Government-Sponsored Enterprise

Government-Sponsored Enterprise

US government sponsored enterprises (GSEs) are institutions that operate under the auspices of the Federal government but which whose obligations are not explicitly guaranteed by the Federal government. The Federal National Mortgage Association (known as Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), the Federal Home Loan Bank System, and the Farm Credit System are all GSEs, set up by Congress to develop mortgage and agricultural lending. Even though the government does not guarantee the securities, it has provided GSEs with financial assistance in an emergency. This was aptly illustrated when Fannie Mae and Freddie Mac were bailed out during the global financial crisis.

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