Interview transcript:

 

Doug Criscitello Very excited to get underway at the Center for USA Lending. The idea has been building really in my mind, and on the part of others from this community, the federal lending community, for several decades really. The U.S. government runs more than 125 federal loan and loan guarantee programs, and that’s at agencies like the Federal Housing Administration, the Small Business Administration, the Department of Agriculture has a variety of loan programs, and various others. There’s about a dozen federal agencies that have loan programs. And today, the U.S. government has evolved to a point where it’s really the world’s largest financial institution. Its credit portfolio alone now totals about $5 trillion, a huge number. So given the relative complexity of making and servicing loans — and these instruments have terms that can last for decades — managing the government’s huge credit portfolio has always been a tremendous challenge. You know, particularly when you compare it with simply providing a one-time cash grant to an intended beneficiary, that’s pretty simple. You’re just cashing once. When we loan money, we’re entering into a long-term relationship with the borrower, technically, so the complexity is very significant.

Terry Gerton When you think about that massive portfolio, you’d said 125 different programs, 12 agencies, $5 trillion. Are there any specific programs that rise to the top of your visibility list in terms of desperately needing attention?

Doug Criscitello Let me answer that by talking about some of the good news, because huge strides have been made in recent decades. We’ve come a long way from the days when loan repayments were recorded on three-by-five index cards in pencil, right? So many of the systems that have been developed over the past few decades are huge advances relative to what we had prior to the sort of general use of computational power across the government. But notwithstanding those advancements, the systems that we have today are fragmented, outdated, they don’t communicate with each other. So, this creates a whole lot of administrative complexity. And borrower confusion. It drives up costs at the end of the day and it makes it difficult to manage risk or detect fraud. And it generally frustrates borrowers. I think if you did a man on the street interview, it wouldn’t be hard to find folks that have been frustrated in repaying a loan to the government.

Terry Gerton Well, your press release for the Center for USA Lending mentions modernization, technology, and integrity as core priorities. You just sort of glossed over them. But when I think about the financial industry, banking, and major corporations, they’re really at the front edge of technology, cybersecurity, identity management. How are you seeing the possibilities for bringing that kind of technology into how the government operates its loan portfolio?

Doug Criscitello Exactly right. So there are a lot of financial institutions that embrace modern technologies and are continuing to advance their use of cutting-edge tools. I think artificial intelligence is a terrific application here, right, to tailor the experience of borrowers, depending on their background, both in the application process and when it comes to servicing. Our hope is to really facilitate a dialog, not only across the government, but to bridge the gaps that exist between technology, private financial institutions and what they’re doing, and the U.S. government credit apparatus. Right now, there are huge opportunities to have really seamless systems from the time a borrower applies for a loan till the day they make the final payment. One agency that I’ve worked at and around for much of my career, the Small Business Administration, has made some amazing strides since the COVID pandemic, when it was forced to disperse nearly $1 trillion in paycheck protection program loans and economic injury disaster loans. They’re in the midst of just an incredible improvement in the borrower experience, the disaster loan program being a great example. And we want to encourage that type of improvement to occur at other agencies as well.

Terry Gerton I’m speaking with Doug Criscitello. He’s the new executive director at the Center for USA Lending. Doug, coordinated technology investment is a perennial problem for the federal government. But setting that aside, you just described a situation that calls out for centralized governance, that calls out for data standardization. Beyond tech investment, what are your policy priorities for the center?

Doug Criscitello You’ve touched on some of them, for sure. The notion of trying to at least have a coherent approach across agencies, where we have common data definitions and agreement in principle that having these end-to-end systems are the way forward here. We really need to automate workflows and integrate systems. I mean, that’s priority one, to ensure that can be done. So look, there’s a lot that the center can do. One thing we’re planning to do is to convene the community. Let’s get folks — we plan to have frequent gatherings of both folks in government, folks in industry — to come together to explore how best to move forward and to continually evolve. It’s not a one-time fix, you know. These systems can continually be strengthened. The government has shown no signs of reducing the size of its footprint here in the lending world. So, you know, we want to be a convener. We want to develop thought leadership. We want to pull together data from across the federal lending enterprise into a common shared platform to help all of the participants in this realm better understand how these programs are performing and what we might do differently going forward.

Terry Gerton You’ve laid out a pretty bold and expansive vision there. If you’re successful, five years from now, what looks different about federal lending?

Doug Criscitello The stakes are really high with a $5 trillion portfolio. I think if we’re successful, our work will help enhance taxpayer value, importantly, by reducing wasteful spending on duplicated systems. We hope to enhance program integrity, reduce hedge fraud faster, and streamline access to loans. Particularly when they’re needed most, right? There are times when the federal government — and the pandemic was a great example — times when funds need to be put on the street quickly and effectively and efficiently, and avoiding fraud. So our goal is really to make government lending more efficient. So whether you’re a borrower seeking faster service, a private lender who wants to have a harmonized relationship across all of their various federal loan guarantee programs in which they participate, or even just a taxpayer … importantly, a taxpayer who absolutely deserves efficient government operations. The center’s modernization efforts, I think, are poised to benefit you directly. So we’re really excited to get underway.

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