Stern School of
Business, NBER and CEPR
Lawrence J. White, Arthur E. Imperatore Professor of Economics, NYU Stern
School of Business
Acknowledgments
Many insights presented in this book were developed during the development of two earlier
books that the four of us contributed to at NYU-Stern: Restoring Financial Stability: How to
Repair a Failed System (Wiley, March 2009); and Regulating Wall Street: The Dodd-Frank Act
and the New Architecture of Global Finance (Wiley, October 2010). We owe much to all of our
colleagues who contributed to those books, especially those who contributed to the chapters on
the government-sponsored enterprises (GSEs): Dwight Jaffee (who was visiting Stern during
2008-09), T. Sabri Oncu (also visiting Stern during 2008-10), and Bob Wright. We received
valuable feedback on the first draft of the book from Heitor Almeida, Ralph Koijen, and Amit
Seru, useful expositional comments from Sanjay Agarwal, Les Levi and Manjiree Jog, and
excellent research assistance from Vikas Singh on how countries other than the United States
deal with home ownership and mortgage markets. We would like to thank Robert Collender,
principal policy analyst at the FHFA, for helping us better understand the FHFA data. We are
also grateful to the professionalism of staff at the Princeton University Press, especially Seth
Ditchik, who managed the process for us right from the book proposal to eventual publication.
Finally, we owe substantial gratitude to a number of economists, policy-makers, and
practitioners – some named in the book and others unnamed – who have over the past two
decades studied the GSEs, with prescience pointed out the flaws in their design and warned of
the likely adverse consequences due these flaws. Their collective wisdom has shaped our
understanding of the GSEs in significant measure and helped us provide original
recommendations for much-needed reform of mortgage finance in the United States.