How did Fannie Mae get such political clout? This is one of the best-told stories in the book. McLean and Nocera tell how a well-connected Democrat named Jim Johnson made Fannie Mae almost invulnerable politically. Johnson, who had been Vice President Walter Mondale’s executive assistant during Jimmy Carter’s presidency and had run Mondale’s failed presidential campaign in 1984, was the chairman and chief executive officer of Fannie Mae from 1991 to 1998. During that time, he turned Fannie Mae into one of the most powerful lobbies in Washington, using that lobbying power to defend its government-granted privileges. The most important privilege was government backing.

While the U.S. government did not explicitly back Fannie Mae — a government-sponsored enterprise rather than a government enterprise — everyone assumed, it turns out correctly, that it did.

To get powerful congressmen on board, Johnson set up “partnership offices” in their congressional districts. The first such office was in San Antonio, in the district of Henry Gonzalez (D, Texas), then-chairman of the House Banking Committee. These offices were staffed, the authors write, “by someone close to power — the son of a senator, a governor’s assistant, a former congressional staffer.” Expenditures on such offices don’t even count as lobbying. But Fannie Mae also lobbied, spending $170 million between 1997 and 2006.

This is from my book review, “Most of the Devils are Here,” in the latest issue of Regulation. It’s a review of Bethany McLean and Joseph Nocera, All the Devils are Here.

I think the book is excellent but its main weakness is that the reader has no way of judging, without days of independent research, whether some of the claims are true. There are no footnotes or references.