IDEAS home Printed from https://ideas.repec.org/p/nfi/nfipbs/2006-pb-09.html
   My bibliography  Save this paper

Privatizing a Government Sponsored Enterprise: Lessons from the Sallie Mae Experience

Author

Listed:
  • Michael J. Lea

Abstract

Government Sponsored Enterprises (GSEs) are government-chartered, special purpose corporations. They have been created to advance foster funding in a number of areas including housing, education and agriculture. Over the past 2 decades, the privatization has been proposed. There are many challenges associated with privatizing large, complex and politically powerful entities. Fortunately, a model for such an action exists. The Student Loan Marketing Association (Sallie Mae) was privatized through an Act of Congress in 1996. Sallie Mae re-organized under a holding company charter with a GSE and non-GSE subsidiaries. The GSE activities were limited and terminated on December 29, 2004 almost 4 years ahead of schedule. This paper describes the rationale for privatization, the constraints to the process, the reorganization structure and the effect of privatization on Sallie Mae and the student loan market. The key elements of the privatization process and structure are highlighted with reference to the applicability to Housing GSEs today.

Suggested Citation

  • Michael J. Lea, 2006. "Privatizing a Government Sponsored Enterprise: Lessons from the Sallie Mae Experience," NFI Policy Briefs 2006-PB-09, Indiana State University, Scott College of Business, Networks Financial Institute.
    • Handle: RePEc:nfi:nfipbs:2006-pb-09
    as

    Download full text from publisher

    File URL: http://www.indstate.edu/business/sites/business.indstate.edu/files/Docs/2006-PB-09_Lea.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. William Haraf, 1988. "Restructuring Banking & Financial Services in America," Books, American Enterprise Institute, number 917739, September.
    Full references (including those not matched with items on IDEAS)

    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 N. Collender & Samantha Roberts & Valerie L. Smith, 2007. "Signals from the Markets for Fannie Mae and Freddie Mac Subordinated Debt," FHFA Staff Working Papers 07-04, Federal Housing Finance Agency.
    2. Winkler, Adalbert, 2013. "Der lender of last resort vor Gericht," Frankfurt School - Working Paper Series 206, Frankfurt School of Finance and Management.
    3. Makoto (M.) Watanabe & Tarishi Matsuoka, 2019. "Banking Panics and the Lender of Last Resort in a Monetary Economy," Tinbergen Institute Discussion Papers 19-002/V, Tinbergen Institute.
    4. Mark A. Carlson & Burcu Duygan-Bump & William R. Nelson, 2015. "Why Do We Need Both Liquidity Regulations and a Lender of Last Resort? A Perspective from Federal Reserve Lending during the 2007-09 U.S. Financial Crisis," Finance and Economics Discussion Series 2015-11, Board of Governors of the Federal Reserve System (U.S.).
    5. Vincent Bignon & Marc Flandreau & Stefano Ugolini, 2012. "Bagehot for beginners: the making of lender‐of‐last‐resort operations in the mid‐nineteenth century," Economic History Review, Economic History Society, vol. 65(2), pages 580-608, May.
    6. Michael D. Bordo, 1989. "Introduction to "Money, History, and International Finance: Essays in Honor of Anna J. Schwartz"," NBER Chapters, in: Money, History, and International Finance: Essays in Honor of Anna J. Schwartz, pages 1-12, National Bureau of Economic Research, Inc.
    7. David Folkerts-Landau & Peter M. Garber, 1992. "The European Central Bank: A Bank or a Monetary Policy Rule," NBER Working Papers 4016, National Bureau of Economic Research, Inc.
    8. Hans Gersbach & Volker Hahn, 2011. "Modeling Two Macro Policy Instruments - Interest Rates and Aggregate Capital Requirements," CESifo Working Paper Series 3598, CESifo.
    9. van Eeghen, Piet-Hein, 2021. "Funding money-creating banks: Cash funding, balance sheet funding and the moral hazard of currency elasticity," International Review of Financial Analysis, Elsevier, vol. 76(C).
    10. David Folkerts-Landau, 1990. "The Case for International Coordination of Financial Policy," NBER Chapters, in: International Policy Coordination and Exchange Rate Fluctuations, pages 279-306, National Bureau of Economic Research, Inc.
    11. Olivier Jeanne & Charles Wyplosz, 2003. "The International Lender of Last Resort. How Large Is Large Enough?," NBER Chapters, in: Managing Currency Crises in Emerging Markets, pages 89-124, National Bureau of Economic Research, Inc.
    12. Eric Tymoigne, 2006. "Asset Prices, Financial Fragility, and Central Banking," Economics Working Paper Archive wp_456, Levy Economics Institute.
    13. Jean-Charles Rochet & Xavier Vives, 2004. "Coordination Failures and the Lender of Last Resort: Was Bagehot Right After All?," Journal of the European Economic Association, MIT Press, vol. 2(6), pages 1116-1147, December.
    14. repec:zbw:bofrdp:2000_003 is not listed on IDEAS
    15. Xavier Freixas, 2009. "Monetary policy in a systemic crisis," Oxford Review of Economic Policy, Oxford University Press, vol. 25(4), pages 630-653, Winter.
    16. Mei Li & Frank Milne & Junfeng Qiu, 2022. "Central bank screening, moral hazard, and the lender of last resort policy," Journal of Banking Regulation, Palgrave Macmillan, vol. 23(3), pages 244-264, September.
    17. Mei Li & Frank Milne & Junfeng Qiu, 2013. "Uncertainty in an Interconnected Financial System, Contagion," Working Papers 1304, University of Guelph, Department of Economics and Finance.
    18. John H. Boyd & Mark Gertler, 1993. "US Commercial Banking: Trends, Cycles, and Policy," NBER Chapters, in: NBER Macroeconomics Annual 1993, Volume 8, pages 319-377, National Bureau of Economic Research, Inc.
    19. Michael D. Bordo & Anna J. Schwartz, 2003. "Charles Goodhart's contributions to the history of monetary institutions," Chapters, in: Paul Mizen (ed.), Monetary History, Exchange Rates and Financial Markets, chapter 2, Edward Elgar Publishing.
    20. Michael D. Bordo, 1989. "The lender of last resort: some historical insights," Proceedings 234, Federal Reserve Bank of Chicago.
    21. Kornai, János & Maskin, Eric & Roland, Gérard, 2022. "A puha költségvetési korlát - II [The soft budget constraint II]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 94-132.

    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:nfi:nfipbs:2006-pb-09. 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: Ray Thomas (email available below). General contact details of provider: https://edirc.repec.org/data/nfinsus.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.