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Macroeconomic influences - Changes in the economy can have a major impact on our financial programs and the ability of our customers to meet their obligations. A rise in unemployment generally impacts low-income families first and can result in an increase in delinquency rates. Inflation can impact the disposable income of low-income families and may also adversely impact the ability of small communities and businesses to meet their obligations if their operating expenses are increasing faster than their income. Changes in the cost of money have the greatest impact on the mission area. Rising interest rates obviously impact the cost of the financing provided by the mission area and the ability of new customers to afford the needed assistance. It limits the ability of our existing customers to graduate to private sector credit. Rising interest rates will impact the subsidy rates for each program and reduce the amount of funds available for lending.
Legislative and other regulatory changes - Significant changes in the environment in which a family, community, or business operates have an impact on how they will function in the future. For example, Welfare Reform will have a major impact on low-income families especially during periods of economic downturn. The Telecommunications Act of 1996, which moved the telecommunications industry from a tightly regulated industry to a competitive deregulated industry, is impacting our rural telecommunications customers. The 1992 Energy Policy Act may change dramatically the business environment of the electric utility industry.
Reductions in funding - Our financial programs are dependent upon Federal funding. Reductions in the level of funding will reduce our ability to help rural America and achieve our goals. Likewise, reductions in funding at the State or local level will limit our ability to leverage our funds with the resources of other organizations.
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