Fair-Value Estimates of the Cost of Selected Federal Credit Programs for 2015 to 2024

May 24th, 2014
in econ_news, syndication

from the Congressional Budget Office (CBO)

CBO has estimated the budgetary costs of the Department of Education’s student loan programs, the Export-Import Bank’s (Ex-Im Bank’s) credit programs, and the Federal Housing Administration’s (FHA’s) single-family mortgage guarantee program using two different approaches. In one, cost is based on an estimate of the market value of the federal government’s obligations, termed a fair-value approach. Those estimates are compared with ones reflecting the procedures currently used in the federal budget as prescribed by the Federal Credit Reform Act of 1990 (FCRA). CBO’s fair-value and FCRA estimates are based on the program terms and outcomes—including the volume and amount of lending, fees, and borrowers’ rates of repayment and default—that are expected to prevail under current law.

Follow up:

For fiscal years 2015 to 2024, CBO found that under current law:

  • The Department of Education’s four largest student loan programs would yield budgetary savings of roughly $135 billion under FCRA accounting but cost roughly $88 billion on a fair-value basis (see the figure below);
  • Ex-Im Bank’s six largest programs would generate budgetary savings of $14 billion under FCRA accounting but cost $2 billion on a fair-value basis; and
  • FHA’s single-family mortgage guarantee program would provide budgetary savings of $63 billion under FCRA accounting but cost $30 billion on a fair-value basis.

Estimated Total Budgetary Costs of Selected Federal Credit Programs Under FCRA and the Fair-Value Approach, 2015 to 2024

CBO used its own projections of the volume of loans and cash flows for the Department of Education’s student loan programs and FHA’s single-family mortgage guarantee program because those estimates are a routine part of its baseline budget projections. However, because CBO does not ordinarily project the detailed cash flows required to estimate the costs for most other federal credit programs, CBO relied on the Export-Import Bank’s projections of those cash flows for this analysis of the bank’s programs.

[read the complete study by clicking on image below]

Source: http://www.cbo.gov/sites/default/files/cbofiles/attachments/45383-FairValue.pdf

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.

 navigate econintersect.com


Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved