Credit Management

Deteriorating Credit Picture Emphasizes Importance of OMB's Nine-Point Program Gao ID: AFMD-90-12 April 16, 1990

Pursuant to a congressional request, GAO provided information on five federal agencies': (1) changes in loans receivable data between fiscal years 1985 and 1988; and (2) activities to implement the Office of Management and Budget's (OMB) nine-point credit management program.

GAO found that, over the past several years, federal agencies have made progress in certain credit management areas, such as screening loan applicants, servicing loan accounts, and implementing debt collection procedures, but credit management programs have continued to deteriorate because agencies failed to: (1) check whether loan applicants were delinquent in paying taxes; (2) adequately monitor private lenders whose loans were guaranteed; (3) fully utilize private collection firms in the collection process; and (4) follow appropriate write-off procedures or report close-out accounts to the Internal Revenue Service (IRS) as income to the debtor. GAO also found that: (1) guaranteed loans increased 34 percent and defaulted guarantees increased 84 percent during fiscal year 1988; and (2) the Farmers Home Administration (FmHA) and Small Business Administration (SBA) understated loan delinquencies by about $9.5 billion and $200 million, respectively, because they did not report the entire amount of loans due over 180 days.


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