Government-sponsored enterprise (GSE) Definition Bankrate.com Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content
Government-sponsored enterprise GSE
Government-sponsored enterprises help keep cash flowing. Bankrate explains. What is a government-sponsored enterprise GSE
A government-sponsored enterprise (GSE) is an organization chartered by Congress for the purpose of providing people with financial services. GSEs frequently deal with mortgages, including guaranteeing, holding, or selling them, but also provide to agricultural businesses and people seeking . Today, the GSEs are publicly traded companies, but they continue to uphold their charter. Deeper definition
Government-sponsored enterprises were created in the early 20th century to “improve the efficiency of the capital markets.” They do this by extending credit to underprivileged communities through private industry in return for low . GSEs are not agencies of the government, although their business operations are strongly defined by the government’s priorities. Such organizations fall roughly into three categories: Agriculture: In fact, the very first GSE was the Federal Loan Bank, which was established in 1916 to provide credit to farmers throughout the country. The Federal Loan Bank was part of a Farm Credits System that continues to guarantee loans to support agriculture. Mortgages: The Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, known as and , respectively, are GSEs that increase the liquid cash available for mortgages by buying them from banks and selling them to investors. While Fannie Mae and Freddie Mac don’t issue mortgages directly, a cooperative GSE system known as the Federal Home Loan Banks does write loans. Since 2008, these organizations have been regulated by the Federal Housing Finance Agency. Education: The Student Loan Marketing Association, or , used to be sponsored by the government, but in the mid-1990s it became a fully private corporation. Sallie Mae is the country’s largest of student loans, which since 2014 it has managed through a spin-off company called Navient. In all these industries, GSEs create by either directly adding cash into markets, as with loans they write, or by stabilizing the flow of that already exists by reducing the risk that banks incur when they lend money. GSEs are for-profit institutions, and some make money by securitizing the loans they own and selling them to investors, or by trading in debt markets at the low interest rates given them by the government. However, GSEs generally provide access to funds to ordinary Americans who otherwise would struggle to participate in capital markets. Looking for a personal loan? . Government-sponsored enterprise GSE example
Old MacDonald has a farm. Banks near his farm used to be wary about extending credit to the farmers nearby, including Old Mac. But since 1971, when the Farm Credit Act came into law, he has been able to get loans for his farm through one of the banks that belongs to the Farm Credit System, a GSE administered by the Farm Credit Administration. With the extra cash on hand, Old Mac is able to build a new barn, and hire three new workers, thus increasing the amount of capital flowing through his community. More From Bankrate
Knowing bank holiday schedules can help you avoid delays on necessary transactions. A bank reconciliation statement helps you track business finances and catch errors. Looking for a nearby Chase Bank location or ATM? Here’s how to find the closest ones. Walmart MoneyCenter offers services like a checking account and money transfers. Walk away with stacks of cash just for opening a checking or savings account. Review ratings methodology For consumers looking to find the best bank or credit union for their individual banking needs, the choices are numerous and can seem overwhelming. Finding the right mix of high [...] Steer clear of these common bank fees to keep your accounts from taking a hit. These are the cities where ATM fees will put the biggest dent in your wallet. A notary public witnesses and validates the signing of important documents.