[Congressional Record Volume 141, Number 20 (Wednesday, February 1, 1995)]
[House]
[Pages H1028-H1029]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 CONCERNS REGARDING THE MEXICAN BAILOUT

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from New Jersey [Mr. Menendez] is recognized for 5 minutes.
  Mr. MENENDEZ. Mr. Speaker, I got elected for the 13th district of New 
Jersey to voice on behalf of my citizens their concerns, and certainly 
it is on their behalf that I have taken to the well today to speak on 
them.
  I want to state very clearly and very loudly for the record that I 
stand staunchly opposed to the unilateral action by the executive, in 
collaboration with the leadership of the House, to grant the Mexican 
Government an unprecedented bailout package worth billions of dollars. 
Not a single congressional voice nor a single American voter will be 
heard by virtue of the process that has taken place on this banker and 
speculator bailout bill.
  Mr. Speaker, I think it is a travesty for justice. I know that some 
in the House were involved in negotiations, but overwhelmingly many 
were not, many who also represent hundreds of thousands of taxpayers in 
their congressional districts.
  For those of us who did not support NAFTA, we spoke up about our 
concerns at that time, that Mexico was a developing economy, not a 
developed economy. We spoke up about our concerns about the value of 
the peso, and that in fact it was way beyond where it should be in 
terms of its exchange rate.
  Sure enough, Mr. Speaker, after NAFTA and after the presidential 
elections in Mexico, we find that many of these things are coming true. 
So without creating the appropriate safeguards during the NAFTA debate 
and subsequently in its enactment, it is my belief that we created a 
speculative environment in which middle class investors, the mom-and-
pop investors so vital to Wall Street brokers, were led to believe that 
investing some of their hard-earned life savings in mutual funds, in 
pension funds, investing in emerging Mexico was a safe bet, but 
billions of dollars later, we know it is not. In one week alone U.S. 
investors took over $12 billion out of the Mexican market.
  I question, one of the things I would have liked to have seen is how 
much money the middle class families across the country lose in the 
context of the investments in a speculative market that we helped 
create by virtue of how we portrayed the Mexican market.
  Today, Mr. Speaker, in the Committee on International Relations 
testimony was heard on this issue. I would like to read from one of the 
witnesses, John Sweeney of the Heritage Foundation, not an institution 
that I normally quote, but which is of great interest to me, 
particularly in the context that they were supporters of NAFTA and free 
market ideas.
  He said: ``This new plan is an improvised hodgepodge that will not 
solve the structural causes of the Mexican crisis. This new bailout 
plan is bad policy, and it is bad politics.''
  We were told, Mr. Speaker, that in fact the original $40 billion loan 
guaranty was meant to overwhelm Mexico's problem.
                              {time}  1830

  Yet we see that this new package has now risen to between $47 billion 
and $50 billion. So I am concerned if $40 billion was meant to 
overwhelm Mexico's problem, why did we have to go to $47 billion or 
nearly $50 billion?
  This witness went on to say, ``The Mexican crisis needs a stronger 
free market cure than Mexico's ruling political, corporate and labor 
elites are willing to accept.'' He went on to criticize this action.
  I think his last comment that I would like to make, he said, 
``Bailing out Mexico will tell governments in emerging markets that bad 
policies based on short-term political imperatives would be forgiven, 
and it would send private investors the message that bad investment 
decisions will be bailed out at U.S. taxpayer expense.''
  I think that that is the wrong message to send.
  It is interesting to see in today's New York Times in the business 
section how now investors are looking at all emerging markets and their 
investments in those emerging markets and beginning to question those 
investments. Maybe they will come back to good old T-bills and blue 
chip stocks here in the United States.
  I think it is important in this debate to continue to raise the 
questions of what type of speculative environments 
     [[Page H1029]] are we creating to put middle-class taxpayers 
     at risk, and in doing so I would hope that we would continue 
     to speak about this issue on the House floor.

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