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1 1 (April 2020)

handle is hein.congrec/cboestfcp0001 and id is 1 raw text is: .. APRIL 2020 Estimates of the Cost of Federal Credit Programs in 2021 Summary The federal government supports some private activities by offering credit assistance to individuals and busi- nesses. That assistance is provided through direct loans and guarantees of loans made by private financial insti- tutions. In this report, the Congressional Budget Office estimates the lifetime costs of new loans and loan guar- antees that are projected to be issued in 2021. The report shows two kinds of estimates: those that were created by following procedures currently used in the federal budget, as prescribed by the Federal Credit Reform Act of 1990 (FCRA); and those that account for the market value of the government's obligations, which are called fair-value estimates. Most of the FCRA estimates were produced by other federal agencies, although CBO used FCRA procedures to estimate the budgetary effects of the largest federal credit programs. The fair-value estimates were produced by CBO. Using FCRA procedures, CBO estimates that new loans and loan guarantees issued in 2021 would result in sav- ings of $41.8 billion. But using the fair-value approach, CBO estimates that those loans and guarantees would have a lifetime cost of $46.8 billion. More than three-quarters of the difference between those amounts is attributable to three sources: * The guarantees that Fannie Mae and Freddie Mac are projected to make in 2021, analyzed on a FCRA basis, would save the federal government $28.5 billion. Under fair-value accounting, however, the guarantees would cost $1.1 billion. * The Department of Education's student loan programs are projected to save $3.2 billion on a FCRA basis but to cost $16.9 billion on a fair-value basis. * The Department of Housing and Urban Development's (HUD's) loan and loan guarantee programs are projected to save $10.5 billion on a FCRA basis but to cost $7.4 billion on a fair-value basis. Federal Credit Programs For this report, CBO analyzed the 89 programs through which the federal government provides credit assistance. The total amount of federal credit assistance projected for 2021 is $1.5 trillion, consisting of new direct loans that total $154 billion and new loan guarantees that cover $1.4 trillion in loans. Just a few programs are pro- jected to provide about 90 percent of total federal credit assistance-specifically, the programs offering mortgage guarantees and student loans. The largest federal credit programs by far are the guarantees of mortgage-backed Notes: Unless this report indicates otherwise, all years referred to are federal fiscal years, which run from October 1 to September 30 and are designated by the calendar year in which they end. Numbers in the text, table, and figure may not add up to totals because of rounding. For the most part, this report uses the names for departments, agencies, and programs that are given in the Office of Management and Budget's Federal Credit Supplement, which is available at www.whitehouse.gov/omb/supplemental-materials.

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