Wednesday, August 26, 2009

Federal agency securities

for at least the past 50 years, the federal government has attempted to aid certain sectors of the economy which appear to have an unusually difficult time raising funds in the nation‘s money and capital markets. These so-called disadvantaged sectors include agriculture, housing, and small businesses. Dominated by smaller, less-credit-worthy borrowers, these sectors allegedly get "shoved aside" in the race for scare funds by large corporate borrowers and government, especially in periods of tight money. Beginning in the 1920s and 30s, the federal government created several federal agencies to make direct government loans to, or guarantee private loans for, disadvantaged borrowers. today, these federal credit agencies are large enough and, with the government‘s blessing, financially sound enough to compete successfully for funds in the open market and channel those funds to areas of critical social need.

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