When you think about it, making unsecured loans to unemployed teenagers does not sound like a super-profitable business model, which is presumably why private lenders don’t copy it. But it’s the Department of Education that has the models, as well as a financial division with a $1 billion budget and a staff about 300 times larger than the four-person credit crew. Incredibly, the cost of that staff, and of other federal employees who administer credit programs, is excluded from the analysis of their profitability. For scoring purposes, the programs are effectively run for free.
Some experts, including the CBO, believe even if you ignore whether budget estimates are too optimistic about loans going bad, government accounting quirks still make credit programs look much cheaper than they really are
The agencies have a natural inclination to make their credit programs look cheap, joining forces with the congressional committees that fund them and the special interests that love them to push generosity over fiscal responsibility. After all, the Department of Education is in the business of promoting access to education, just as the Department of Agriculture (which provides farmers with operating loans, marketing loans, storage loans, even boll weevil eradication loans) aims to promote agriculture and the Department of Veterans Affairs (which runs a $350 billion mortgage business) aims to help veterans. Pokračovat ve čtení „Behind the scenes, OMB’s bare-bones credit crew has questioned the Department of Education’s rosy models of loan losses“