Report on the Commodity Credit Corporation's GSM-102/103 Export Credit Guarantee Programs and Iraq's Participation in the Programs

GAO discussed the Commodity Credit Corporation's (CCC) management and operations of its Export Credit Guarantee Program and Intermediate Export Credit Guarantee Program, focusing on Iraq's participation in the programs. GAO noted that: (1) the programs were U.S. government loan guarantee programs designed to increase exports of U.S. agricultural commodities and allow the exporter to obtain immediate payment on the credit sale by assigning the account receivable and the repayment guarantee to any participating U.S. financial institution; (2) the government approved almost $33 billion in loan guarantees to finance U.S. agricultural exports under the programs; (3) there were no operational differences between the two programs, but they had differing repayment periods and funding authorization levels; (4) about 100 financial institutions had participated in the programs since their inception, but only a few had been major participants; (5) three financial institutions had foreign customer ownership ranging from 14 percent to 100 percent of equity, and in one case there had been no defaults; (6) CCC paid out about $3 billion in claims and was at risk for approximately $2 billion in guaranteed loans that Iraq had stopped payment on; and (7) the Department of Justice was investigating irregularities at one bank that made more than $2 billion in loans to Iraq, of which only a fraction were properly authorized.