Appendix 1 — The Government-Sponsored Shadow Banking System

Appendix 1. The GSEs — the FHLB System, Fannie Mae and Freddie Mac — are off-balance-sheet “shadow banks” of the U.S. federal government that mirror the private shadow-banking chain: the FHLBs term-warehouse conforming loans (like multi-seller conduits), Fannie/Freddie guarantee loan pools (like monolines), and the GSE retained portfolios run maturity transformation (like SIVs). The blue chain is a private FHC process shown for comparison; the teal chain is the parallel GSE process.