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What are Federal Agencies?

Understanding the Concept of Federal Agencies

Federal agencies are distinct government entities, established with the primary objective of addressing a particular need, such as resource management, financial industry oversight, or bolstering national security. The creation of these organizations stems from a consensus on the necessity of specific functions to operate for the collective interest of the nation.

Commonly, federal agencies are also referred to as Commissions, Task Forces, or Administrations. The formation of such entities can be a result of legislative action or can be conceived under the direction of a particular Department or Branch of the government. Regardless of their name or genesis, all federal agencies are generally bestowed with a specific responsibility or focus.

Federal Agencies: Formation, Dissolution, and Longevity

Federal agencies can be birthed by different government entities, and conversely, they can also be swiftly dissolved. However, it is important to note that many of them continue to exist indefinitely due to the persisting need for their function. While agencies typically have a more long-term lifespan, Commissions may be created to exist for a shorter period, primarily to perform a specific task.

Structural and Functional Aspects of Federal Agencies

Federal agencies can comprise large bureaucratic structures and can have significant budgets allocated to their operation. These entities may be an integral part of the government, or they may commence as government-formed organizations before morphing into independent entities. The range of functions performed by these agencies could be diverse, encompassing the regulation of the mortgage industry, safeguarding national security, or managing national resources. As of 2016, there were approximately 130 active government agencies.

Federal Agencies: Direct and Implicit Backing

These organizations regulate industries or practices that require close monitoring or specialized expertise. Certain organizations, such as the Federal Deposit Insurance Corporation (FDIC) and the Government National Mortgage Association (GNMA), have their operations explicitly backed by the U.S. Treasury, thereby imparting credibility and trust.

On the other hand, organizations like Fannie Mae, Freddie Mac, and Sallie Mae are only offered an implicit guarantee from the U.S. Treasury. These entities are typically set up with the initial assistance of a presidential order but are ultimately created by legislative action. The selection of the directors for these agencies generally occurs through presidential appointment.

Federal Agencies and Securities

A notable facet of several federal agencies is their engagement with the issuance or guarantee of securities such as stocks and bonds. Since agency bonds offer less liquidity than Treasury bonds, they typically provide a slightly higher interest rate, thus making them an attractive investment proposition for certain types of investors.

The Vital Role of Federal Agencies

Federal agencies form an integral part of the government's mechanism to ensure orderly operations within various sectors of the economy and maintain national security. They are crucial entities that ensure industry regulations are in place and practices requiring specialized expertise and close oversight are adequately monitored. Understanding the role of federal agencies is essential to comprehend the larger picture of how government mechanisms function to safeguard the nation's interest.


Agencies are entities which are created by the federal government to fulfill an obligation or role that is deemed to be in the best interest of the country.

Agencies might also also be known as Commissions, and they can be formed by legislative action, or through the direction of a specific Department or Branch of the government. Some federal agencies are known as Commissions, Task Forces, or Administrations, but all are generally tasked with a specific responsibility or focus.

Different government entities can “birth” an agency or commission, and they can also be quickly dissolved, although many of them continue to exist indefinitely. Agencies tend to be more long-term, while Commissions may only be meant to exist for a short time to perform one task.

Agencies can have large bureaucratic structures and large budgets. They are sometimes part of the government and sometimes they are only created by the government before they become an independent entity. Their function could range from regulating the mortgage industry to protecting national security.

There are somewhere around 130 government agencies as of 2016.

What is the Federal Housing Administration (FHA)?
What is the FCC?

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