The Department of Transportation Office
of Inspector General (OIG) issued its Report
on the Audit of the Title XI Loan Guarantee Program The audit examined whether proper procedures were followed and the impact of recent bankruptcies. As of December 2002, the Title XI portfolio totaled approximately $4.3 billion in executed loan guarantees and loan guarantee commitments. The report discussed the impact of the American Classic Voyages Co.
(AMCV) bankruptcy ($1.3 billion in loan guarantees) and potential problems with loan guarantees to companies that are subsidiaries of Enron Corporation
($122 million in loan guarantees). The OIG recommends that the Maritime Administration undertake more effective oversight of the loan application and review process (including a risk analysis and external review); more vigorous financial oversight of borrowers during the term of the loan guarantee; better monitoring and protection of vessels and shipyards while under the loan guarantee; and more effective stewardship of foreclosed assets.