Economic and Legal Considerations of Optimal Privatization; Case Studies of Mortgage Firms (Depfa Group and Fannie Mae)
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.
Year of publication: |
1999-05-01
|
---|---|
Authors: | Garrett, John R. ; Beyer, Hans-Joachim ; Dziobek, Claudia Helene |
Institutions: | International Monetary Fund (IMF) |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Garrett, John R., (1999)
-
Regulatory and Tax Treatment of Loan Loss Provisions
Dziobek, Claudia Helene, (1996)
-
Central Bank Losses and Experiences in Selected Countries
Dziobek, Claudia Helene, (2005)
- More ...