[Congressional Record Volume 141, Number 205 (Wednesday, December 20, 1995)]
[Senate]
[Pages S19012-S19013]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            THE FIRST ANNIVERSARY OF THE MEXICAN PESO CRISIS

 Mr. D'AMATO. Mr. President, today marks the 1-year anniversary 
of a sad chapter in Mexico's history and a sad chapter in American 
financial management by the Clinton administration. After the sudden 
devaluation of the Mexican peso on December 19, 1994, the Mexican 
economy continued to collapse. In response to the economic crisis, the 
Clinton administration circumvented Congress and unilaterally committed 
$20 billion of United States taxpayer funds to bail out Mexico.
  The public relations campaign conducted by the Clinton administration 
and the Mexican Government have attempted to portray the Mexican 
bailout as a success and that, given enough time and enough money--
United States taxpayers' money--conditions in Mexico will eventually 
improve. Public relations campaigns and publicity stunts 

[[Page S19013]]
aside, the facts are that the Clinton administration's taxpayer funded 
bailout of Mexico is a colossal failure.
  In early 1994, Mexico was hailed by the administration as a hallmark 
of success and was embraced as a partner in the North American Free-
Trade Agreement. The subsequent 2 years have revealed that this image 
was a costly mirage forced upon the American and Mexican citizens. 
Mexico has become a dependent of the United States, looking north for 
more money to bail out its failed economic and social policies. But the 
answer to Mexico's problems is, and always has been, in Mexico City, 
not Washington, DC.
  I have been saying for almost 1 year that the Clinton 
administration's bailout was an ill-conceived disaster. It is not just 
my opinion, it is the cold hard facts--evidenced by the Mexican 
economic figures. The last few months have demonstrated that the 
Mexican financial sector can no longer disguise what is happening in 
Mexico. Mexico's economic crisis is now 1 year old and there is no 
indication of any meaningful improvement in Mexico's real economy: 
Record numbers of Mexicans are out of work, interest rates are soaring, 
the people are starving, and the country is reeling under increasing 
social and political unrest.
  Mr. President, we must look at the objective facts, and the 
performance of the Mexican peso is an excellent starting point. On 
December 20, 1994, the peso was trading at 3.97. Yesterday the peso 
closed at 7.54 against the dollar--that is a 50-percent drop in 1 year.
  Mr. President, no one wants to hold pesos because they are considered 
worthless. As reported by the New York Times on November 11, 1995, ``In 
the land of the peso, the dollar is common coin.'' But the Mexican 
Government continues to spend United States taxpayer dollars in their 
frantic and futile attempt to support the peso. Money from our Exchange 
Stabilization Fund--the ESF--that was supposed to be used to support 
the dollar. The Clinton administration's use of the ESF was 
unprecedented, and legally tenuous. In August of this year, I sponsored 
the Senate passed an amendment to the ESF statute which will prevent 
this administration from using the ESF as the President's personal 
piggybank again.
  The currency speculators will continue to reap huge profits from the 
fluctuating peso. On December 22, 1994, Mexico adopted a floating rate 
regime, which can only be successful if people have confidence in the 
Mexican Central Bank. The Central Bank's performance so far has failed 
to inspire such confidence. These problems are exacerbated by the 
continuing dismal condition of the Mexican banking system. I have been 
saying all year that the Mexican banking system is the weak link in any 
financial recovery. In May of this year, the Banking Committee held a 
hearing to review the condition of the banks and their apparent 
inaccurate reports. The end result in that the Mexican Government is 
bailing our Mexican banks. On December 15, 1995, the Mexican Government 
announced that it was buying $2 billion of bad loans from Banamex, 
Mexico's largest financial groups. Where is the Meixcan Government 
getting this money? From the U.S. taxpayers?
  In the year since the peso's collapse, Mexico has received over $23 
billion from the United States and the IMF and it has not solved 
anything.
  American taxpayer dollars have been spent paying off private 
investors and not one dime of it is staying in Mexico or helping the 
Mexican people. Over 1 million jobs have been lost and annual inflation 
has exceeded 50 percent. It is clear the bailout is a failure, so I 
hope that this administration will not consider throwing more good 
money after bad.
  Mr. President, I want to address a related matter concerning the IMF. 
On October 18, I sent a letter to the Managing Director of the IMF, Mr. 
Camdessus, requesting the public release of the so-called ``Whittome 
Report''. Two months later, the Congress and the American public still 
have not seen the Report. The Whittome Report is the result of an 
internal study by the IMF of its surveillance and response to the 
Mexican crisis. According to news articles, the Whittome Report 
concluded that the IMF distorted its own reporting on Mexico in 
response to political pressure from the Mexican Government. The Report 
apparently provides a comprehensive analysis of the IMF's monitoring 
and response to the Mexican Economic Crisis. The Congress and the 
American people need all the information we can get on this multi-
billion dollar bailout.
  The United States is the single largest financial contributor to the 
IMF, almost \1/4\ of their funds, and we deserve some answers. The IMF 
has sent $11.4 billion to Mexico this year and they will disburse $1.6 
billion more every 3 months until August of next year. So when you add 
the indirect contributions the United States has made from the IMF to 
the $12.5 billion the United States has given directly to Mexico, it is 
obvious that we all have a very large stake in this game. When we have 
questions--we deserve answers.
  It is unconscionable that full disclosure has not been given the 
Congress--or the American taxpayer--about what happened in this Mexican 
bailout. 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. That's wrong.
  In October I introduced a resolution calling for the IMF to release 
the Whittome Report and requesting that the Treasury Department 
declassify it so that the American public can judge it for themselves. 
If this report is not declassified and made available to the public and 
the Congress by the start of the next session, I will ask my colleagues 
to vote for this resolution and take further steps to obtain the 
information we deserve.
  Mr. President, the Mexican peso crisis is now 1 year old. It is time 
to reassess the situation and learn all we can from the mistakes that 
were made. At a time when we are struggling to balance our own budget, 
and make necessary cuts in social programs, we must think long and hard 
about spending United States tax dollars to bail out Mexico's financial 
problems.

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