[Congressional Record Volume 141, Number 156 (Tuesday, October 10, 1995)]
[Senate]
[Pages S14950-S14951]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             THE MEXICAN BAILOUT AND PROPOSED BAILOUT FUND

  Mr. D'AMATO. Mr. President, I rise this evening because the annual 
meeting of the International Monetary Fund, IMF, and the World Bank are 
being held in Washington this week; as a matter of fact, this very 
evening. As financial leaders gather from all over the world, I think 
it is incumbent that we review recent developments concerning the IMF, 
the Mexican bailout and the IMF's proposed international bailout fund.
  The IMF recently released its annual survey of global capital 
markets, which includes an analysis of the Mexican peso crisis. This 
IMF report confirms many of the concerns that I have expressed since 
the beginning of the year. The IMF report also raises many troubling 
questions.
  First, did the Mexican Government persuade the U.S. officials to 
approve a loan package by exaggerating this crisis after denying there 
was a problem for over a year? And by overstating the crisis, did the 
Mexican Government increase its own problems and further destabilize 
the peso?
  Second, was the bailout, as structured, really necessary? The Mexican 
Government and the Clinton administration claimed that without the 
bailout, conditions in Mexico would have been far worse. But the 
situation in Mexico is a disaster. Just ask the Mexican people.
  Third, was the crisis in Mexico certain to spread to other emerging 
markets? That is the rumor that was spread. That is what Congress was 
told. According to the IMF report, the answer is no. The IMF report 
states that:

     once the panic trading subsided, markets discriminated, 
     albeit imperfectly, among countries according to the quality 
     of their economic fundamentals.

  Fourth, should the administration have sent American taxpayers' 
dollars to pay off rich tesobono holders? The administration pushed 
this bailout plan without a single vote of Congress. The American 
people should not have been forced to bear the financial risk of the 
Mexican Government and foreign investors. The administration should not 
have soothed the pains of speculative investors at the expense of the 
American taxpayers and the Mexican people.
  Mr. President, we now know that the U.S. tax dollars were sent to 
Mexico to bail out speculators. In fact, the IMF report indicates that 
the peso's devaluation was precipitated and made far worse by the 
massive withdrawal of money by Mexican and foreign investors. We now 
know that Mexican investors who had a firsthand view of Mexico's 
rapidly deteriorating political and economic situation in 1994 were the 
first to cash in their holdings and take their money out of the 
country.
  Mr. President, the IMF report underscores the initial question that 
the American taxpayers have asked over and over: Why were billions of 
American taxpayers' dollars sent to a foreign country that was first 
abandoned by its own wealthy citizens, citizens who, Mr. President, had 
inside information and bailed out?
  At a minimum, the Mexican Government should have looked to its own 
rich countrymen for help before turning to U.S. taxpayers to bail them 
out. At a minimum, our Treasury Department should have insisted upon 
that.
  The IMF report confirms that the Mexican Government withheld 
important financial data and provided inaccurate and overly optimistic 
economic forecasts. If a country does not provide complete and accurate 
disclosure of key economic figures, we should punish this deception, 
not reward it.
  Mr. President, I am also troubled by the IMF's role in the Mexican 
peso crisis. I am deeply concerned by the recent Whittome report, an 
internal study which focuses on the IMF's review of economic conditions 
in Mexico. Unfortunately, the U.S. Department of Treasury has 
classified this report. But according to news articles in the 
international press service, the Whittome report concluded that the IMF 
distorted its own reporting on Mexico in response to political pressure 
from the Mexican Government.
  Why is this report being withheld from the American public and the 
Congress? We have a right to know what happened in this Mexican 
bailout. Unfortunately, this administration has made a habit of 
concealment. The Treasury Department has classified the Whittome report 
so the American people cannot read it and make their own judgment about 
how this crisis was handled. Mr. President, that is wrong. People have 
a right to know.
  The Mexican Government has been less than candid with the American 
people and the world financial markets. The administration should not 
be aiding them in their disingenuous behavior. We should not reward bad 
economic policies or deception. That report should be made public.
  The IMF and the World Bank and the Clinton administration have 
proposed the creation of a $50 billion bailout fund to handle future 
Mexico-style crises. I am opposed to using U.S. taxpayers' dollars to 
support this bailout fund.
  The American taxpayers have already been forced to contribute more 
than their fair share. The Mexican bailout was billed to the Congress 
and the American people as an international effort, but American 
taxpayers were left holding the bag.
  The American people are sick and tired of picking up the check. We 
still have not been paid back for the first bailout, and despite last 
week's propaganda, I doubt we ever will be. The Mexican Government and 
the U.S. Treasury have proudly proclaimed that the prepayment of $700 
million of a $12.5 billion debt shows the bailout was a success.
  What they have not told us is that this so-called ``prepayment'' of 
$700 million is only a fraction of the $2 billion that is due in a few 
weeks. What about the remaining $1.3 billion that is due at that time? 
It is no accident that this publicity coincides with Mexican President 
Zedillo's visit to Washington and the IMF's annual meeting.
  I do not see how we can have a serious discussion about increasing 
the amount of money the IMF makes available to bail out other countries 
if we cannot trust the IMF's own reports, if we do not even get to the 
see the IMF's report, if the Treasury Department classifies it.
  The IMF's future role in the world economy must be reexamined, 
especially in the light of the disturbing reports that the fund has 
become too easily swayed and manipulated by political pressures. We 
must demand candor, honesty, and good business judgment from our own 
officials and from anyone else asking for U.S. taxpayers' dollars. The 
American people deserve accountability. As the World Bank and the 

[[Page S 14951]]
IMF consider international bailout funds and other mechanics that deal 
with global economic problems, the Congress must not be idle.
  Mr. President, the Congress must remain vigilant in its efforts to 
protect taxpayers' dollars. We will be watching for the full payment 
from the Mexican Government at the end of this month, and we will be 
closely reviewing any proposed international bailout fund. If the 
administration is ready to declare the Mexican bailout a success, then 
we should have immediate repayment of the entire $12.5 billion of 
taxpayers' money.
  Mr. President, I yield the floor.

                          ____________________