Business
Congress established GSEs to improve the efficiency of capital markets and to overcome market imperfections which prevent funds from moving easily from suppliers of funds to areas of high loan demand. This is primarily done by some form of guarantee that limits the risk of capital losses to those supplying funds. Presently, GSEs primarily act as financial intermediaries to assist lenders and borrowers in housing and agriculture.
In addition, the GSEs created a secondary market in loans through guarantees, bonding and securitization. This has allowed primary market debt issuers to increase loan volume and decrease the risks associated with individual loans. This also provides standardized instruments (securitized securities) for investors.
Read more about this topic: Government-sponsored Enterprise
Famous quotes containing the word business:
“My business is words. Words are like labels,
or coins, or better, like swarming bees.”
—Anne Sexton (1928–1974)
“Really to succeed, we must give; of our souls to the soulless, of our love to the lonely, of our intelligence to the dull. Business is quite as much a process of giving as it is of getting.”
—Alice Foote MacDougall (1867–1945)
“Young men of the fairest promise, who begin life upon our shores, inflated by the mountain winds, shined upon by all the stars of God, find the earth below not in unison with these,—but are hindered from action by the disgust which the principles on which business is managed inspire, and turn drudges, or die of disgust,—some of them suicides.”
—Ralph Waldo Emerson (1803–1882)