# Plain Language Summary: Fair-Value Accounting and Budget Act

Right now, when Congress creates loan programs—like student loans, small business loans, or home loans—the government estimates how much these programs will cost using a method called "credit reform accounting." The problem is that this method doesn't always show the true financial risk of these loans. This bill changes how the government calculates and reports the real cost of federal loan programs by requiring something called "fair-value" accounting instead.

Think of it this way: if you lend money to a friend, the real cost to you isn't just the amount you lend—it's also the risk that they might not pay you back. Fair-value accounting tries to capture that risk upfront. Under this bill, whenever Congress considers a new loan program or changes an existing one, the Congressional Budget Office (the nonpartisan group that estimates how much bills cost) must calculate what the loan program would actually cost using fair-value methods. This gives lawmakers a clearer picture of the true financial impact before they vote.

The bill also requires the Office of Management and Budget to publish an annual report showing fair-value estimates for all federal credit programs, and it tells Congress to use these fair-value numbers when checking whether spending bills follow budget rules. Essentially, this is about making government accounting more honest and transparent so that when Congress spends money on loan programs, they're working with numbers that better reflect what those programs actually cost taxpayers.

Fair-Value Accounting and Budget Act

Fair-Value Accounting and Budget ActThis bill requires the Congressional Budget Office (CBO) to provide certain fair-value estimates of federal loan and loan guarantee programs. Under the bill, the fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair-value estimates generally use private-market interest rates to estimate the cost of a loan program rather than rates based on Treasury securities.The bill requires CBO to include fair-value estimates in (1) any estimate prepared for a measure that establishes or modifies a loan or loan guarantee program, and (2) its publication titled The Budget and Economic Outlook. If CBO provides a fair-value estimate pursuant to this bill, the chairs of the congressional budget committees must use the estimate to determine compliance with budget enforcement requirements.&nbsp;&nbsp;The bill also requires the Office of Management and Budget to submit an annual report to Congress on fair-value estimates of the costs of federal credit programs.&nbsp;&nbsp;