IIB 
113TH CONGRESS 
2D SESSION 
H. R. 1872 
IN THE SENATE OF THE UNITED STATES 
APRIL 8, 2014 
Received; read twice and referred to the Committee on the Budget 
AN ACT 
To amend the Balanced Budget and Emergency Deficit Con-
trol Act of 1985 to increase transparency in Federal 
budgeting, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Budget and Account-
ing Transparency Act of 2014’’. 
TITLE I—FAIR VALUE 
ESTIMATES 
SEC. 101. CREDIT REFORM. 
(a) IN GENERAL.—Title V of the Congressional 
Budget Act of 1974 is amended to read as follows: 
‘‘TITLE V—FAIR VALUE 
‘‘SEC. 500. SHORT TITLE. 
‘‘This title may be cited as the ‘Fair Value Account-
ing Act of 2014’. 
‘‘SEC. 501. PURPOSES. 
‘‘The purposes of this title are to— 
‘‘(1) measure more accurately the costs of Fed-
eral credit programs by accounting for them on a 
fair value basis; 
‘‘(2) place the cost of credit programs on a 
budgetary basis equivalent to other Federal spend-
ing; 
‘‘(3) encourage the delivery of benefits in the 
form most appropriate to the needs of beneficiaries; 
and 
‘‘(4) improve the allocation of resources among 
Federal programs. 
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‘‘SEC. 502. DEFINITIONS. 
‘‘For purposes of this title: 
‘‘(1) The term ‘direct loan’ means a disburse-
ment of funds by the Government to a non-Federal 
borrower under a contract that requires the repay-
ment of such funds with or without interest. The 
term includes the purchase of, or participation in, a 
loan made by another lender and financing arrange-
ments that defer payment for more than 90 days, in-
cluding the sale of a Government asset on credit 
terms. The term does not include the acquisition of 
a federally guaranteed loan in satisfaction of default 
claims or the price support loans of the Commodity 
Credit Corporation. 
‘‘(2) The term ‘direct loan obligation’ means a 
binding agreement by a Federal agency to make a 
direct loan when specified conditions are fulfilled by 
the borrower. 
‘‘(3) The term ‘loan guarantee’ means any 
guarantee, insurance, or other pledge with respect to 
the payment of all or a part of the principal or inter-
est on any debt obligation of a non-Federal borrower 
to a non-Federal lender, but does not include the in-
surance of deposits, shares, or other withdrawable 
accounts in financial institutions. 
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‘‘(4) The term ‘loan guarantee commitment’ 
means a binding agreement by a Federal agency to 
make a loan guarantee when specified conditions are 
fulfilled by the borrower, the lender, or any other 
party to the guarantee agreement. 
‘‘(5)(A) The term ‘cost’ means the sum of the 
Treasury discounting component and the risk com-
ponent of a direct loan or loan guarantee, or a modi-
fication thereof. 
‘‘(B) The Treasury discounting component shall 
be the estimated long-term cost to the Government 
of a direct loan or loan guarantee, or modification 
thereof, calculated on a net present value basis, ex-
cluding administrative costs and any incidental ef-
fects on governmental receipts or outlays. 
‘‘(C) The risk component shall be an amount 
equal to the difference between— 
‘‘(i) the estimated long-term cost to the 
Government of a direct loan or loan guarantee, 
or modification thereof, estimated on a fair 
value basis, applying the guidelines set forth by 
the Financial Accounting Standards Board in 
Financial Accounting Standards #157, or a 
successor 
thereto, 
excluding 
administrative 
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costs and any incidental effects on govern-
mental receipts or outlays; and 
‘‘(ii) the Treasury discounting component 
of such direct loan or loan guarantee, or modi-
fication thereof. 
‘‘(D) The Treasury discounting component of a 
direct loan shall be the net present value, at the time 
when the direct loan is disbursed, of the following 
estimated cash flows: 
‘‘(i) Loan disbursements. 
‘‘(ii) Repayments of principal. 
‘‘(iii) Essential preservation expenses, pay-
ments of interest and other payments by or to 
the Government over the life of the loan after 
adjusting for estimated defaults, prepayments, 
fees, penalties, and other recoveries, including 
the effects of changes in loan terms resulting 
from the exercise by the borrower of an option 
included in the loan contract. 
‘‘(E) The Treasury discounting component of a 
loan guarantee shall be the net present value, at the 
time when the guaranteed loan is disbursed, of the 
following estimated cash flows: 
‘‘(i) Payments by the Government to cover 
defaults and delinquencies, interest subsidies, 
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essential preservation expenses, or other pay-
ments. 
‘‘(ii) Payments to the Government includ-
ing origination and other fees, penalties, and re-
coveries, including the effects of changes in loan 
terms resulting from the exercise by the guar-
anteed lender of an option included in the loan 
guarantee contract, or by the borrower of an 
option included in the guaranteed loan contract. 
‘‘(F) The cost of a modification is the sum of— 
‘‘(i) the difference between the current es-
timate of the Treasury discounting component 
of the remaining cash flows under the terms of 
a direct loan or loan guarantee and the current 
estimate of the Treasury discounting component 
of the remaining cash flows under the terms of 
the contract, as modified; and 
‘‘(ii) the difference between the current es-
timate of the risk component of the remaining 
cash flows under the terms of a direct loan or 
loan guarantee and the current estimate of the 
risk component of the remaining cash flows 
under the terms of the contract as modified. 
‘‘(G) In estimating Treasury discounting com-
ponents, the discount rate shall be the average inter-
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