952 

 66 



Section 819(c) stipulates that no bond could be fruaranteed unless 

 the Secretary determines that : 



(1) The state or local government could not borrow sufficient 

 revenues on reasonable terms and conditions without the guar- 

 antee. 



(2) The bond issued must provide for a complete amortization 

 period within thirty years. 



(3) The total principal amount of any individual bond to be 

 guaranteed cannot exceed $20,000,000. 



(4) The total principal amount of all bonds to he guaranteed 

 under this program cannot exceed $200,000,000. 



(5) The Secretary must determine that each bond to be guaran- 

 teed is : 



(a) issued only to investors approved by or meeting the 

 requirements of the Secretary. 



(h) bonds must bear interest at a rate satisfactory to the 

 Secretary. 



(c) each bond mu-^t be subiect to repayment and maturity 

 terms satisfactory to the Secretary. 



(d) each bond issued must contain provisions which would 

 adequatelv protect the financial security interests of the 

 United States. 



(6) The approval of the Secretarv of the Treasury is required 

 for each guarantee made by the Secretarv of Commerce. It is pre- 

 sumed by inclusion of this provision that the Secretary of Com- 

 merce will work closely with the Secretarv of the Treasury in the 

 formulation of the various rules, resfulations, and provisions nec- 

 essary for the implementation of this bond guarantee projrram. 



(7) The Secretary must determine that there is a reasonable 

 assurance of repayment between the issuer and the lender of such 

 bonds. 



(8) No guarantee could be made after September 80, 1981. 

 Section 819(d) would require that the Secretarv publish proposed 



terms and conditions of the guarantee program prior to guaranteeing 

 any obligation. A thirty day public comment period is provided fol- 

 lowing publication of the proposed terms. After the comment period, 

 the Secretary would publish final conditions, but these would not be- 

 come effective until thirty days after publication. 



Section 819(e) would provide that the full faith and credit of the 

 United States is pledged to the payment of all guarantees. This lan- 

 ofua^re is standard in recent Federal cfuarantee statutes, and would gen- 

 era 11 v serve to assure that anv bond so guaranteed would enjoy a 

 priority rating within the bond market. 



Subsection (f) of section 819 would direr^t the Secretary to pre- 

 scribe and collect a reasonable jruarantee fee from the states and local 

 jrovemments. The amount of such fees should be sufficient to cover 

 necessarv administrative costs of the bond guarantee program. Sub- 

 section (g) would not permit the Secretary to guarantee any Federally 

 tax-exempt bonds. 



Section 819(h) sets forth the method bv which pavments shall be 

 made in cases of defaults bv the state and local crovemments. The 

 United States shall have a full risrht of reimbursement for any such 

 payments made, and the Secretary would be permitted to apply monies 



