[Congressional Record Volume 141, Number 20 (Wednesday, February 1, 1995)]
[House]
[Page H1031]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                           OIL AS COLLATERAL

  The SPEAKER pro tempore (Mr. Hastings of Washington). Under a 
previous order of the House, the gentlewoman from Ohio [Ms. Kaptur] is 
recognized for 5 minutes.
  Ms. KAPTUR. Mr. Speaker, I want to compliment the previous speaker, 
the gentleman from California [Mr. Hunter], who has been so much a part 
of our efforts to really open up international trade and explain the 
consequences to people in this country and abroad.
  I rise tonight with a rather heavy heart because of the action of the 
Clinton administration. Our Government is not a monarchy. We are a 
nation of laws and of balance of powers between this legislative 
branch, which is the first branch that the Constitution mentions, and 
the action, in my opinion, by the Clinton administration in extending 
over $47 billion worth of credit from the taxpayers of this country is 
outside the constitutional boundaries of the executive branch.
  Now, Wall Street today and their irresponsible money men are 
cheering, because they essentially have been bailed out along with 
their 24 billionaire friends in Mexico with this gift package from the 
taxpayers of the United States of America with no vote by Members of 
this Congress. Wall Street investors have every reason to be happy. 
They got their money back from you, the taxpayers, but the American 
people should know that they are at risk, because this deal is backed 
up by worthless paper certificates of oil serving as collateral.
  Now, why do I say this? Does not oil have value? Under normal 
circumstances, it would. But the Mexican Government has long used its 
oil over and over, the same oil again, as collateral for debts they 
already owe.
  Did you know that Mexico has already pledged its oil in the European 
bond market, the Euro-bond market, for upwards of $10 billion? The fact 
is Mexican oil no longer has any value for use as collateral on new 
debt, because it is pledged to old debt, and Mexico owes anywhere 
between, on the public debt it owes, between $160 billion and $200 
billion.
  It would be almost better for Mexico to pledge jumping beans rather 
than to repledge their oil again.
  In the Record tonight I have taken out of Moody's Manual a list of 
where Mexico's monopoly-owned, state-owned oil company, Pemex, has 
already pledged
 the assets of their oil company.

  Suffice it to say, all the administration accomplished by 
conditioning new loans, these $47 billion worth of loans from our 
taxpayers, on Mexican oil was to put our taxpayers at the end of a very 
long line of creditors to that oil. Even adding up all the assets and 
production of Pemex, Mexico does not have enough oil revenue to cover 
the $47.5 billion worth of new loans.
  In fact, the Houston Chronicle reports that Mexico will become a net 
oil importer by the turn of the century, because it is essentially 
producing half of the oil it produced a decade ago because of problems 
inside that oil company.
  Now, add to that what Mexico's own officials have said. The Mexican 
Secretary of the Treasury said, ``Our oil resources are not going to be 
used for guarantees.'' Well, if they are not, what is backing up the 
risk to the taxpayers of this country?
  And Mexico's Energy Minister was quoted recently, and a direct quote 
again, ``Our oil will not be mortgaged nor will it form any part of any 
loan guarantee.''
  Now, maybe the United States Ambassador to Mexico cannot read 
Spanish, but it is all there in the Mexican newspapers to be read by 
anyone.
  Basically, my friends, by dodging Congress, our people have been sold 
a bill of goods that have no value by the administration in 
collaboration with the Government of Mexico. Now our administration is 
scrambling to make this back-door deal look as legitimate as possible, 
but the fact remains the so-called collateral that Mexico is putting up 
for the $47.5 billion in loans is worthless and, in fact, experts have 
estimated the entire worth of Pemex at somewhere perhaps, if we are 
lucky, about $24 billion.
  So ask yourself when you read the fine print and they say they are 
going to book sales of oil on the Federal Reserve of New York's books, 
who is cooking the books? We are not getting barrels of oil. We are 
getting pledges of collateral that has already been overpledged.
  And if you really want to get cynical, and I will end with this 
statement, is it not interesting that this is not the first time this 
has happened? But in fact it happened right after the Presidential 
election of 1988, during that period when they were trying to prop up 
the value of the Mexican peso. It happened in 1982, and now they 
devalued the peso right after the Mexican election in 1994.
  Let the record speak for itself.
  

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