Government Sponsored Enterprise

(redirected from Federally sponsored agencies)

Government Sponsored Enterprise

A privately held or publicly traded company created by the U.S. Government for some purpose thought to benefit the American economy. For example, Freddie Mac was originally a GSE created to encourage homeownership among middle class and working class Americans. Because it is "sponsored" but not owned by the government, GSE stocks carry higher risk than, say, Treasury securities, which are backed by the full faith and credit of the United States. However, GSEs have an implicit guarantee that the government will not allow them to fail. Indeed, when Fannie Mae and Freddie Mac collapsed in 2008 they almost instantly received federal assistance.
References in periodicals archive ?
The company said the filing and the sale were necessitated by its deteriorating financial condition and the resulting concerns of the federally sponsored agencies -- GNMA, FNMA and FHLMC -- as well as private participants in the mortgaged-backed securities industry, and the company's inability to access the capital necessary to maintain its business.
In this environment, many financial and nonfinancial businesses, federally sponsored agencies, and state and local governments have concluded that active management of their interest rate, exchange rate, and other financial market risks is essential.
Diversified lenders, acting in part through other intermediaries, such as federally sponsored agencies, mostly filled the gap left by the thrift institutions.

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