A BILL 
To amend the Balanced Budget and Emergency Deficit Con-
trol Act of 1985 to increase transparency in Federal 
budgeting, and for other purposes. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Budget and Accounting 
Transparency Act of 2012’’. 
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. 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 budg-
etary basis equivalent to other Federal spending; 
‘‘(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. 
‘‘SEC. 502. DEFINITIONS. 
‘‘For purposes of this title: 
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‘‘(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 arrangements 
that defer payment for more than 90 days, including 
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 Cor-
poration. 
‘‘(2) The term ‘direct loan obligation’ means a 
binding agreement by a Federal agency to make a di-
rect loan when specified conditions are fulfilled by the 
borrower. 
‘‘(3) The term ‘loan guarantee’ means any guar-
antee, insurance, or other pledge with respect to the 
payment of all or a part of the principal or interest 
on any debt obligation of a non-Federal borrower to 
a non-Federal lender, but does not include the insur-
ance of deposits, shares, or other withdrawable ac-
counts in financial institutions. 
‘‘(4) The term ‘loan guarantee commitment’ 
means a binding agreement by a Federal agency to 
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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 compo-
nent 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 Gov-
ernment of a direct loan or loan guarantee, or 
modification thereof, estimated on a fair value 
basis, applying the guidelines set forth by the Fi-
nancial Accounting Standards Board in Finan-
cial Accounting Standards #157, or a successor 
thereto, excluding administrative costs and any 
incidental effects on governmental receipts or 
outlays; and 
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‘‘(ii) the Treasury discounting component of 
such direct loan or loan guarantee, or modifica-
tion 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 es-
timated 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 ad-
justing for estimated defaults, prepayments, fees, 
penalties, and other recoveries, including the ef-
fects 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 fol-
lowing estimated cash flows: 
‘‘(i) Payments by the Government to cover 
defaults and delinquencies, interest subsidies, es-
sential preservation expenses, or other payments. 
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