Summary: House Resolution 7597 would require that the receipts and disbursements of the Federal Financing Bank (FFB) be included in the Federal budget. The bill as proposed would put the FFB on-budget; impose a ceiling on the activities of the FFB; and require that certain guaranteed loans be financed by the FFB. Putting a ceiling on FFB lending could force the Department of the Treasury to allocate credit among agencies and might result in agencies borrowing in the private markets at higher interest rates. Control over Federal credit programs can be exercised more effectively at the agency level than at the aggregate level. It appears that the bill would require that most guaranteed loans be financed by the FFB. This provision might eliminate the loan guarantee as a policy instrument because an FFB-purchased guaranteed loan becomes a direct loan. Loan guarantees should be retained as a policy option. If the FFB is put on-budget, but nothing is done about other off-budget activities, many of the transactions which now go through the FFB may no longer do so. Congress should require that the receipts and disbursements of the FFB be included in the budget totals, the receipts and disbursements of other off-budget lending agencies be included in the budget totals, and Certificates of Beneficial Ownership be treated in the budget as borrowing rather than as the sale of an asset.
