Guide to Analysing Companies

Ginnie Mae
The name used by the Government National Mortgage Associa-
tion, a US government institution designed to support to the
housing market. Ginnie Mae was formed in 1968 when its
parent organisation, fannie mae (the Federal National Mort-
gage Association) was split into two. Ginnie Mae remained
within the government, while Fannie Mae was hived off to in-
vestors. The job of both is to encourage home ownership.
Ginnie Mae does so by buying mortgages, bundling them up
and reissuing them as securities for investors to buy. This
ensures both that there is always a ready buyer in the market
for mortgages and that Ginnie Mae has the money to buy them.
Ginnie Mae also raises money in the financial markets.
Giro
A payment system organised by a group of banks, or by postal
authorities. It enables institutions to make payments among
themselves without perpetually shuffling cash from one to
another. A giro system transfers funds among accounts
which the participating institutions hold at the giro’s central
clearing house.
Glass-Steagall Act
A law put forward by Senator Carter Glass and Representative
Henry Steagall in 1933, a milestone in US banking legislation.
The law prevented any commercial bank in the United States
from underwriting and dealing in securities. Securities busi-
ness was left as the exclusive preserve of investment banks.
The strict divide was created in the wake of financial scandals in
the late 1920s and early 1930s. Some banks had used depositors’
money to support the price of securities that they were under-
writing, sometimes with disastrous consequences for deposi-
tors. Many investors who bought the shares of dud dotcom
companies during the technology boom of the late 1990s felt
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similarly short-changed. They discovered that some analysts
employed by investment banks had worried more about the
fees the bank would receive from a successful initial public
offering of the shares than about delivering an objective rec-
ommendation of the company’s worth. Changes in the way fi-
nancial markets operate and pressure from the new breed of
financial-services conglomerates finally caused the Glass-
Steagall Act to fray at the edges, and it was repealed in 1999.