Summary: Congress created government-sponsored enterprises (GSE) to help make credit available to certain sectors of the economy, such as housing and agriculture, in which the private market was perceived as not effectively meeting credit needs. GSEs receive benefits from their federal charters that help them fulfill their missions. In this report, GAO presents analysis of information on nonmortgage investment activities at three GSEs: the Federal Home Loan Mortgage Corporation (Freddie Mac), the Federal National Mortgage Association (Fannie Mae), and the Federal Agricultural Mortgage Corporation (Farmer Mac). Specifically, GAO examines (1) the enterprises' legal authority for making nonmortgage investments and federal regulatory oversight of that activity; (2) the relationship among nonmortgage investment policies and practices and missions of the enterprises; and (3) the extent to which the enterprises have undertaken nonmortgage investments for arbitrage profits--using the funding advantage from government sponsorship to purchase nonmortgage investments that generate profits. GAO also provides information on the enterprises' compensation structures for directors and senior managers and whether these structures create incentives to make nonmortgage investments.
