Port Security Conference

April 14 2003

$25 million for Title XI
American shipbuilding's friends in the Senate have wrought a minor miracle. They have managed to sneak $25 million for the Title XI loan guarantee program into the FY 2003 appropriations as part of a $70 billion supplemental package that primarily funds the war in Iraq.

Originally, the Senate was looking for $50 million for the program, while the House was looking for zero. Conferees agreed the $25 million with a proviso that MARAD comply with the recommendations of the recent Department of Transportation audit by the Office of the Inspector General..

In summary: the OIG found:that MARAD needs more effective oversight of the loan-application process, borrowers, vessels and shipyards constructed under loan guarantees, and foreclosed assets. It recommended that MARAD: (1) analyze the risks presented when it modifies criteria used to approve loans and impose provisions to mitigate those risks; (2) establish processes for external independent reviews of projects; (3) improve oversight of its borrowers' financial condition; and (4) establish a process to monitor the physical condition of assets over the term of a loan guarantee; and (5) improve its return on foreclosed assets through better tracking of vessels and property constructed with loan guarantees. MARAD agreed with the recommendations.

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