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Abstract

This article explains the history behind the Government National Mortgage Association Mortgage-Backed Securities ("MSB") program, created in the 1960's to increase and stabilize the supply of residential mortgage credit to attract a broad base of investors. It also discusses the formation of the Government National Mortgage Association ("GNMA" or Ginnie Mae"), whose purpose is to assume certain functions of the Federal National Mortgage Association ("FNMA") that could not be carried out in the private market. It addresses the issue that Ginnie Maes are not regulated under the federal securities laws, and that as a result, trading abuses in the Ginnie Mae forward market have arisen, posing a substantial risk to the system. It explores the nature and scope of the GNMA Securities market, the legislative framework for the overlapping jurisdiction of the Securities and Exchange Commission ("SEC") and the Commodities Futures Trading Commission ("CFTC") over GNMA industry regulation. It also highlights the evolution of alternative regulatory responses of various government agencies. Finally, this Note reviews proposed legislation to amend the Securities and Exchange Act of 1934.

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