ABSTRACT
The chapter discusses the role of government-sponsored enterprises (GSEs) as a policy tool in the United States. Each GSE was created to deal with perceived shortcomings in financial markets. GSEs differ from other federal credit instruments in that GSEs are privately owned institutions but with charters that limit their activities to a specified public purpose. The chapter also presents an overview of the creation and evolution of each GSE, discusses an assessment of current policy issues regarding GSEs, and analyzes their effectiveness and current utility as a policy tool. It further intents to link the GSEs via evaluation efforts to the current thinking on the future of GSEs as a policy tool. In this way, the chapter provides an understanding of GSEs as a rather unique policy tool that has been used on only limited occasions, but with immense financial and political implications.
