Government Agency Transactions with the Federal Financing Bank Should Be Included on the Budget
PAD-77-70: Published: Aug 3, 1977. Publicly Released: Aug 3, 1977.
- Full Report:
Excluding the Federal Financing Bank from federal budget totals and other questionable budget practices combine to produce an inadequate and incomplete picture of federal credit assistance.
In its 4 years of operation, the Federal Financing Bank has helped agencies to borrow money at a cost savings. Although it was originally thought that the Bank would finance its activity by issuing its own securities in the private money and capital markets, nearly all of the Bank's borrowing has been from the Department of the Treasury. This borrowing arrangement saves money for agency borrowers and at present has small effect upon debt management and monetary policy. Problems created by the off-budget status of the Bank combine with other deviations of current budget practices to provide an understatement of federal outlays. Purchase of government-guaranteed borrowings is one of the most troublesome aspects of the Bank's off-budget status.
Matter for Congressional Consideration
Comments: Please call 202/512-6100 for additional information.
Matter: Congress should: (1) require that the Bank's receipts and disbursements be included in the federal budget totals; (2) require that the receipts and disbursements of all off-budget federal agencies that borrow from the Bank be included in the budget totals; (3) require that sales of Certificates of Beneficial Ownership be treated as borrowing in agency budgets rather than as asset sales; and (4) monitor the Bank's growth to determine when, if ever, the indirect costs of the current borrowing arrangement with the Treasury outweigh the benefits of savings achievable on agency borrowing that this practice provides.