Session 5: Working with Private Partners | Sessions | Mission & Metrics: Finance Training for Federal Credit Program Professionals

This session explores how for-profit institutions approach the provision of credit. The purpose is to gain insights into their operations to enable government partnering agencies to better interface and protect taxpayer dollars in various public-private partnerships that can form to extend credit to borrowers.

Benefits and Risks

Adverse selection, lack of transparency, regulatory capture, conflicts of interest
Credit portfolio management objectives for large loan, small loan and non-profit portfolios
Accounting for delinquencies, charge-offs, and loss reserves: what it does and does not tell us
How they game the system
Metrics for detecting the games

Predicting Credit Risk at For-Profit Lending Partners

Who are they?
What are they doing? Trend line analysis
What are they thinking? The key driver and key strategy
A successful agency solution: SBA’s PARRIS

Predicting Credit Risk at Non-Profit Partners

The key differences
A successful agency solution: the NeighborWorks PROMPT

Remediation

Protecting the program from excessive risk and misuse
Segmentation by performance in key metrics
Graduated remedies

Interactive

Based on metrics of three different small business lenders going into 2007, which of them will have the worst performing loans and which will survive—two different outcomes?
Remediation: Suppose a recipient of grant money from HUD for multifamily housing development is not using funds properly.