Jump to ContentJump to Main Navigation
Measuring and Managing Federal Financial Risk$
Users without a subscription are not able to see the full content.

Deborah Lucas

Print publication date: 2010

Print ISBN-13: 9780226496580

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226496597.001.0001

Show Summary Details
Page of

PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 20 May 2022

Valuing Government Guarantees

Valuing Government Guarantees

Fannie and Freddie Revisited

(p.131) 6 Valuing Government Guarantees
Measuring and Managing Federal Financial Risk

Deborah Lucas

Robert McDonald

University of Chicago Press

This chapter considers some of the methodological issues surrounding estimating government-sponsored enterprise (GSE) subsidy values using a derivatives pricing approach and provides new estimates of the subsidy to Fannie and Freddie, taking these considerations into account. Existing estimates of the GSE subsidy value—made under the relatively stable market conditions of the last decade—vary enormously, ranging from $200 million to $182 billion. The wide range reduces the credibility of cost estimates and suggests the need to reconsider what is driving these differences. The takeover of Fannie and Freddie by the federal government and the prospect that they may remain fully federal entities for an extended time period underscore the need for improved tools to evaluate and monitor their costs and risks.

Keywords:   Government-sponsored enterprise, government guarantees, Fannie, Freddie, costs and risks, subsidy value

Chicago Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us.