(This abstract was borrowed from another version of this item.)"> (This abstract was borrowed from another version of this item.)">
[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ste/nystbu/04-01.html
   My bibliography  Save this paper

Regulating Housing GSEs: Thoughts on Institutional Structure and Authorities

Author

Listed:
  • Lawrence J. White
  • W. Scott Frame
Abstract
Many of the benefits that the housing government-sponsored enterprises (GSEs) transmit to homebuyers stem from an implied federal guarantee arising from the GSEs? charter benefits and past supervisory forbearance. But this implicit guarantee also represents a risk to taxpayers if one of these GSEs?Fannie Mae, Freddie Mac, or the Federal Home Loan Bank (FHLB) System?becomes insolvent and the government provides financial assistance. ; In the wake of a $5 billion accounting restatement by Freddie Mac in 2003, concerns about taxpayer liability associated with the housing GSEs have led to various legislative proposals to reorganize their regulatory oversight. This article discusses these proposals, drawing on lessons from U.S. banking regulation to identify and evaluate the points of contention. ; The legislative proposals generally pertain to institutional design (where the safety-and-soundness regulator is located, how it is funded, and whom it should supervise) and institutional authorities (for example, discretion to alter capital requirements and the ability to appoint conservators and receivers). ; With respect to institutional design, the authors conclude that there may not be a clearly dominant approach. In regard to institutional authorities, the authors recommend that the safety-and-soundness regulator have responsibility for approving new programs and other activities, the discretion to set both minimum and risk-based capital requirements, receivership authority, and other enforcement authorities comparable to the federal banking agencies.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Lawrence J. White & W. Scott Frame, 2004. "Regulating Housing GSEs: Thoughts on Institutional Structure and Authorities," Working Papers 04-01, New York University, Leonard N. Stern School of Business, Department of Economics.
    • Handle: RePEc:ste:nystbu:04-01
    as

    Download full text from publisher

    File URL: http://w4.stern.nyu.edu/economics/docs/workingpapers/2004/04-01White.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Hugh Cohen, 1993. "Beyond duration: measuring interest rate exposure," Economic Review, Federal Reserve Bank of Atlanta, issue Mar, pages 23-31.
    2. Lawrence White, 2003. "Focusing on Fannie and Freddie: The Dilemmas of Reforming Housing Finance," Journal of Financial Services Research, Springer;Western Finance Association, vol. 23(1), pages 43-58, February.
    3. Rosen, Richard J, 2003. "Is Three a Crowd? Competition among Regulators in Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(6), pages 967-998, December.
    4. Lawrence J. White, 2003. "What Constitutes Appropriate Disclosure for a Financial Conglomerate?," Working Papers 03-03, New York University, Leonard N. Stern School of Business, Department of Economics.
    5. Ben Craig & James Thomson, 2003. "Federal Home Loan Bank Lending to Community Banks: Are Targeted Subsidies Desirable?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 23(1), pages 5-28, February.
    6. Dwight Jaffee, 2003. "The Interest Rate Risk of Fannie Mae and Freddie Mac," Journal of Financial Services Research, Springer;Western Finance Association, vol. 24(1), pages 5-29, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lawrence J. White & W. Scott Frame, 2004. "Emerging Competition and Risk-Taking Incentives at Fannie Mae and Freddie Mac," Working Papers 04-02, New York University, Leonard N. Stern School of Business, Department of Economics.
    2. Stojanovic, Dusan & Vaughan, Mark D. & Yeager, Timothy J., 2008. "Do Federal Home Loan Bank membership and advances increase bank risk-taking?," Journal of Banking & Finance, Elsevier, vol. 32(5), pages 680-698, May.
    3. W. Scott Frame & Diana Hancock & Wayne Passmore, 2012. "Federal Home Loan Bank Advances and Commercial Bank Portfolio Composition," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44(4), pages 661-684, June.
    4. W. Scott Frame, 2016. "The federal home loan bank system and U.S. housing finance," FRB Atlanta Working Paper 2016-2, Federal Reserve Bank of Atlanta.
    5. W. Scott Frame & Andreas Fuster & Joseph Tracy & James Vickery, 2015. "The Rescue of Fannie Mae and Freddie Mac," Journal of Economic Perspectives, American Economic Association, vol. 29(2), pages 25-52, Spring.
    6. W. Scott Frame & Lawrence J. White, 2007. "Charter Value, Risk-Taking Incentives, and Emerging Competition for Fannie Mae and Freddie Mac," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(1), pages 83-103, February.
    7. Lawrence J. White, 2007. "Reducing Barriers to Services Trade: The U.S. Case," Working Papers 07-7, New York University, Leonard N. Stern School of Business, Department of Economics.
    8. W. Scott Frame & Lawrence J. White, 2005. "Fussing and Fuming over Fannie and Freddie: How Much Smoke, How Much Fire?," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 159-184, Spring.
    9. Robert Eisenbeis & W. Frame & Larry Wall, 2007. "An Analysis of the Systemic Risks Posed by Fannie Mae and Freddie Mac and An Evaluation of the Policy Options for Reducing Those Risks," Journal of Financial Services Research, Springer;Western Finance Association, vol. 31(2), pages 75-99, June.
    10. W. Scott Frame & Lawrence J. White, 2010. "The Industrial Organization of the U.S. Single-Family Residential Mortgage Industry," Working Papers 10-11, New York University, Leonard N. Stern School of Business, Department of Economics.
    11. Lawrence J. White & W. Scott Frame, 2009. "The Federal Home Loan Bank System: Current Issues in Perspective," Working Papers 09-18, New York University, Leonard N. Stern School of Business, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Robert DeYoung & William Hunter & Gregory Udell, 2004. "The Past, Present, and Probable Future for Community Banks," Journal of Financial Services Research, Springer;Western Finance Association, vol. 25(2), pages 85-133, April.
    2. W. Scott Frame & Lawrence J. White, 2005. "Fussing and Fuming over Fannie and Freddie: How Much Smoke, How Much Fire?," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 159-184, Spring.
    3. Wall, Larry D. & Eisenbeis, Robert A. & Frame, W. Scott, 2005. "Resolving large financial intermediaries: Banks versus housing enterprises," Journal of Financial Stability, Elsevier, vol. 1(3), pages 386-425, April.
    4. Jason Thomas & Robert Order, 2020. "Fannie Mae and Freddie Mac: Risk-Taking and the Option to Change Strategy," The Journal of Real Estate Finance and Economics, Springer, vol. 60(3), pages 270-307, April.
    5. Mikkel Svenstrup & Soren Willemann, 2006. "Reforming Housing Finance - Perspectives from Denmark," Journal of Real Estate Research, American Real Estate Society, vol. 28(2), pages 105-130.
    6. Gordian Rättich & Kim Clark & Evi Hartmann, 2011. "Performance measurement and antecedents of early internationalizing firms: A systematic assessment," Working Papers 0031, College of Business, University of Texas at San Antonio.
    7. Richard K. Green & Susan M. Wachter, 2005. "The American Mortgage in Historical and International Context," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 93-114, Fall.
    8. Chung, Hon-Lun & Chan, Wai-Sum, 2010. "Impact of credit spreads, monetary policy and convergence trading on swap spreads," International Review of Financial Analysis, Elsevier, vol. 19(2), pages 118-126, March.
    9. Deborah Lucas & Robert McDonald, 2010. "Valuing Government Guarantees: Fannie and Freddie Revisited," NBER Chapters, in: Measuring and Managing Federal Financial Risk, pages 131-154, National Bureau of Economic Research, Inc.
    10. Mr. Itai Agur & Mr. Sunil Sharma, 2013. "Rules, Discretion, and Macro-Prudential Policy," IMF Working Papers 2013/065, International Monetary Fund.
    11. Lawrence White, 2004. "Mortgage Backed Securities: Another Way to Finance Housing," Working Papers 04-14, New York University, Leonard N. Stern School of Business, Department of Economics.
    12. William James Adams & Ben R. Craig & James B. Thompson, 2006. "Does Small Business Administration guaranteed lending improve economic performance in lowincome areas?," Proceedings: Community Affairs Dept. Conferences, Federal Reserve Bank of Kansas City, issue Jul, pages 55-85.
    13. Hans Degryse & Sanja Jakovljević & Steven Ongena, 2015. "A Review of Empirical Research on the Design and Impact of Regulation in the Banking Sector," Annual Review of Financial Economics, Annual Reviews, vol. 7(1), pages 423-443, December.
    14. Lawrence J. White, 2007. "Should Wal-Mart, Real Estate Brokers, and Banks Be in Bed Together? A Principles-Based Approach to the Issues of the Separation of Banking and Commerce," Working Papers 07-20, New York University, Leonard N. Stern School of Business, Department of Economics.
    15. Dwight M. Jaffee, 2006. "Controlling the Interest Rate Risk of Fannie Mae and Freddie Mac," NFI Policy Briefs 2006-PB-04, Indiana State University, Scott College of Business, Networks Financial Institute.
    16. James A. Clouse & David H. Small, 2004. "The scope of monetary policy actions authorized under the Federal Reserve Act," Finance and Economics Discussion Series 2004-40, Board of Governors of the Federal Reserve System (U.S.).
    17. Gillian Burgess & Wayne Passmore & Shane M. Sherlund, 2005. "The effect of housing government-sponsored enterprises on mortgage rates," Finance and Economics Discussion Series 2005-06, Board of Governors of the Federal Reserve System (U.S.).
    18. Duca, John V. & Muellbauer, John & Murphy, Anthony, 2010. "Housing markets and the financial crisis of 2007-2009: Lessons for the future," Journal of Financial Stability, Elsevier, vol. 6(4), pages 203-217, December.
    19. Abhishek Srivastav & Francesco Vallascas, 2022. "Small Business Lending and Regulation for Small Banks," Management Science, INFORMS, vol. 68(10), pages 7742-7760, October.
    20. W. Scott Frame & Lawrence J. White, 2004. "Emerging competition and risk-taking incentives at Fannie Mae and Freddie Mac," Proceedings 922, Federal Reserve Bank of Chicago.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ste:nystbu:04-01. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Amanda Murphy (email available below). General contact details of provider: https://edirc.repec.org/data/ednyuus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.