Fannie Mae’s Last Stand

Many believe the government-backed mortgage giants known as Fannie Mae and Freddie Mac were major culprits in the economic meltdown. But, for decades, Fannie Mae had been under siege from powerful enemies, who resented its privileged status, its hard-driving C.E.O.’s, and its huge profits. Surveying Fannie’s deeply dysfunctional relationships with Congress, the White House, and Wall Street, the author tells of the long, vicious war—involving most of Washington’s top players—that helped propel one of the world’s most successful companies off a cliff.

by Bethany McLean February 2009

The chairman of the universe.”

“Washington, D.C.’s Medici.”

“The face of the Washington national establishment.”

“One of the most powerful men in the United States.”

All those phrases were used to describe a man you may never have heard of: Jim Johnson, the C.E.O. of mortgage giant Fannie Mae in the 1990s. Fannie was then one of the largest, most profitable companies in the world, with a stock-market value of more than $70 billion and more earnings per employee than any other company in America. (By comparison, G.M. at its peak, in 2000, was worth only $56 billion.) On one level, Johnson, now 65 years old, was just another businessman with a lot of money and multi-million-dollar houses in desirable locations from D.C. to Sun Valley, Idaho, to Palm Desert, California. Chairman of D.C.’s premier arts venue, the Kennedy Center, and one of its top think tanks, the Brookings Institution, Johnson was out “wearing white-tie and black-tie every night,” says Bill Maloni, Fannie’s former chief lobbyist. “Everyone wanted a little bit of Jim.”