[Investigation Into Legality of Commodity Credit Corporation Loan Guarantee Payments]

In response to a congressional request, GAO investigated the legality of certain loan guarantee payments made by the Commodity Credit Corporation (CCC) to various U.S. banks which financed exports of domestic agricultural commodities to Poland. The payments in question were made pursuant to offers made by CCC to repurchase its guarantee obligations to certain holders in return for an assignment of the debt covered by those obligations. According to their terms, the offers exempted the holders from compliance with certain procedural prerequisites to reimbursement provided for in the regulations governing two CCC export guarantee programs. It was asked whether: (1) the provisions of the offers violated CCC regulations; (2) any of the resulting payments were therefore illegal; (3) the agreements adequately protect the government's right to subrogation; and (4) the President's power under the Urgent Supplemental Appropriation Act of 1982 may be delegated. GAO did not believe that the offers and the resulting payments by CCC to the banks that accepted those offers were legally improper. GAO found that the terms of the offers and the actual procedures followed by CCC and the government with respect to the matter of subrogation were fully consistent with all applicable statutes and regulations and fully protected the government's legal interests. Finally, GAO concluded that the President's power under the Urgent Supplemental Appropriation Act may properly be delegated to the Secretary of State.