Government-Sponsored Enterprises

Pursuant to a legislative requirement, GAO reviewed the risks undertaken by government-sponsored enterprises (GSE).

GAO found that: (1) GSE have been generally successful in minimizing losses from risks, and there were no risk control problems or financial conditions that would indicate a current threat to the viability of GSE; (2) the government supervises some GSE but not others; (3) certain Farm Credit System (FCS) institutions remain weak; (4) because risk control mechanisms cannot eliminate all risk, the federal government and GSE need to be concerned with protecting against unexpected adverse events; (5) except for short-term rate increases, creditors have treated GSE securities as very safe investments; (6) the government's primary interest is achieving specific public policy purposes, while GSE owners and managers are primarily concerned with maximizing shareholder value; and (7) unless the government oversees GSE risk-taking and capital levels, it has little capability to prevent taxpayer losses that may arise from GSE failure.