Summary: Congress originally created government-sponsored enterprises (GSE) to enhance the credit available to home buyers, farmers, students, and colleges. Congress established GSEs as federally chartered, but privately owned and operated corporations, limited their activities to economic sectors deemed worthy of public support, and gave them certain advantages to help accomplish their missions. Today, the outstanding volume of federally assisted GSE credit is large and rapidly increasing. The volume of GSE credit more than doubled, to almost $1.8 trillion, between 1990 and 1996, and has steadily increased as a percentage of the total credit outstanding in the economy. By contrast, the share of total net credit accounted for by federal direct and guaranteed loans has declined substantially. Because GSEs involve significant risks and potential costs to taxpayers, GAO has done several major evaluations of the effectiveness of various GSE regulators and has developed criteria to judge the effectiveness of regulation as well as criteria that policymakers could use to evaluate proposals to expand the types of products or services that GSEs currently offer.
