[Congressional Record Volume 141, Number 29 (Tuesday, February 14, 1995)]
[Senate]
[Pages S2667-S2668]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                  MEXICAN LOAN COMMITMENTS RESOLUTION

 Mr. D'AMATO. Mr. President, I am pleased today to cosponsor 
with Senator Mack the Mexican loan commitments resolution.
  As I stated on February 8, the President never should have 
circumvented the will of the American people to bail out a mismanaged 
Mexican Government and global currency speculators. I remain outraged 
that American taxpayers have been forced to do something they did not 
want to do. The President knew full well that Congress would never 
approve a $40 billion bailout. He never should have submitted to 
economic blackmail.
  The President's use of $20 billion from our Exchange Stabilization 
Fund [ESF] to bail out Mexico was unprecedented. This fund was intended 
to stabilize the dollar, not the Mexican peso or any other foreign 
currency. It is not the President's personal piggy bank. The President 
has now committed $20 billion of the approximately $25 billion the ESF 
has available for lending. Are sufficient funds left in the ESF to 
stabilize the dollar's exchange rate in the event of a crisis? What 
happens if Mexico defaults? Does the President propose to raise taxes 
or cut needed domestic programs to replenish the ESF?
  The Banking Committee intends to hold oversight hearings on the 
President's use of the ESF to bail out Mexico. These hearings will 
address, among other issues: First, the President's legal authority to 
use the ESF to provide $20 billion in loans, loan guarantees, and other 
assistance to Mexico; second, the need for such assistance to Mexico; 
third, Mexico's compliance with the conditions imposed for United 
States assistance; fourth, the administration's monitoring of economic 
conditions in Mexico during 1994, including whether the administration 
or the International Monetary Fund [IMF] participated in Mexico's 
December 20 decision to devalue the peso; and fifth, lessons of the 
Mexican peso crisis, including the risk of similar crises occurring in 
other nations.
  The Mexican loan commitments resolution expresses the sense of the 
Senate that Congress must receive sufficient information to judge the 
success or failure of the President's Mexican adventure. This 
resolution urges the Secretary of the Treasury to provide the Senate 
Banking Committee with monthly information on: First, economic 
conditions in Mexico, and second, Mexico's use of the funds it obtains 
from the ESF and IMF. The Secretary now submits a monthly ESF financial 
statement to the Senate and House Banking Committees.
  Mr. President, in a February 9 letter to me, Secretary Rubin 
expressed a willingness to provide some additional information to the 
Banking Committee on Mexico's economic condition, and Mexico's use of 
our assistance. I ask that the Secretary's letter be included in the 
Record at the conclusion of my remarks.
  (See exhibit 1.)
  The purpose of this resolution is to detail the information that the 
Senate believes the Secretary must submit to allow the Banking 
Committee to monitor the President's extraordinary use of the ESF to 
aid Mexico.
  The resolution urges the Secretary to provide the Banking Committee 
with information on:
  The activities of the Mexican Central Bank, including the reserve 
positions of the Mexican Central Bank and data relating to the 
functioning of Mexican monetary policy;
  The implementation and extent of wage, price, and credit controls in 
the Mexican economy;
  Mexican tax policy;
  Planned or pending Mexican Government regulations affecting the 
Mexican private sector; and
  Any efforts to privatize public sector entities in Mexico.
  This information will allow the committee to determine whether 
Mexico's Government has instituted the tight money and free market 
reforms needed to improve its economy.
  [[Page S2668]] The resolution further asks that the committee be 
provided with a full disclosure of all financial transactions, both 
inside and outside of Mexico, directly involving funds disbursed from 
the ESF or the IMF. This information will allow the committee to 
determine whether these funds are being used to strengthen the peso or 
to refinance Mexico's debt. As Senator Bennett urged last week, these 
funds should be used to extinguish excess pesos not to bail out 
speculators in Mexican tesobonos.
  Finally, this resolution asks that the committee be informed of any 
consultations involving Mexico between the Untied States Department of 
the Treasury, the IMF, and the Bank of International Settlements. This 
information will assist the committee in evaluating the success of the 
multilateral effort to aid Mexico.
  Mr. President, I hope my dire predictions about the President's use 
the ESF to aid Mexico turn out to be wrong. I hope that Mexico 
prospers, and that American taxpayers are not left holding the bag.
  Mr. President, I strongly urge passage of the Mexican loan 
commitments resolution. The information specified in this resolution 
will allow Congress to blow the whistle if Mexico fails to life up to 
its commitments--to stop the peso press, to balance its budget, and to 
privatize. We must protect American taxpayers, not badly run foreign 
governments.
                               Exhibit 1

                                        Secretary of the Treasury,


                                   Department of the Treasury,

                                 Washington, DC, February 9, 1995.
     Hon. Alfonse M. D'Amato,
     Chairman, Senate Committee on Banking, Housing, and Urban 
         Affairs, U.S. Senate, Washington, DC.
       Dear Senator D'Amato: In your floor statement of February 
     8, you called on the Department of the Treasury to provide 
     the Banking Committee with monthly information on (i) 
     economic conditions in Mexico, and (ii) Mexico's use of the 
     funds it will obtain through our support package. As you 
     know, the Treasury Department presently submits a monthly 
     report to the House and Senate Banking Committees on Exchange 
     Stabilization Fund (ESF) operations. We are happy to 
     supplement this monthly report with the information you 
     requested. The report will also provide a detailed picture of 
     developments in Mexico, as well as an analysis of Mexico's 
     compliance with our agreed economic terms and conditions. 
     This information will enable the Congress and the American 
     people to review actions we are taking in America's interests 
     to deal with Mexico's financial situation.
       Let me assure you that we fully share your concerns about 
     the need to ensure Mexico's proper use of our support.
       To that end, Mexico has already agreed to meet a tough set 
     of economic conditions imposed by the IMF as a requirement 
     for accepting support from the Fund. These include strict 
     monetary targets that will hold Mexico to negative real 
     monetary growth, and disciplined fiscal targets that will 
     move Mexico to budget surplus. In addition, the Mexicans have 
     committed themselves to pushing forward with their 
     privatization program and further opening their economy.
       Our own framework agreement with Mexico will take the IMF 
     program as a base. But we will also require the Mexicans to 
     agree to additional obligations, over and above those imposed 
     by the IMF, to protect our own resources. We will insist that 
     Mexico take steps to assure the independence of its central 
     bank. Moreover, we will require far greater transparency and 
     regular reporting on Mexico's financial condition and 
     policies. We will further ensure Mexico provides us with the 
     data we need to determine independently whether Mexico is 
     complying with our conditions and the IMF's conditions. Let 
     me emphasize to you that we will preserve the right to halt 
     our support program if we conclude that Mexico is not 
     cooperating, or if we judge that Mexico's economic situation 
     is deteriorating.
       Please let me know if I or my staff can be of any further 
     assistance.
           Sincerely,

                                          Robert E. Rubin.
     

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