- Hardcover: 225 pages
- Publisher: Harpercollins (April 1991)
- Language: English
- ISBN-10: 0887304192
- ISBN-13: 978-0887304194
There are few books more helpful in understanding the issues behind the current discussion of the future of Freddie Mac and Fannie Mae than Thomas Stanton's book: A State of Risk: Will Government-Sponsored Enterprises (GSEs) Be the Next Financial Crisis? The book is well researched and Tom writes from the perspective of one actively involved in the Congressional debate over reform and regulation of GSEs. This book is a classic in public administration and it deserves to be updated in view of the more recent history.
The book is organized into these chapters:
1. Introduction: GSEs and Thrift Institutions.
2. The Hidden Costs and Public Benefits of GSEs.
3. How GSEs work.
4. Enterprises in the Marketplace.
5. The Politics of Enterprise Lending.
6. Enterprises as Private Financial Institutions.
7. The Implicit Federal Guarantee as a Source of Risk Exposure.
8. Supervising Enterprise Safety and Soundness.
9. Enterprise Accountability.
Appendices: Law, Cases, and Other Legal Sources on GSEs.
"A GSE is a privately owned, federally chartered financial institution with nationwide scope and specialized lending powers that benefits from an implicit federal guarantee to enhance its ability to borrow money" (p. 17). Stanton clarifies this definition with two insights: (1) "An enterprise raises money the way the federal government does but it lends that money as a private institution…" and (2) "An enterprise is a privately owned and controlled institution with a public purpose" (p. 39). These insights sound simple, but in practice many analysts have trouble understanding the business function of the GSEs.
by Dr. Stephen W. Hiemstra, Centreville, VA