Loan guarantee: Difference between revisions
No edit summary |
|||
| Line 4: | Line 4: | ||
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 failures]] 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> |
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 failures]] 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 political reasons. 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. Somewhat differently, despite intensive lobbying by the [[Israel lobby in the United States|Israel lobby]], [[George H.W. Bush|President Bush]], refused $10 billion in loan guarantees to the [[Israel]]i government of [[Itzhak Shamir]], because of his pro-settlement policy, and because Palestinians and many Arab governments viewed the prior acceptance of loan guarantees as a test of America's credibility as mediator. Bush requested and received a Congressional delay in discussion of the guarantees, and the [[Madrid Conference of 1991]] was later convened. These loan guarantees were issued later, following the election of [[Itzhak Rabin]] and his pledge to end Shamir's settlement policy and reformulate national priorities.<ref>Scott Lasensky, [http://meria.idc.ac.il/journal/2002/issue1/jv6n1a7.html Underwriting Peace in the Middle East: U.S. Foreign Policy and the Limits of Economic Inducements], [[Middle East Review of International Affairs]]: Volume 6, No. 1 - March 2002</ref> |
Loan guarantees can also be extended to large borrowers for political reasons. 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. Somewhat differently, despite intensive lobbying by the [[Israel lobby in the United States|Israel lobby]], [[George H.W. Bush|President George H. W. Bush]], refused $10 billion in loan guarantees to the [[Israel]]i government of [[Itzhak Shamir]], because of his pro-settlement policy, and because Palestinians and many Arab governments viewed the prior acceptance of loan guarantees as a test of America's credibility as mediator. Bush requested and received a Congressional delay in discussion of the guarantees, and the [[Madrid Conference of 1991]] was later convened. These loan guarantees were issued later, following the election of [[Itzhak Rabin]] and his pledge to end Shamir's settlement policy and reformulate national priorities.<ref>Scott Lasensky, [http://meria.idc.ac.il/journal/2002/issue1/jv6n1a7.html Underwriting Peace in the Middle East: U.S. Foreign Policy and the Limits of Economic Inducements], [[Middle East Review of International Affairs]]: Volume 6, No. 1 - March 2002</ref> |
||
=== Government programs and agencies === |
=== Government programs and agencies === |
||
Revision as of 07:16, 4 March 2011
A loan guarantee, in finance, is a promise by one party (the guarantor) to assume the debt obligation of a borrower if that borrower defaults.
Government loan guarantees
The term can be used to refer to a government to assume a private debt obligation if the borrower defaults. Most loan guarantee programs are established to correct perceived market failures by which small borrowers, regardless of creditworthiness, lack access to the credit resources available to large borrowers.[1]
Loan guarantees can also be extended to large borrowers for political reasons. 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. Somewhat differently, despite intensive lobbying by the Israel lobby, President George H. W. Bush, refused $10 billion in loan guarantees to the Israeli government of Itzhak Shamir, because of his pro-settlement policy, and because Palestinians and many Arab governments viewed the prior acceptance of loan guarantees as a test of America's credibility as mediator. Bush requested and received a Congressional delay in discussion of the guarantees, and the Madrid Conference of 1991 was later convened. These loan guarantees were issued later, following the election of Itzhak Rabin and his pledge to end Shamir's settlement policy and reformulate national priorities.[2]
Government programs and agencies
United Kingdom
United States
- Fannie Mae
- Export-Import Bank
- Federal Family Education Loan Program
- Freddie Mac
- Government National Mortgage Association
- Small Business Administration
- USDOE
- VA loan
- USAID Development Credit Authority
See also
References
- ^ 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.
- ^ Scott Lasensky, Underwriting Peace in the Middle East: U.S. Foreign Policy and the Limits of Economic Inducements, Middle East Review of International Affairs: Volume 6, No. 1 - March 2002
External links
 | This business-related article is a stub. You can help Wikipedia by expanding it. |