Banking Investigate

Reforming Credit Reform: Federal Accounting Rules Downplay The Costs Of Extending Credit

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Executive Summary

The researchers conclude that under the federal government's existing accounting rules set out in the Federal Credit Reform Act of 1990 (FCRA), the cost of credit programs is typically understated. Although the FCRA improved the treatment of credit in the federal budget, the policies still fail to reflect true market values. Before Congress passed the FCRA, the federal budget used cash-basis accounting in most cases.

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