The US Gov’t is taking the risk to guarantee the loans.
If the borrowers fails to pay, guess who swallows the losses? That is right...the tax payers.
The government bailed out GM, and received GM stock in return. If I remember right, government sold those stocks at a loss.
Who gets the profits on the loan if the borrowers pay? The taxpayers. So far the bank’s loss ratio is 0.175% and they charge more than enough interest above the borrowing rate to cover that and more.
If they are making money on the loans, there is no real subsity.
Scenario #1: I’d much rather see the government’s credit used to support an export loan which helps employee Americans and which gets paid back at a profit.
Scenario #2: The alternative is to use the government’s credit to borrow from China to pay for unemployed American’s. In that way, we are subsidizing imports from China. The price of those imports don’t reflect the cost of unemployed Americans, or the opportunity cost had those Americans been working and paying taxes, or even the taxes the domestic producer would have paid.
So in the first scenario, we make interest profits on the loan and we get taxes from working Americans and we get taxes when those salaries buy stuff in our economy. In the second scenario, we pay interest to China, we pay support to non-working Americans, and ultimately we see China buy up our firms, dismantle them and move them to China.