[Congressional Record Volume 141, Number 19 (Tuesday, January 31, 1995)]
[House]
[Page H958]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                            MEXICAN BAILOUT

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Ohio [Ms. Kaptur] is recognized for 5 minutes.
  (Ms. KAPTUR asked and was given permission to revise and extend her 
remarks.)
  Ms. KAPTUR. Today the administration, with the acquiescence of the 
top leaders in this Congress, announced a sweeping $47.5 billion 
bailout of the Government of Mexico and its Wall Street creditors by 
our taxpayers through the instrumentalities of the United States, 
including our U.S. Treasury, our Federal Reserve, the International 
Monetary Fund, into which the United States pumps money, and the Bank 
for International Settlements, on whose board sit the chairman of our 
Federal Reserve and the chairman of the New York Federal Reserve.
  All of this was done without a vote of the Congress of the United 
States, the only federally elected officials representing the people of 
this country.
  This newest proposal is a perpetuation of the worst kind of 
manipulative politics, both here in our country and in Mexico. And from 
a constitutional standpoint, it is absolutely precedent setting in the 
abuse of power by our own Federal Reserve, in collaboration with the 
U.S. Department of Treasury.
  This new proposal is nothing short of a circumvention of the 
democratic process and a circumvention of the proper role of the 
elected leaders of the Congress of the United States.
  The administration chose this path because they knew that they did 
not have the votes in this Congress, nor the support of the American 
public. In fact, over 80 percent of the American people oppose this 
bailout.
  This new proposal is representative of what is wrong with politics in 
our country: not reflecting the will of the people.
  Federal Reserve Chairman Greenspan, officials in the administration, 
and the top Republican leadership of this Congress have all exhibited 
this type of behavior during the present Mexican peso crisis and 
further through past trade policies which created this mess, an 
arrogance and abuse of power which knows no bounds.
  It is well known that people tend to change once they come into the 
beltway in Washington.
  In October 1979, Federal Reserve Chairman Greenspan told the Senate 
Banking Committee that a proposed $750 million loan, one-fortieth of 
what is being proposed here, for near-bankrupt Chrysler Corp. was a bad 
idea that flew in the face of the principles of free enterprise. This 
is the same man who by raising interest rates has increased your 
mortgage payments and increased your monthly credit card payments, 
eating into your wages over the last 20 years.
  Chairman Greenspan and the Federal Reserve are trying desperately to 
cover their own tracks in this crisis. In fact, it was the Federal 
Reserve's own interest-rate policies of the past 3 years that helped 
set Mexico up for a fall.
  Low United States rates in 1992 and 1993 led speculators to pump 
record levels of money into Mexico, some estimating over $70 billion, 
and other emerging markets, but then the Fed's interest rate increases 
of 1994, all six of them, led those same investors to pull their money 
back out and bring it home.
  If Chairman Greenspan was so concerned about Mexico, he would 
certainly not have raised United States interest rates six times over 
the last year.
  The latest increase in interest rates means that if you own a $60,000 
home with a 30-year mortgage, your mortgage payments have gone up by an 
additional $100 a month. And as a result of the Fed's actions, your 
home will cost you about $1,200 more a year or about $36,000 over the 
life of your mortgage.
  Chairman Greenspan is unelected, unaccountable, and evidently unaware 
of the people's lives in this country that his policies affect.
  There is absolutely no reason that a proposal of this magnitude 
should not be considered by the Congress of the United States.
  Under the Constitution, we have the absolute authority to coin money 
and to regulate the flow of money between nations. What was done here, 
very cleverly through the back door, was that an entity within the U.S. 
Treasury Department, the Currency Stabilization Fund, took 
deutschemarks and yen that they hold and they said to the Federal 
Reserve, we will borrow against those. And essentially a flow of funds 
came from the Federal Reserve to the U.S. Treasury against the terms of 
the Constitution of the United States, which require all appropriated 
dollars to be voted on by the Congress of the United States.

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