As a result of the recent financial crisis, there has been significant public debate on the role of the financial sector in bringing about the "Great Depression." More generally, there has been debate about whether the current industry structure has enhanced social welfare or served a detrimental role. This book is a collection of papers presented at the conference held at the Federal Reserve Bank of Chicago, in November 2012 that examined the social value of the financial sector as currently structured. Issues evaluated include what are the perceived benefits and costs of the current financial system? How valuable have industry innovations been for society? Should regulation be used to "move" the industry in a direction thought to be more valuable for society? Should "big" banks be broken up? What are the welfare implications of the current industry structure? In the book, leading industry scholars debate these issues with a goal of influencing public policy toward the industry.

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?

"Guaranteed to Fail" explains how poorly designed government guarantees for Fannie Mae and Freddie Mac led to the debacle of mortgage finance in the United States, weighs different reform proposals, and provides sensible, practical recommendations. Despite repeated calls for tougher action, Washington has expanded the scope of its guarantees to Fannie and Freddie, fueling more and more housing and mortgages all across the economy--and putting all of us at risk. This book unravels the dizzyingly immense, highly interconnected businesses of Fannie and Freddie. It proposes a unique model of reform that emphasizes public-private partnership, one that can serve as a blueprint for better organizing and managing government-sponsored enterprises like Fannie Mae and Freddie Mac. In doing so, "Guaranteed to Fail" strikes a cautionary note about excessive government intervention in markets.