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The perils of too much government lending

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Among the many things it does, the federal government is one of the nation’s largest lenders. It lends to farmers, homeowners, students, small businesses, exporters and rural electric utilities, among others. Altogether, there are more than 100 loan programs administered by about 20 agencies overseeing lending worth $3.4 trillion in fiscal 2015, up from $1.5 trillion in 2007.

These fascinating figures come from a new report on federal credit programs. The report’s verdict is mixed: Many programs are justified to correct failures of private credit markets, but lending standards are often too lax, resulting in unnecessary losses for the Treasury and harm to borrowers.

In theory, the government — that is, taxpayers — could be on the hook for the entire outstanding amount of $3.4 trillion (actually, the total is greater now). This would be a significant addition to the existing publicly held federal debt of more than $14 trillion.


© Washington Post