WHITE HOUSE DETAILS CREDIT REFORM LEGISLATION
The Reagan Administration sent to
Congress proposed legislation that would require Congress to
reflect the cost of federal loan subsidies in the government's
budget.
    The legislation would require Congress to approve all
subsidies on loans, to sell off many loans to the private
sector shortly after they are made and to buy private
reinsurance for many guaranteed loans.
    White House officials estimated reinsurance premiums  could
amount to six billion dlrs a year to private companies.
    The bill would make little impact on the federal deficit or
payroll, officials said.
    The legislation would not in itself alter the terms of
federal credit programs.
    But officials said they would be pleased if Congress
tightened some programs after seeing their true cost set out in
the budget.
    The program would call for the immediate sale of many newly
made direct federal loans, but would no effect existing federal
loan portfolios. Some of these are already proposed to be sold
off under previous administration programs.
    Exempt from the sale requirement would be loans made under
the Commodity Credit Corp commodity loan program, which the
government considers to be a commodity purchase program rather
than a credit program, and defaulted guaranteed loans, which
the government considers to be the same as direct loans.
    Also excluded from the sale requirement would be most
foreign loans, though officials said they may at some point
consider selling off some Export-Import Bank loans.
    Officials said government loan programs currently amount to
about 252 billion dlrs in direct loans and 450 billion dlrs in
guaranteed loans a year.
    Officials said U.S. agencies were asked to calculate the
approximate cost of their loan subsidies by looking at
comparable loans in the marketplace.
    The administration is asking Congress to begin reflecting
the cost of these subsidies in the fiscal 1988 budget, which
the House Budget Committee plans to begin marking up late next
week.
    Officials said the reforms, if adopted across-the-board by
all affected congressional committees, would lower the federal
deficit by only 100 mln dlrs in fiscal 1988.
    Officials said the administration hopes to sell a total of
13.0 billion dlrs in loan assets during fiscal 1988, including
1.8 billion dlrs in loan assets under the credit reform program
and 11.2 billion dlrs in loan assets already in the
governemnt's portfolion.
    In fiscal 1989, the administration hopes to sell 8.9
billion dlrs in loans, including 1.3 billion dlrs of loans
under the credit reform program and 7.6 billion dlrs from the
existing portfolio.
 Reuter
