The March 2021 presentation below predicts, with a fair amount of accuracy, what actually happened at EPA WIFIA through FY25 with respect to portfolio funding losses.
It’s also a succinct overview of the primary factors involved — how highly rated borrowers can use a WIFIA loan as an option, correlation to their tax-exempt bond alternatives, use of short-term financing, FCRA budgeting with PIA, and the one-way ‘ratchet effect’ of large, near-certain losses that realistically will not be balanced with commensurate gains.
Economic-Cost-WIFIA-Portfolio-Part-1-Interest-Rate-Re-Estimates-v1.1-03282021-InRecapThe last few bullets of the Conclusion page sum up where we are — $2.1b of upward re-estimates have surfaced, with more to come, and there are implications:
If the likelihood of big funding losses was clear to me in 2021, using only publicly available data, why weren’t EPA WIFIA and OMB also aware of it? Or, if they were, why apparently was nothing done?