Each depositor insured to at least $250,000 per insured bank

Vol. 8 No. 2 - Article II - Published: June 1995 - Summary

Government-Sponsored Enterprises: Their Role as Conduits of Credit and as Competitors of Banking Institutions
by Panos Konstas

Government-sponsored enterprises, GSEs, are privately owned firms that have been chartered by Congress to accomplish public purposes. With current credit obligations exceeding $1.5 trillion, they are well-established participants in the nation's money and capital markets. The first GSE participation in these markets occurred in 1916, when the Federal Land Banks were created. The establishment of the latest entry in 1988, Farmer Mac, suggests that the federal government continues to regard the GSE vehicle as an important instrument of public policy. This article examines the operations and growing importance of GSEs in the financial system, and discusses how these entities have affected the competitive landscape for banking institutions.