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DOCUMNT RBSOB
05967 - (31526555]
Federal Credit assistance: in Approach to Program Design and
Analysis. PAD-78-31; 8-174958. May 31, 1978. 31 pp. + appendix
(3 pp.).
Report by Eler a. Stacts, Comptroller General.
Issue Area: Alternative Approaches or Methods to Achieve Federal
Program Objectives (3600).
Contact: Program Analysis Div.
Organization Concerned: Department of the Treasury; Office of
Management and Budget.
Congressional ReleTance: Bouse Committee on Banking, Currency
and Housing; Senate Coe-Ittee on Banking, Housing and Urban
Affairs.
Federal credit prograas inclcde direct lending
activities of Federal agencies and loans made by commercial
lenders which are guaranteed by Federal agencies. Credit
assistance provides an alternative to subsidies, tax benefits,
price regulation, and other actions seeking to achieve policy
objectives. Credit that is outstanding under these programs
totals over $300 billion. Findings/Conclusions: Evaluatioa of
Federal credit programs consists of determining whether the
program is likely to achieve its social objective or whether it
is superior to some other type of action and evaluation of
program design. Federal credit can be more cost-effective than
direct subsidies, but programs with high risk and low expected
cash flow may require both a direct subsidy and Federal credit.
GAO guidelines for program evaluation and design are: the
economic advanta~e of a direct loan must be weighed against the
fact that the interest rate on guaranteed loans is determined by
the market while the direct loan interest rate is not; if a
program is to be self-supporting, the loan guarantee fee or
direct loan interest rate should be set according to risk;
various mechanisms to control risk should be considered; the
agency that bears responsibility for a program should be
responsible for risk analysis; and administrative practices
during a Lrogrames formative stages should include obligaticnal
authority, lisbursement procedures, allocation of credit when
demand exceeds the available authority, and encouragement of
investment during recessionary periods. (BTU)](ViewImageLocal?handle=hein.gao/gaobaaxgx0001&div=1&collection=&method=preview&ext=.png&size=3)