Series 7: 2.14.1.1. Government-Sponsored Enterprises

2.14.1.1. Government-Sponsored Enterprises

Government-Sponsored Enterprises (GSEs) are privately owned, corporate entities that are chartered by the federal government. Their purpose is to direct funds into areas of national importance where borrowing is in high demand but lending may be scarce.

GSEs are given certain privileges not provided to private corporations. They do not have to pay state and local taxes and are exempt from SEC oversight. They have access to a standing line of credit in excess of $2 billion, and their securities are issued and paid through the facilities of the Federal Reserve Bank. While loans by GSEs have never been backed by an explicit guarantee of the federal government, they