Government Sponsored Enterprise

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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 $30 billion allocation from each of the two government-sponsored enterprises (GSEs) includes authority to exceed the cap for loans on affordable housing properties and for assets with a sustainable component.
The bill would prohibit the Federal Housing Finance Agency (FHFA) or other regulators from setting arbitrary limitations on the volume or scope of multifamily housing mortgages backed by Government-Sponsored Enterprises (GSEs) like Fannie Mae and Freddie Mac.
The settlement addresses claims FHFA brought in a lawsuit against Morgan Stanley that the company violated federal and state securities laws and common law fraud with regard to private-label securities (PIS) purchased by the government-sponsored enterprises (GSEs).
The Federal Housing Administration, which oversees the government-sponsored enterprises, estimated that approximately 35 percent of repurchases that require lenders to buy back a loan are tied to faulty appraisals.
Valentin Bolotnyy, Federal Reserve Board of Governors, "The Government-Sponsored Enterprises and the Mortgage Crisis: The Role of the Affordable Housing Goals"
As bills like these are reviewed and potentially implemented, the market as a whole can shift further to a more neutral balance with private capital re-assuming some of the securities burden acquired by government-sponsored enterprises in recent years.
But relatively few homeowners will qualify and benefit from the program, and it is American taxpayers who will be floating them the money, through those infamous government-sponsored enterprises, Fannie Mae and Freddie Mac.
Federal Housing Finance Agency filed lawsuits Friday against 17 financial institutions for damages caused by their illegal sales of mortgage-backed securities to government-sponsored enterprises Fannie Mae and Freddie Mac, the analysts said.
Previously, Watson was a managing director of JPMorgan's securities business in New York, leading the company's investment and commercial banking operations for US government-sponsored enterprises, including FHLBs, since 1995.
Under the MBS purchase program, the Federal Reserve said in late December that it will begin purchasing MBS backed by the government-sponsored enterprises Fannie Mae, Freddie Mac, and Ginnie Mae.
This marks the second consecutive month Ginnie Mae MBS issuances surpassed government-sponsored enterprises Fannie Mae and Freddie Mac.
Where do government-sponsored enterprises, like Fannie Mae and Freddie Mac, appear in the GDP accounts?

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