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Federal & Congressional Oversight of the GSEs

To assure that the GSEs continue to fulfill their public mission of reducing borrowing costs for certain groups, their activities are monitored and periodically reviewed by their respective regulators and congressional oversight committees. Recent changes in the GSE oversight structure include the creation of the Federal Housing Financing Board in 2008 as the regulator of the housing GSEs. In addition, as part of President Obama's Financial Regulatory Reform proposal, the Treasury and HUD will develop recommendations for the future of housing GSEs.

Public criticism of the GSEs can obviously create some level of political uncertainty and price volatility in these markets. This “political headline” risk has so far never affected the current credit of outstanding GSE debt, but it can impact trading spreads and temporarily disrupt liquidity in the GSE market.

Investors should therefore remain cognizant that, as large as the GSE debt market has become, Congress and other federal oversight authorities will continue to play a key role in assuring that the GSEs do their utmost to fulfill their missions, maintain their high credit ratings and adhere to their charters.

At times this may create a certain amount of short-term volatility in these markets. Yet, responsible federal oversight ultimately helps strengthen the long-term viability of the GSE debt market.


All information and opinions contained in this publication were produced by the Securities Industry and Financial Markets Association from our membership and other sources believed by the Association to be accurate and reliable. By providing this general information, the Securities Industry and Financial Markets Association makes neither a recommendation as to the appropriateness of investing in fixed-income securities nor is it providing any specific investment advice for any particular investor. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and sources may be required to make informed investment decisions.