Successful privatization must be accompanied by the complete removal of privileges and any public policy mission. Bank behavior changes rapidly as profit maximation replaces the bureaucratic objective function. Once privileges are granted, they are difficult to remove. Therefore, privatization is a one-time (nonreversible) operation. The German mortgage bank, DePfa, went through a carefully planned and lengthy privatization process that was successful. Fannie Mae, the U.S. mortgage firm, became a privately owned institution endowed with special privileges, which led to a quasi-monopoly position. This resulted in suboptimal financial sector performance. Fannie Mae’s special privileges have proven resistant to reform efforts.
The main aims of this thesis are as follows:(a) To present a comprehensive analysis of the concept of privatisation its origins and limits, (b) To identify the legal and institutional framework for privatisation in different European countries from a comparative perspective; (c) To define and analyse particularly legal issues which arise during the privatisation transactions: e.g. labour law, competition law etc.; (d) To evaluate which features of the successful legal and organisational framework of privatisation have been successful so as to provide guidelines for those individuals and organisations participating in the privatisation exercises.This work found out that there is no simple, internationally applicable recipe for privatisation; various legal methods and techniques can be used to privatise state owned enterprises. Because each country has different circumstances, it is impossible to provide a unique model for privatisation; each country needs to design its own model according to its circumstances.Privatisation is an essential but insufficient element for structural economic reform in the economy and society. Privatisation is not a panacea, it is not the solution to every economic and administrative problem; selling an enterprise to the private sector does not mean an end to all problems. Also privatisation is not an overnight process or a magic touch; it will be a lengthy process. Furthermore, a decision that something can be privatised does not mean that it should be privatised.In that context, privatisation is not good or bad; it is an economic and social instrument. If it is well designed it may bring substantial benefits to the economy and society.In many countries, many state owned enterprises, particularly the ones which are financially weak, have still not been privatised. This finding revealed that the privatisation process will be in the political and economic agenda for at least few more decades.
Research activity in the IMF emphasizes the links between the organization's policy and operational concerns. The main objectives of research is IMF staff understanding of policy and operational issues relevant to the institution, and to improve the analytical quality of the work prepared for management and the Executive Board and the advice provided to member countries. The scope of research in the IMF is defined by the purposes and functions of the institution. In order to foster innovation and ensure quality control, the IMF makes much of its research available outside the institution and encourages staff to interact with academia and other research organizations through conferences, seminars, and occasional joint research projects. The visiting scholar’s program has also enhanced the quality of research done in the IMF. This program brings in leading members of the economics profession from around the world to assist in the preparation of papers for the Executive Board and to conduct research on IMF-related issues.
This Selected Issues paper analyzes developments and issues in banking and financial markets in France. The paper provides an overview of the transition from a state-directed to a market-based financial system. It adopts a comprehensive approach and discusses the outcome of this transition in banking, insurance, and capital markets. The paper highlights the sequencing of financial sector modernization. The analysis concludes that, on balance, France has successfully modernized its financial industry and the financial system seems better prepared to operate successfully in the increasingly competitive international environment.
Two of the largest government-sponsored enterprises (GSEs), the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), receive government subsidies estimated to be worth $6 billion. Of that total, an estimated $2 billion goes directly as income to shareholders and employees of Fannie Mae and Freddie Mac. By design, the remainder of the subsidy largely diverts investment into the middle- and upper-income housing sector and away from capital sectors of the economy.Fannie Mae and Freddie Mac preserve their privileged status through a multi-million-dollar lobbying effort that includes massive "soft money" campaign contributions and the payment of exorbitant salaries to politically connected executives and lobbyists. The GSEs also protect their government-sponsored empire through millions of dollars of charitable donations to Washington advocacy groups.Because of their quasi-governmental status, there is a market perception that Fannie Mae and Freddie Mac mortgage-backed securities and debt carry an implicit federal guarantee against default. Hence, the GSEs expose the federal taxpayer to an ever-increasing potential contingent liability that could ultimately cost tens of billions of dollars to rectify.To remedy the situation, those GSEs should be stripped of the privileges of government sponsorship and be converted to fully private enterprises. The only remaining questions for analysis are when and how privatization should occur.
Excerpt from Studies on Privatizing Fannie Mae and Freddie Mac The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (Public Law 102-550, Section 1355) requires that the Comptroller General of the United States, the Secretary of Housing and Urban Development, the Secretary of the Treasury, and the Director of the Congressional Budget Office shall each conduct and submit to the Committee on Banking, Finance and Urban Affairs (now the Committee on Banking and Financial Services) of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate a study regarding the desirability and feasibility of repealing the federal charters of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), eliminating any federal sponsorship of the enterprises, and allowing the enterprises to continue to operate as fully private entities. The text of the congressional requirement is reproduced in full at the end of this introduction. This volume contains five analytical studies that were prepared to inform the four agencies as to the best current thinking on issues surrounding the concept of full privatization, preparatory to drafting their Reports to Congress on privatization. This volume supplements the separate reports of the Comptroller General, the two Secretaries, and the Director, as published independently by each agency. In addition to the five studies, the volume includes commentaries on the studies by academic experts and by Fannie Mae, and in several cases responses to the commentaries by the study authors. The commentaries were initially presented in seminars on drafts of the papers. Seminar participants included the authors, invited discussants, staff members from the four agencies and the Office of Federal Housing Enterprise Oversight, and representatives of Fannie Mae and Freddie Mac. The plan for the studies and seminar series was formulated by an interagency working group. This group designed the materials used in recruitment of authors, directed the author selection process, monitored preparation of the studies, and organized the seminars. It consisted of William Kruvant, William Shear, Mitchell Rachlis, Fred Evans, and Paul Thompson from the U. S. General Accounting Office; Harold Bunce, John Gardner, and Stephanie Smith from the U. S. Department of Housing and Urban Development (HUD); Joan Affleck-Smith, Edward DeMarco, and Mario Ugoletti from the U. S. Department of the Treasury; and Robin Seiler and later Marvin Phaup from the Congressional Budget Office. The Congressional Budget Office funded the Stanton paper, and HUD funded the other four papers. John Gardner of HUD served as general editor for this volume. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.
