HR 3581 RFS
‘‘(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, 
essential preservation expenses, or other pay-
ments. 
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‘‘(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-
est rate on marketable Treasury securities of similar 
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duration to the cash flows of the direct loan or loan 
guarantee for which the estimate is being made. 
‘‘(H) When funds are obligated for a direct loan 
or loan guarantee, the estimated cost shall be based 
on the current assumptions, adjusted to incorporate 
the terms of the loan contract, for the fiscal year in 
which the funds are obligated. 
‘‘(6) The term ‘program account’ means the 
budget account into which an appropriation to cover 
the cost of a direct loan or loan guarantee program 
is made and from which such cost is disbursed to 
the financing account. 
‘‘(7) The term ‘financing account’ means the 
nonbudget account or accounts associated with each 
program account which holds balances, receives the 
cost payment from the program account, and also 
includes all other cash flows to and from the Gov-
ernment resulting from direct loan obligations or 
loan guarantee commitments made on or after Octo-
ber 1, 1991. 
‘‘(8) The term ‘liquidating account’ means the 
budget account that includes all cash flows to and 
from the Government resulting from direct loan obli-
gations or loan guarantee commitments made prior 
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to October 1, 1991. These accounts shall be shown 
in the budget on a cash basis. 
‘‘(9) The term ‘modification’ means any Gov-
ernment action that alters the estimated cost of an 
outstanding direct loan (or direct loan obligation) or 
an outstanding loan guarantee (or loan guarantee 
commitment) from the current estimate of cash 
flows. This includes the sale of loan assets, with or 
without recourse, and the purchase of guaranteed 
loans (or direct loan obligations) or loan guarantees 
(or loan guarantee commitments) such as a change 
in collection procedures. 
‘‘(10) The term ‘current’ has the same meaning 
as in section 250(c)(9) of the Balanced Budget and 
Emergency Deficit Control Act of 1985. 
‘‘(11) The term ‘Director’ means the Director 
of the Office of Management and Budget. 
‘‘(12) The term ‘administrative costs’ means 
costs related to program management activities, but 
does not include essential preservation expenses. 
‘‘(13) The term ‘essential preservation ex-
penses’ means servicing and other costs that are es-
sential to preserve the value of loan assets or collat-
eral. 
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‘‘SEC. 503. OMB AND CBO ANALYSIS, COORDINATION, AND 
REVIEW. 
‘‘(a) IN GENERAL.—For the executive branch, the 
Director shall be responsible for coordinating the esti-
mates required by this title. The Director shall consult 
with the agencies that administer direct loan or loan guar-
antee programs. 
‘‘(b) DELEGATION.—The Director may delegate to 
agencies authority to make estimates of costs. The delega-
tion of authority shall be based upon written guidelines, 
regulations, or criteria consistent with the definitions in 
this title. 
‘‘(c) COORDINATION WITH
THE CONGRESSIONAL 
BUDGET OFFICE.—In developing estimation guidelines, 
regulations, or criteria to be used by Federal agencies, the 
Director shall consult with the Director of the Congres-
sional Budget Office. 
‘‘(d) IMPROVING COST ESTIMATES.—The Director 
and the Director of the Congressional Budget Office shall 
coordinate the development of more accurate data on his-
torical performance and prospective risk of direct loan and 
loan guarantee programs. They shall annually review the 
performance of outstanding direct loans and loan guaran-
tees to improve estimates of costs. The Office of Manage-
ment and Budget and the Congressional Budget Office 
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