More Supervision of Lenders Needed

THE JOURNAL RECORD, August 17, 1990 | Go to article overview

More Supervision of Lenders Needed


WASHINGTON - Federal auditors said that the government should sharply increase the regulation and supervision of government-sponsored enterprises that lend money to home buyers and college students or else taxpayers might have to foot the bill in the future.

In a report to Congress on Wednesday, the General Accounting Office said the ``ambiguous status'' of such lenders - ``neither fully private nor clearly public'' - exposes the government to potentially large financial risks, as in the savings and loan industry.

The report said the Department of Housing and Urban Development had been passive in monitoring two such lenders, the Federal National Mortgage Association, or Fannie Mae, and the Federal Home Loan Mortgage Corp., or Freddie Mac.

Also, it said, the Student Loan Marketing Association, known as Sallie Mae, ``has no federal regulator to oversee the safety and soundness of its financial activities.''

The General Accounting Office, a congressional investigative agency, said the government should treat such hybrid entities more like commercial banks and insist that they increase their capital with the risks they take.

Leland C. Brendsel, the chairman of the Federal Home Loan Mortgage Corp., responded that the report ``understates both the financial strength of Freddie Mac and the importance'' of its mission to provide credit for home buyers.

``We have a 20-year unbroken string of profits,'' he said, and Freddie Mac will not become a liability to the government unless there is ``a nationwide economic catastrophe worse than the Great Depression.''

Similarly, David O. Maxwell, Fannie Mae's chairman, said his congressionally chartered corporation had ``never cost taxpayers a penny.'' In fact, he said, ``over the last three years, we paid some $908 million in Federal income taxes.''

Maxwell added that he welcomed ``close scrutiny,'' but he denied that the special status of a government-sponsored enterprise created ``incentives for management to take excessive risks.''

Edward A. Fox, the president of the Student Loan Marketing Association, said the report unfairly reinforced the ``perception among investors that the federal government will act as a credit backstop for all government-sponsored enterprises.''

He said he saw no need to impose ``an outside regulator to monitor and evaluate the adequacy of Sallie Mae's capital.''

The General Accounting Office acknowledged that ``Sallie Mae's credit standing is quite high, and that there is no evidence to suggest that Sallie Mae represents an imminent risk of failure to the government.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

More Supervision of Lenders Needed
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.