What was the Connie Lee - College Construction Loan Insurance Association - CCLIA

Connie Lee, or College Construction Loan Insurance Association (CCLIA), was a formerly government-sponsored enterprise created by the Higher Education Amendments of 1986 and exists now in a different form after being privatized in 1997.

BREAKING DOWN Connie Lee - College Construction Loan Insurance Association - CCLIA

Connie Lee, or College Construction Loan Insurance Association (CCLIA)’s purpose was to provide insurance to universities, colleges and other educational institutions for their debt instruments in order to help fund-building initiatives.

The Department of Education provided Connie Lee with start-up equity capital, however, in 1997, Connie Lee was privatized and the money was paid back. Reuters reported that Ambac Financial Group paid $106 million for the outstanding shares of Connie Lee. This merger came after a period of speculation where Connie Lee waited for a buyer and new leadership. The company had already relinquished its status as a government-sponsored enterprise (GSE), a financial service corporation formed by Congress to expand credit across the economy, and its founding president and CEO Oliver Sockwell had retired earlier in the year. According to news reports at the time, Connie Lee’s largest shareholders were Sallie Mae, with 42 percent of its stock, and the Pennsylvania Public School Employees Retirement System, at nearly 23 percent.

Comparing Connie Lee with Sallie Mae, Freddie Mac, and Fannie Mae

Connie Lee was named according to the same scheme other government agencies were named: Sallie Mae, Fannie Mae, and Freddie Mac. They are all acronyms that are personified into relatable, memorable names.

Sallie Mae, also known as the SLM Corporation, was originally titled the Student Loan Marketing Association. Also initially a government entity, Sallie Mae provided federal education loans to students, then went private in the mid-1990s and is now the largest originator of federally insured loans. In 2014, its loan servicing operation and most of its loan portfolio separated off into a publicly traded business known as the Navient Corporation. Sallie Mae managed more than $10 billion in assets in 2016.

Freddie Mac, or Federal Home Loan Mortgage Corp (FHLMC), acts as purchaser and guarantor of mortgages, forming mortgage-backed securities. Freddie Mac originated with Congress passing the Emergency Home Finance Act in 1970, expanding the secondary mortgage market and reducing the interest-rate risk for banks. Freddie Mac was reorganized in 1989 and turned into a shareholder-owned company. Freddie Mac has not been privatized, and is therefore still a GSE. Nearly 80 percent of residential mortgages in America are backed by Freddie Mac and another, similar GSE, Fannie Mae, a massive portfolio which critics say is a threat the U.S. economy, through systematic risk.

Fannie Mae, or the Federal National Mortgage Association (FNMA), was founded in 1938 as part of the New Deal. Established to stimulate the housing market by expanding lines of credit to lower-income homebuyers, it works similarly to Freddie Mac as a purchaser and guarantor on the secondary mortgage market.