[Congressional Record Volume 141, Number 29 (Tuesday, February 14, 1995)]
[House]
[Pages H1696-H1697]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   CLINTON ADMINISTRATION/MEXICAN PESO CRISIS: THEY SHOULD HAVE KNOWN

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 4, 1995, the gentleman from Florida [Mr. Stearns] is recognized 
during morning business for 5 minutes.
  Mr. STEARNS. Mr. Speaker, perhaps the most amazing aspect of the 
Clinton administration's $53 billion loan bailout of Mexico--$20 
billion of which comes straight out of the pockets of the U.S. 
taxpayers--is that it's a bailout that should not have happened.
  As the Washington Post recently reported, there were signs as early 
as February of last year that Mexico's economy was in serious trouble. 
At that time the International Monetary Fund issued a report stating 
that Mexico's consumption of foreign goods and services was outpacing 
the ability of its economy to pay for them. In other words, it was 
living on borrowed time--and money.
  Clinton administration officials expressed no alarm, not even when 
foreign investors began shifting money to dollar-denominated 
investments that would make it easier to pull funds out of Mexico. As a 
former analyst for Mexico's Banca Serfin Banking group said, ``That's a 
clear sign something was wrong * * * if the American Government didn't 
see that, they're blind.''
  But that did not stop then-Treasury Secretary Lloyd Bentsen from 
claiming in mid-February that Mexico ``has become an example for all of 
Latin America.'' He said this one year ago.
  [[Page H1697]] Then in March, the Mexican financial markets suffered 
another shock when the ruling political party's Presidential candidate 
was assassinated. This prompted the Clinton administration to extend a 
$6 billion credit line to Mexico, even as Mexico was using up its 
reserve of U.S. dollars to prop up the peso. This occurred less than 1 
year ago.
  Last summer, the Mexican economy had deteriorated to the point that 
Clinton administration officials finally recommended economic reforms. 
But as the Washington Post put it, ``those efforts lacked urgency and 
never went beyond exhortations.'' And the administration never made a 
big push for Mexico to devalue its overinflated currency.
  And although administration officials deny it, one has to wonder what 
role their desire to see Ernesto Zedillo win the upcoming Presidential 
election played in the decision to abandon calls for real reform. As 
the Washington Post quoted one official, the CIA accurately predicted 
Zedillo's victory, but ``it didn't tell you that if he kept driving 
straight he would fall off a cliff.''
  With Zedillo safely elected, Mexico's then-President Salinas finally 
admitted on October 1 that his country's central bank reserves had 
fallen to $17 billion from $28 billion at the end of 1993. It became 
clear a devaluation was coming.
  But Mexico tried to hide its financial predicament from the world. 
Not until mid-December did we find out Mexico's reserves had sunk to $7 
billion. Even then, Mexico's finance minister said his country would 
``absolutely not'' devalue its currency.
  We all know what happened next. On December 20 the Mexican Government 
reversed its policy and devalued the peso by 13 percent.
  There is no good reason the Clinton administration should not have 
seen this coming. The signs were there a year ago. Now the U.S. 
taxpayers are the line for $20 billion to rescue the economy of a 
country that bungled its own economy and hid the facts from us. 
Congress should not let his bailout deal go through unquestioned.


                          ____________________