Budget Counsel Reference Directory
Government-Sponsored Entities
Summary
Government-Sponsored Entities.—A government-sponsored enterprise (GSE) is a privately-owned corporation, but one established and chartered by United States Congress. GSEs are designed to fulfill a public purpose, such as facilitate the flow of financing to from capital markets to areas of the economy thought to require increased funding (such as the mortgage market). By creating the corporation and giving it certain benefits, GSEs may reduce the risk those willing to invest in their financial products. The economic areas that have been favored by the creation of GSEs are in farming and agriculture, education and the home finance system.
The first GSE was the Farm Credit System, which was established in 1916. Other GSEs were created in turn, such as the Federal Home Loan Banks in 1932, the Federal National Mortgage Association, and Sallie Mae in 1972. This last GSE was privatized and became a fully private institution in 1995).
Privatizing Government-sponsored enterprises
The Effect on the Mortgage Markets of Privatizing Fannie Mae and Freddie Mac ,Dwight M. Jaffee
Kling, Arnold. Freddie Mac and Fannie Mae, An Exit Strategy for the Taxpayer, (Briefing Paper No. 106, Cato Institute) September 8, 2008, Washington, DC, 2009.
Alice Rivlin – Do we want Fannie public or private? (Politico) July 18, 2008
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Additional References
Ambrose, Brent W., and Thomas G. Thibodeau with Kenneth Temkin. “An Analysis of the Effects of the GSE Affordable Goals on Low- and Moderate-Income Families.” Prepared for the U.S. Department of Housing and Urban Development Office of Policy Development and Research, Washington, DC, 2002.
An, Xudong, Raphael W. Bostic, Yongheng Deng, and Stuart A. Gabriel. “GSE Loan Purchases, the FHA, and Housing Outcomes in Targeted, Low-Income Neighborhoods.” Paper presented at the Brookings-Wharton Conference on Urban Affairs, Brookings Institution, Washington, DC, October 2006.
Bennett, Rosalind L., Mark D. Vaughan, and Timothy J. Yeager. “Should the FDIC Worry About the FHLB? The Impact of Federal Home Loan Bank Advances on the Bank Insurance Fund.” Working Paper WP 05-05, Federal Reserve Bank of Richmond, Richmond, VA, 2005.
Blinder, Alan S., Mark J. Flannery, and G. Brandon Lockhart. “New Estimates of the Jumbo-Conforming Mortgage Spread.” Working Paper, Warrington College of Business Administration, University of Florida, Gainesville, FL, 2006.
Bond Market Association. An Investor’s Guide to GSE Debt Securities. 2002.
Bond Market Association. Practice Guidelines for When Issued Trading in GSE Auctioned Securities. 2001.
Cleveland, Paul. “Freddie Mac: a Mercantilist Enterprise.” Ludwig von Mises Institute, Auburn, AL, 2005.
Cochran, Jay, and Catherine England. “Neither Fish nor Fowl: An Overview of the Big-Three Government-Sponsored Enterprises in the U.S. Housing Finance Markets.” Working Papers in Regulatory Studies, Mercatus Center, George Mason University, McLean, VA, 2001.
DiVenti, Theresa R. “Fannie Mae and Freddie Mac: Past, Present, and Future.” Cityscape: A Journal of Policy Development and Research 11, no. 3 (2009): 231-242.
Fannie Mae. Guaranteed MBS Pass-Through Securities: Mega Certificates. Washington, DC, 2002.
Federal Deposit Insurance Corporation. “Assessing the Banking Industry’s Exposure to an Implicit Government Guarantee of GSEs.” FYI: An Update on Emerging Issues in Banking, Washington, DC, 2004. http://www.fdic.gov/bank/analytical/fyi/2004/030104fyi.html.
Ferguson, Thomas, and Robert Johnson. “Too Big to Bail: The ‘Paulson Put,’ Presidential Politics, and the Global Financial Meltdown.” International Journal of Political Economy 38, no. 1 (2009): 3-34. http://www.peri.umass.edu/fileadmin/pdf/conference_papers/SAFER/Ferguson_Johnson_Too_Big.pdf.
Ferullo, Mike, and Jonathan Nicholson. “CBO’s Estimate of Cost of the Administration’s Proposal to Authorize Federal Financial Assistance for the Government-Sponsored Enterprises for Housing.” Congressional Budget Office, Washington, DC, 2008. http://www.cbo.gov/doc.cfm?index=9574.
Gerardi, Kristopher, Harvey S. Rosen, and Paul Willen. “Do Households Benefit from Financial Deregulation and Innovation? The Case of the Mortgage Market.” Working Paper 12967, NBER, Cambridge, MA, 2007. http://www.nber.org/papers/w12967.pdf.
Greenspan, Alan. Government Sponsored Enterprises. Conference on Housing, Mortgage Finance, and the Macroeconomy, Federal Reserve Bank of Atlanta, Atlanta, GA, May 19, 2005. http://www.federalreserve.gov/boarddocs/speeches/2005/20050519/.
Jaffee, Dwight M. “Monoline Regulations to Control the Systemic Risk Created by Investment Banks and GSEs.” The B.E. Journal of Economic Analysis & Policy 9, no. 3 (2009). http://faculty.haas.berkeley.edu/jaffee/Papers/115BEOct09Conf.pdf.
(2000). http://faculty.haas.berkeley.edu/jaffee/papers/aeimay00.pdf.
Kling, Arnold. “Freddie Mac and Fannie Mae, An Exit Strategy for the Taxpayer (CATO)” Briefing Paper no. 106, Cato Institute, September 8, 2008, Washington, DC, 2009.
Kosar, Kevin R. “Government Sponsored Enterprises (GSEs): An Institutional Overview.” Report RS21663, Congressional Research Service Report for Congress Report for Congress, Washington, DC, December 20, 2005. https://fas.org/sgp/crs/misc/RS21663.pdf.
Lucas, Deborah, and Robert McDonald. “Valuing Government Guarantees: Fannie and Freddie Revisited.” In Measuring and Managing Federal Financial Risk, 131-54. Chicago, IL: University of Chicago Press, 2010. http://www.nber.org/chapters/c3041.pdf.
Lucas, Deborah, and Robert McDonald. “An Options-Based Approach to Evaluating the Risk of Fannie Mae and Freddie Mac.” Paper prepared for the 2005 Carnegie Rochester Public Policy Conference (August 2005). http://www.haas.berkeley.edu/groups/finance/CarnegieRochester_8.pdf.
Marron, Donald, and Phillip Swagel. “Whither Fannie and Freddie? A Proposal for Reforming the Housing GSEs.” E21 – Economic Policies for the 21st Century Commentary Series (2006): 1-19. http://economics21.org/commentary/whither-fannie-and-freddie-proposal-reforming-housing-gses.
Mortgage Bankers Association. “Why the Bright Line Helps Mortgage Markets: MBA Rebuttal to Freddie Mac Bright Line Paper.” Issue Paper, Washington, DC, April 2005.
Moulton, Shawn. “The 1992 GSE Act and Loan Application Outcomes.” Presented at the “Past, Present, and Future of the Government Sponsored Enterprises” conference organized by the Federal Reserve Bank of St. Louis, St. Louis, MI, November 17, 2010. http://research.stlouisfed.org/conferences/gse/Moulton.pdf.
Myers, Jr., Samuel L. “Government-Sponsored Enterprise Secondary Market Decisions: Effects on Racial Disparities in Home Mortgage Loan Rejection Rates.” Cityscape: A Journal of Policy Development and Research 6, no. 1 (2002): 85-113. http://www.huduser.org/Periodicals/CITYSCPE/VOL6NUM1/chp2.pdf.
National Home Equity Mortgage Association. “NHEMA’s GSE Policy Statement.” Washington, DC, November 1999. http://archives.financialservices.house.gov/banking/91200co5.pdf.
Noland, Doug. “Bubble Bubble Mortgage Trouble.” The International Economy, (Summer 2004): 48-53. http://www.international-economy.com/TIE_Su04_Noland.pdf.
Nott, Loretta, and Barbara Miles. “GSE Regulatory Reform: Frequently Asked Questions.” Report RS21724, Congressional Research Service Report for Congress, Washington, DC, 2005. http://wlstorage.net/file/crs/RS21724.pdf.
Pearce, James E. “Mortgage Purchases in Low-Income and High-Minority Neighborhoods: 1994-96.” Cityscape: A Journal of Policy Development and Research 5, no. 3 (2001): 265-316. http://www.huduser.org/Periodicals/CITYSCPE/VOL5NUM3/pearce.pdf.
Pinto, Edward J. “Government Housing Policies in the Lead-up to the Financial Crisis: A Forensic Study.” Working Paper, American Enterprise Institute, Washington, DC, 2010. http://www.aei.org/papers/economics/financial-services/housing-finance/government-housing-policies-in-the-lead-up-to-the-financial-crisis-a-forensic-study/.
Pollock, Alex J. Services, We Don’t Need GSEs (Testimony before the House Committee on Financial Services)
Poole, William. “The GSEs: Where Do We Stand?” Federal Reserve Bank of St. Louis Review 89, no. 3 (2007): 143-151. http://research.stlouisfed.org/publications/review/07/05/Poole.pdf.
Reiss, David. “Fannie Mae and Freddie Mac and the Future of Federal Housing Finance Policy: A Study of Regulatory Privilege.” Alabama Law Review 61, no. 5 (2010): 907-955. http://www.law.ua.edu/pubs/lrarticles/Volume%2061/Issue%205/reiss.pdf.
Rivlin, Alice M. Do we want Fannie public or private? Politico, July 18, 2008.
Rudman, Warren B. et al. “A Report to the Special Review Committee of the Board of Directors of Fannie Mae.” Paul, Weiss, Rifkind, Wharton & Garrison LLP, Huron Consulting Group Inc., February 23, 2006. http://www.concernedshareholders.com/CCS_FannieMaeReport.pdf.
Schmid, Frank A. “Conjectural Guarantees Loom Large: Evidence from the Stock Returns of Fannie Mae and Freddie Mac.” Working Paper 2003-031A, Federal Reserve Bank of St. Louis, St. Louis, MO, 2003. http://research.stlouisfed.org/wp/2003/2003-031.pdf.
Stanton, Thomas H. “Government-Sponsored Enterprises: Reality Catches up to Public Administration Theory.” Public Administration Review 69, no. 4 (2009): 632-639. http://www.thomas-stanton.com/pubs/gse/GSE-Reality_Catches_up_to_Public_Administration_Theory.pdf.
Stanton, Thomas H. “Government-Sponsored Enterprises and Changing Markets: The Need for an Exit Strategy.” The Financier 2, no. 2 (1995): 27-42. http://www.thomas-stanton.com/pubs/gse/GSE-Need_for_an_Exit_Stragety.pdf.
Temkin, Kenneth, Jennifer E. Johnson, and Diane Levy. “Subprime Markets, the Role of GSEs, and Risk-Based Pricing.” Prepared for the U.S. Department of Housing and Urban Development Office of Policy Development and Research, the Urban Institute, Washington, DC, March 2002. http://www.huduser.org/Publications/pdf/subprime.pdf.
United States Congressional Budget Office. Updated Estimates of the Subsidies to the Housing GSEs. Washington, DC: U.S. Government Printing Office, 2004. http://www.cbo.gov/ftpdocs/53xx/doc5368/04-08-GSE.pdf.
United States Congressional Budget Office. Effects of Repealing Fannie Mae’s and Freddie Mac’s SEC Exemptions. Washington, DC: U.S. Government Printing Office, 2003. http://www.cbo.gov/ftpdocs/41xx/doc4199/05-06-03-GSEs.pdf.
United States Congressional Budget Office. Federal Subsidies and the Housing GSEs. Washington, DC: U.S. Government Printing Office, 2001. http://www.cbo.gov/doc.cfm?index=2841&type=0&sequence=3.
United States Department of Housing and Urban Development, Treasury Task Force on Predatory Lending. Curbing Predatory Home Mortgage Lending. Washington, DC: Government Printing Office, 2000. http://www.huduser.org/Publications/pdf/treasrpt.pdf.
United States General Accounting Office. Government Sponsored Enterprises the Government’s Exposure to Risks: Report to Congress. Publication No. GAO/GGD-90-97, 1990. http://archive.gao.gov/d23t8/142017.pdf.
United States Government Accountability Office. Fannie Mae and Freddie Mac: Analysis of Options for Revising the Housing Enterprises’ Long-term Structures. GAO -09-782, 2009. http://www.gao.gov/assets/300/295025.pdf.
United States Government Accountability Office. Housing Government-Sponsored Enterprises: A New Oversight Structure Is Needed. GAO-05-576T, 2005. http://www.gao.gov/assets/120/111562.pdf.
United States Government Accountability Office. Consumer Protection: Federal and State Agencies Face Challenges in Combating Predatory Lending. GAO-04-280, 2004. http://www.gao.gov/new.items/d04280.pdf.
United States Government Accountability Office. A Framework for Strengthening GSE Governance and Oversight. GAO-04-269T, 2004. http://www.gao.gov/assets/120/110575.pdf.
United States Government Accountability Office. Housing Enterprises: The Roles of Fannie Mae and Freddie Mac in the U.S. Housing Finance System. GAO/T-GGD-00-182, 2000. http://www.gao.gov/assets/110/108603.pdf.
United States Government Accountability Office. Federal Housing Enterprises: HUD’s Mission Oversight Needs to Be Strengthened. Publication No. GAO/GGD-98-173, 1998. http://www.gao.gov/archive/1998/gg98173.pdf.
Van Order, Robert. “The Structure and Evolution of American Secondary Mortgage Markets, with Some Implications for Developing Markets.” International Union for Housing Finance 16, no. 1 (2001): 16-36. http://www.housingfinance.org/uploads/Publicationsmanager/0109_Evo.pdf.
Weiss, Eric. “Fannie Mae’s and Freddie Mac’s Financial Problems: Frequently Asked Questions.” Report RS22916, Congressional Research Service Report for Congress, Washington, DC, August 4, 2008. http://www.policyarchive.org/handle/10207/bitstreams/20152.pdf.
Weiss, Eric. “GSE Reform: A New Affordable Housing Fund.” Report RS22336, Congressional Research Service Report for Congress, Washington, DC, November 28, 2005.
Weiss, Eric. Congressional Research Service Report for Congress, Limiting Fannie Mae’s and Freddie Mac_s Portfolio Size (RS22307) October 21, 2005
Zigas, Barry. “Re-engineering the Mortgage Finance System: Charting a Future Course for the Secondary Market.” Consumer Federation of America, Washington, DC, December 2, 2009.
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