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RES.15-002 | Summer 2016 | Graduate

# Mission & Metrics: Finance Training for Federal Credit Program Professionals

A suite of financial software, the MIT Mission and Metrics (MM2) Pro suite, has been created specifically to assist users in applying these disciplines within their agencies, particularly for agency process of strategic planning, budget justification, budget submission, and GPRA, as well as for maximizing the day-to-day management of scarce federal resources.

### The MM2 Federal Program Calculator (MM2FPC)

The MM2FPC is a calculator designed for federal credit agency managers. The calculator enables the manager to:

- Choose the optimal platform for delivering credit to the target borrowing segment consisting of a choice among the direct lending, credit guarantee, or grant structures.
- Design a credit product that suits the credit needs and credit capacity of the typical borrower within that segment, including type, amount, term, amortization rate, fees credit risk, collateral, debt service, downpayment.
- Design the optimal portfolio of the credit product, including volume, interest cost (full range of index rates and spreads, fixed and floating), all staffing and operating costs, delinquency, loss curve, loss reserves, charge-offs, recoveries, asset sale, and prepayment speed.
- Forecast the portfolio over a 10 year economic cycle in which changing interest rate indices, loan volume and credit loss rates can be applied to the portfolio.
- Produce a 10 year forecast of the key financial features of the portfolios in industry standard presentation for:
  1. the credit agency if it is a direct lending program
  2. the credit agency and the lending partner if it is a credit guaranty program
  3. the credit agency and the grantee if it is a grant program

The calculator enables the manager to compare results among the different platform and product design options over a 10 year economic cycle. The calculator can be used for new products and programs or for adjusting existing products and programs to changing economic and market conditions.

The logic of the calculator is simple, and the assumptions are those that are made every year during budgeting process.

It can take as little as 5 minutes to run a complete financial scenario “from soup to nuts.”

MM2FPC Tool: MM2FPC (XLSX - 2.4MB)

## Course Info

##### Instructors

- Deborah Lucas
- Douglas Criscitello
- Charles Tansey

##### Departments

- Sloan School of Management

##### As Taught In

Summer 2016

##### Level

Graduate

##### Topics

- Business
  - Accounting
  - Finance
  - Management
- Social Science
  - Economics
    - Public Economics
  - Public Administration
    - Public Policy

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