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The Hybrid Plan: A Proposal For Federal Credit Reform

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  • WILLIAM G. GALE

Abstract

Federal credit subsidies are one of the largest areas of government activity. However, the Unified Budget treats lending in a highly misleading manner, and federal credit management is inconsistent and deceptive. These oversights have contributed to both the rapid rise of federal lending and the financial crises facing several credit agencies during recent years. Credit reform is a vital issue both to protect the government's huge financial stake and to ensure the success of credit programs. This paper critiques previous proposals for credit reform–each suffering from major implementation problems–and suggests an alternative. The Hybrid Plan combines aspects of earlier proposals and eliminates several disadvantages of each. One could implement the Hybrid Plan under current conditions, but it also is consistent with further improvement in federal credit management.

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  • William G. Gale, 1990. "The Hybrid Plan: A Proposal For Federal Credit Reform," Contemporary Economic Policy, Western Economic Association International, vol. 8(2), pages 107-121, April.
    • Handle: RePEc:bla:coecpo:v:8:y:1990:i:2:p:107-121
    DOI: 10.1111/j.1465-7287.1990.tb00594.x
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    1. William G. Gale, 1987. "The Allocational and Welfare Effects of Federal Credit Programs: A Summary," UCLA Economics Working Papers 460, UCLA Department of Economics.
    2. Sosin, Howard B, 1980. "On the Valuation of Federal Loan Guarantees to Corporations," Journal of Finance, American Finance Association, vol. 35(5), pages 1209-1221, December.
    3. Gale, William G, 1991. "Economic Effects of Federal Credit Programs," American Economic Review, American Economic Association, vol. 81(1), pages 133-152, March.
    4. Edward J. Kane, 1985. "The Gathering Crisis in Federal Deposit Insurance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262611856, December.
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