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.
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.
Read more about this topic: Loan Guarantee
Famous quotes containing the words government, loan and/or guarantees:
“I will never accept that I got a free ride. It wasn’t free at all. My ancestors were brought here against their will. They were made to work and help build the country. I worked in the cotton fields from the age of seven. I worked in the laundry for twenty- three years. I worked for the national organization for nine years. I just retired from city government after twelve-and-a- half years.”
—Johnnie Tillmon (b. 1926)
“Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.”
—William Shakespeare (1564–1616)
“... if a person is to be unconventional, he must be amusing or he is intolerable: for, in the nature of the case, he guarantees you nothing but amusement. He does not guarantee you any of the little amenities by which society has assured itself that, if it must go to sleep, it will at least sleep in a comfortable chair.”
—Katharine Fullerton Gerould (1879–1944)