Tom Harkin: “Under credit reform, there are essentially two components to determining the subsidy rate for any loan program. Those…”

“Under credit reform, there are essentially two components to determining the subsidy rate for any loan program. Those components are any discount from the treasury rate of borrowing and the risk related to the loan. The RUS telecommunications loan program has not suffered a loan loss. In fact, the RUS telecommunications loan program has over its life, made money for the Government. Broadband lending within the RUS parameters does not necessarily bring with it a higher risk profile. The process by which the Office of Management and Budget determines subsidy rates for Federal loan programs is sometimes viewed as a mysterious process to say the least, given the year to year swings in the subsidy rates for the same or similar programs and classes of borrowers. Given the record of the agency, however, and given the treasury rate of interest assumption of your question, $20 million a year in direct budget authority provided could generate a minimum loan level of $750 million a year.”