Content deleted Content added
→Government loan guarantees: Not somewhat different, completely different. Does not contribute to the meaning of load guarantee. |
Tags: Mobile edit Mobile web edit |
||
Line 22:
The term can be used to refer to a government to assume a private [[debt]] obligation if the borrower [[default (finance)|defaults]]. Most [[loan]] [[guarantee]] programs are established to correct perceived [[market failure]]s by which small borrowers, regardless of [[creditworthiness]], lack access to the credit resources available to large borrowers.<ref>Riding, Alan L. "On the Care and Nurture of Loan Guarantee Programs." ''Financing Growth in Canada''. Paul J. N. Halpern, ed. University of Calgary Press, 1997.</ref>
Loan guarantees can also be extended to large borrowers for national security reasons, help companies in essential industries, or in situations where the failure of a large company will harm the larger economy, For example, [[Chrysler Corporation]], one of the "big three" US automobile manufacturers, obtained a loan guarantee in 1979 amid its near-collapse, and [[lobbying]] by labor interests. The loans are made by private lenders with the caveat that the government will pay off the loans if the company defaults on them. Chrysler did not go into default. Another example was the creation of the Emergency Loan Guarantee Board to administer $250 million dollars in US government loan guarantees made to private lenders on behalf of Lockheed in 1971. The program ended in 1977 when Lockheed restructured its debt to its 24 lending banks ending the program ended. Over $30 million in Guarantee commitment fees paid by Lockheed and it's lenders to the board created over $29 million transferred to the US treasury. <ref>{{cite web |title=Implementation of the Emergency Loan Guarantee Act |url=https://www.gao.gov/products/PSAD-78-66 |website=Government Accountability Office |publisher=US government |accessdate=26 October 2018}}</ref>
=== Government programs and agencies ===
| |||