how quasi public corporations work
like public purpose corporations such as public libraries and adult day centers quasi public corporations are created to benefit the public in some way these private operating companies are presented with a government chartered mission and in exchange for their services usually receive some form of partial funding from the state quasi public corporations may comprise public companies of an industrial and commercial character nationalized companies and companies with majority public shareholding many consider quasi public institutions to be political policy tools because they can in some instances operate with fewer restrictions and greater cost effectiveness than regular government institutions contrary to popular opinion employees of quasi public corporations do not work for the government for those public private corporations that receive some type of government funding such subsidies consist of regular fund transfers intended to compensate for persistent losses euphemistically referred to as negative operating surpluses losses can be incurred by charging prices that are lower than average costs of production as a matter of deliberate government economic and social policy by convention these subsidies are treated as subsidies on products examples of a quasi public corporationone example of a quasi public purpose corporation is sallie mae corp which was founded to advance student loan development another example is fannie mae otherwise known as the federal national mortgage association fnma fannie mae is regarded as a quasi public corporation because it operates as an independent corporation that s not treated as any part of the government while at the same time operating under a congressional charter that aims to increase the availability and affordability of homeownership special considerationsit is not uncommon to see the shares of this type of corporation trade on major stock exchanges giving individual investors the opportunity to gain exposure to the company and any profit it generates while shares of this type of corporation are sold publicly creating value and profit for shareholders comes second to carrying out its public purpose the operations of a quasi public corporation must usually in some way contribute to the comfort convenience or welfare of the general public quasi public corporations are often mistakenly assumed by the public and investors to be branches of the government this creates a perception of safety or risk free investment in their equity and debt as highlighted in the run up to the financial crisis of 2008 debt securities issued by fannie mae and its counterpart freddie mac said on their face that they were not government guaranteed though many investors treated them as if they were public outcry and the pressure from investors when these entities faced bankruptcy helped lead the u s government to bail them out in effect the public perception that these quasi public entities were guaranteed by the government overrode the explicit terms of the securities themselves 