Page "Government-owned corporation" Paragraph 217

The government-sponsored enterprises ( GSEs ) are a group of financial services corporations created by the United States Congress.

The United States GSEs are private corporations owned by their stockholders, rather than government-owned corporations.

Their primary function is to generate profits for their stockholders, but they are structured and regulated by the US government to enhance the availability and reduce the cost of credit to targeted borrowing sectors.

Congress created the first GSE in 1916 with the creation of the Farm Credit System ; it initiated GSEs in the home finance segment of the economy with the creation of the Federal Home Loan Banks in 1932 ; and it targeted education when it chartered Sallie Mae in 1972 ( although Congress allowed Sallie Mae to relinquish its government sponsorship and become a fully private institution via legislation in 1995 ).

The residential mortgage borrowing segment is by far the largest of the borrowing segments in which the GSEs operate.

Together, the three mortgage finance GSEs ( Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks ) have several trillion dollars of on-balance sheet assets.

The federal government possesses warrants which, if exercised, would allow them to take a 79. 9 % ownership share in the companies.

The federal government has not currently exercised these warrants.