Government-sponsored enterprises (GSEs) are financial service corporations created by the U.S. Congress to ensure or enhance the flow of credit to certain sectors of the economy, such as housing and agriculture. The sector is composed of the Federal Home Loan Banks (FHLBs), the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), the Federal Agricultural Mortgage Corporation (Farmer Mac), the Farm Credit System, the Financing Corporation (FICO), and the Resolution Funding Corporation (REFCORP). The Student Loan Marketing Association, or Sallie Mae, was included until it was fully privatized in the fourth quarter of 2004.
This sector consists of a diverse group of enterprises, not only in terms of their mission, but also in terms of their relationship with the federal government. The FHLBs are a system of 12 regional banks that lend funds to U.S.-chartered depository institutions, credit unions, and life insurance companies. Both Freddie Mac and Fannie Mae, two agencies devoted to housing finance, were placed in conservatorship (a device used to maintain public confidence in an endangered financial institution) in September 2008; the conservator is the federal government, which legally controls both agencies. Farmer Mac is a private corporation that purchases and then securitizes loans on farms and farm land. The Farm Credit System is a network of borrower-owned lenders that makes loans to farmers and other rural concerns. The FICO and the REFCORP were established as a result of the 1980s savings and loans crisis to serve as financing vehicles for the Federal Savings and Loan Insurance Corporation Resolution Fund and the Resolution Trust Corporation, respectively. In the flow of funds accounts, securities issued by the GSEs are not included in government debt.
Note: Beginning in the first quarter of 2010, Freddie Mac and Fannie Mae moved almost all of their one to four-family mortgage pools on to their consolidated balance sheets in response to new accounting rules (Financial Accounting Standards Nos. 166 and 167). Some multifamily pools issued by those GSEs also were moved on to their balance sheets, as well as some pools of farm loans issued by Farmer Mac.