government-sponsored enterprise

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.

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government-sponsored enterprise (GSE)

One of a group of financial services organizations created by the government. Some are owned by the federal government, some are owned by private individuals,and some are owned by corporations that use their services.All of them enjoy exceptionally low loan rates and exceptionally high sales prices for their bonds and other debt instruments because of the implicit backing of the U.S.government.They include

• Federal Home Loan Banks. Owned by over 8,000 community financial institutions that use the services of the FHLBs.
• Federal Home Loan Mortgage Corporation (Freddie Mac). A stockholder-owned, publicly traded corporation listed on the New York Stock Exchange as FRE.
• Federal National Mortgage Association (Fannie Mae). A stockholder-owned, publicly traded corporation listed on the New York Stock Exchange as FNM.
• Government National Mortgage Association (Ginnie Mae). A wholly owned (by the government) corporation within the Department of Housing and Urban Development.
• Farm Credit Bank. Federally chartered and borrower-owned financial institutions.
• Federal Agricultural Mortgage Association (Farmer Mac). A stockholder-owned, publicly traded corporation listed on the New York Stock Exchange as AGM.
• Student Loan Marketing Corporation (Sallie Mae). A stockholder-owned, publicly traded corporation listed on the New York Stock Exchange as SLM.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.