Privatizing Federal Credit Programs Why Sallie Mae - School of 私有化的联邦信贷计划，为什么萨莉Mae学院.doc

Privatizing Federal Credit Programs: Why Sallie Mae? Abstract The federal government plays a critical role in the secondary market for domestic lending, linking the capital of private investors, through financial institutions, with a variety of end borrowers–notably students, farmers, and homeowners. Government-sponsored enterprises (GSEs) design, market and issue the securities that channel capital to these privileged borrowers–a function that accounted for over $440 billion dollars in capital flows in 2000. One of the largest secondary market intermediaries, the Student Loan Marketing Association (SLMA or Sallie Mae), is scheduled to be wholly private by September 30, 2008. This structural change transfers a substantial amount of financial risk from the federal government to private sector borrowers. What explains the choice and pace of privatization in this market? To begin to identify distinctive features of Sallie Mae that permitted or abetted privatization, we investigate the structure, growth, and related capital market innovations of three government-sponsored enterprises. The case of Sallie Mae is an instructive, yet poorly understood, example of how the federal government can and does leverage private sector assets and incentives to achieve public policy missions. Kevin CorderSusan HoffmanDepartment of Political ScienceWestern Michigan University1903 W MichiganKalamazoo, MI 49008 Prepared for presentation at the 6th National Public Management Conference.Bloomington, IndianaOctober 2001 Introduction The federal government relies upon a number of privately owned, congressionally chartered corporations to ensure a flow of capital to particular categories of domestic borrowers, thus pursuing public policy priorities by channeling private investment. These corporations have come to be called government-sponsored enterprises (GSEs) as observers sought a category for a group of similar institutions created by Congress on an ad hoc basis over time