[Congressional Record Volume 141, Number 40 (Friday, March 3, 1995)]
[Senate]
[Page S3460]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            THE MEXICAN PESO

  Mr. BENNETT. Mr. President, I rise to discuss a situation that has 
been before us in the Chamber previously.
  We were all caught with some surprise earlier this year when the 
Secretary of the Treasury and the Chairman of the Federal Reserve Board 
came before a group of Members of Congress, House and Senate combined, 
to tell us of the crisis in Mexico and to ask for our support for a 
proposal to extend $40 billion in loan guarantees to the Mexicans.
  My initial reaction to that proposal was one of support, as were the 
reactions of the leadership of both parties in both Houses. Mexico is 
enormously important to the United States, economically and culturally. 
In addition, if we want to become crass about it, there are some 
750,000 American jobs that are in jeopardy if the Mexican economy 
should collapse. It made sense for the United States to do what it 
could to reach out to the Mexicans and try to support their economy, 
and I supported the administration's request.
  As we got into the details of the deal, however, it became clear to 
me, as it did to a number of other Members of Congress, that the $40 
billion loan guarantee was not a good deal, and we advised the Treasury 
of that. We urged them to come up with some alternative proposals, and 
they did. To their credit, they listened to the Congress and they 
proposed the second deal which I stood on this floor and endorsed in 
principle. It involved $15 billion from the Exchange Stabilization Fund 
and $5 billion under control of the Federal Reserve for a total of $20 
billion in American money and the rest from international sources.
  I praised that deal because it increased the participation to include 
other governments besides our own, and it injected the expertise of the 
Federal Reserve Board into this circumstance which was not directly the 
situation previously.
  I was forced to come to the floor to express some reservations in a 
later speech about how this deal was being put together. When it was 
finally announced and the specifics were signed in the White House, I 
was shocked, and quoted as being shocked in the national press, by the 
statement by the Mexican Minister of Finance, Mr. Ortiz, who said we 
will use this money to shore up our banks, to put more capital into the 
Mexican banks. That was not what I had understood the deal was going to 
be. I said I hope it works, but I still think the thing we should do is 
to get the Federal Reserve Board involved in extinguishing pesos.
  Well, Mr. President, Mexico is back in the headlines with the news of 
the arrest of President Salinas' brother, the accusation being that he 
profited improperly and enormously from the privatization program that 
went on under President Salinas, and then the occasion of his arrest on 
the accusation that he had a hand in the political assassinations that 
took place in Mexico that helped upset the stability of that nation.
  I had dinner just the other evening of this week with people who are 
doing business in Mexico who say that the economic conditions there are 
worse than they were in 1981. For those who may not remember the 1981 
devaluation, the peso prior to that devaluation was trading at 3 to the 
dollar. By the time they finally eliminated that peso and replaced it 
with the new pesos, it was 3,000 to the dollar. And again I say, people 
doing business in Mexico now are saying it is worse than it was in 
1981.
  The Mexican Government is still printing pesos as if they had not 
learned the lessons of 1981 and the lessons of the recent devaluation. 
I see no action on our part by the Federal Reserve Board to try to 
extinguish pesos. Perhaps that is logical. If the Mexicans are going to 
continue to print them, the Federal Reserve Board obviously should not 
be involved in trying to soak them up.
  More in sorrow than anger, I come to the floor now to say it is my 
opinion that this attempt, well meaning and one which I supported, to 
aid the Mexicans in their hour of great distress is failing. I stand 
ready, if the Treasury is interested, to make continued recommendations 
as to what might be done. But I hear these stories about the 
assassinations, the breakdown of Mexican political institutions, and 
the information that the central bank and the Mexican Government are 
continuing to print pesos, and I find myself distressed and discouraged 
at the prospect. It is not a pleasant one. If our neighbors immediately 
to the south go back into the abyss of the economic disasters that they 
went through in 1981, it is not just they who will suffer; we in this 
country will suffer, and I am filled, as I say, with distress and 
anguish that the American attempt to help them for whatever reason has 
failed.
  Mr. WARNER addressed the Chair.
  The PRESIDING OFFICER. The Senator from Virginia.
  Mr. WARNER. Mr. President, I ask that I be permitted 2 or 3 minutes 
to say to my distinguished colleague from Utah that I wish to associate 
myself with the remarks he has just completed. I have been counseling 
with him some several weeks now on this subject, and I would like the 
Senate to know how much time the distinguished Senator from Utah has 
devoted to independent analysis and research of this subject. I, too, 
from the very beginning was deeply concerned with the propriety and the 
manner in which the United States addressed this issue. To date, I have 
not been able to ascertain enough facts to enable this Senator to reach 
a final conclusion. However, I am concerned that the actions that our 
Government has taken will benefit many people who were involved in this 
transaction from the beginning for purpose of making unusual profits as 
a consequence of the high interest rates involved.
  I also regret that Congress did not become more involved, that time 
was not permitted to allow hearings so that we could have had a better 
understanding of the facts. I firmly believe that Congress should have 
participated in making the decision on this important matter.
  I will continue to work with my distinguished colleague from Utah and 
others to assess this situation in hopes that someday we can provide 
for the American people and others a complete set of facts as to how 
this crisis occurred, how it was addressed, and who was to profit and 
who was to lose.
  We have all expressed our compassion and concern about the people of 
Mexico. Indeed, there is no one who does not feel a desire to help 
them. That was expressed by the recent action of the Congress, and 
indeed the President, in certain trade agreements. However, this 
particular situation still has a large element of mystery that must be 
resolved in a manner that the American people fully understand.
  I thank my colleague.
  I yield the floor, Mr. President.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. BYRD. Mr. President, I ask unanimous consent that I may speak out 
of order and that I may speak for not to exceed 30 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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