Memorandum on Federal Credit Management

Memorandum for the Heads of Executive Departments and Agencies
Subject: Strengthening Federal Credit Management

The burden of delinquent debts owed to the Federal Government continues to grow every year and is contributing to our serious problem of inflation. We must again establish the principle that debts to the Federal Government must be paid. Recent studies by the Executive Branch Debt Collection Project and the General Accounting Office reveal that more than $25 billion of the $175 billion in debts owed the Federal Government are either delinquent or in default.

We must institute better credit management to prevent debt delinquencies and defaults and use more aggressive debt collection procedures to recover the delinquencies that do occur. We must take firm action now to reduce that portion of the $25 billion debt backlog that is collectible.

As first steps, I am directing you to designate an official with responsibility and authority for debt collection and submit the name of this official to the Office of Management and Budget by May 15, 1981. Additionally, each department and agency is to complete a review of their agencies debt situation and prepare a detailed plan and schedule for resolving identified problems. This is due by June 15, 1981 to the Office of Management and Budget.

To slow the expansion of delinquent debt, each agency and department will provide a plan for improved credit management and more efficient debt collection. A progress report on the results of your reviews and the development of credit management plans will be due by September 30, 1981 to the Office of Management and Budget. Hereafter, an annual report on debt collection will be submitted in September.

I am instructing the Director of the Office of Management and Budget to issue procedures and guidelines to assist you in carrying out this directive.

Administrative actions are not sufficient to resolve this critical problem. Accordingly, this Administration will support legislation to facilitate better credit management and more effective debt collection.

We cannot afford to allow debt to grow and add to the burden of inflation. Immediate action is required now to restore sound credit management to the Federal Government.

RONALD REAGAN