[House Report 104-53]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                     104-53
_______________________________________________________________________

    REQUESTING THE PRESIDENT TO SUBMIT INFORMATION TO THE HOUSE OF 

        REPRESENTATIVES CONCERNING ACTIONS TAKEN THROUGH THE 
 
    EXCHANGE STABILIZATION FUND TO STRENGTHEN THE MEXICAN PESO AND 

                  STABILIZE THE ECONOMY OF MEXICO

_______________________________________________________________________


 February 27, 1995.--Referred to the House Calendar and ordered to be 
                                printed

                                _______


   Mr. Leach, from the Committee on Banking and Financial Services, 
                        submitted the following

                              R E P O R T

                       [To accompany H. Res. 80]

    The Committee on Banking and Financial Services, to whom 
was referred the resolution (H. Res. 80) requesting the 
President to submit information to the House of Representatives 
concerning actions taken through the exchange stabilization 
fund to strengthen the Mexican peso and stabilize the economy 
of Mexico, having considered the same, report favorably thereon 
with an amendment and recommend that the resolution be agreed 
to.
    The amendment is as follows:
    Strike out all after the resolving clause and insert in 
lieu thereof the following:

That the President is hereby requested to provide to the House of 
Representatives (consistent with the rules of such House), not later 
than 14 days after the adoption of this resolution, the following 
documents in the possession of the executive branch, if not 
inconsistent with the public interest:
          (1) Any document concerning--
                  (A) the condition of the Mexican economy; and
                  (B) any consultations between the Government of 
                Mexico and the Secretary of the Treasury (or any 
                designee of the Secretary), the International Monetary 
                Fund, or the Bank for International Settlements.
          (2) Any document containing--
                  (A) a description of the activities of the central 
                bank of Mexico, including the reserve positions of such 
                central bank and data relating to the functioning of 
                Mexican monetary policy;
                  (B) information regarding the implementation and the 
                extent of wage, price, and credit controls in the 
                Mexican economy;
                  (C) a complete documentation of Mexican tax policy 
                and any proposed changes to such policy;
                  (D) a description of all financial transactions, both 
                inside and outside of Mexico, directly involving funds 
                disbursed from the exchange stabilization fund and the 
                International Monetary Fund, including transactions 
                with--
                          (i) individuals;
                          (ii) partnerships;
                          (iii) joint ventures; and
                          (iv) corporations;
                  (E) a list of planned or pending regulations of the 
                Government of Mexico affecting the private sector of 
                the Mexican economy; and
                  (F) any efforts to privatize public sector entities 
                in Mexico.
          (3) Any document concerning any legal analysis with regard to 
        the authority of the President or the Secretary of the Treasury 
        under section 5302 of title 31, United States Code, the Bretton 
        Woods Agreements Act, the Special Drawing Rights Act, the Gold 
        Reserve Act of 1934, or any other law or legal authority to use 
        the stabilization fund to implement the President's proposed 
        Mexican support package.
          (4) Any document concerning any legal opinion regarding the 
        applicability or nonapplicability of the provisions of the 
        Federal Credit Reform Act of 1990 to the exchange stabilization 
        fund.
          (5) Any document concerning any agreement between the United 
        States and the Government of Mexico (or any other appropriate 
        Mexican entity) to provide assured sources of repayment for all 
        payments by the United States in connection with any short-, 
        intermediate-, or long-term credit facility made available to 
        Mexico after December 31, 1994.
          (6) Any document concerning the implementation by the 
        President and the Secretary of the Treasury (or any designee of 
        the Secretary) of the authority under section 5302 of title 31, 
        United States Code, with respect to any credit facility 
        described in paragraph (5).
          (7) Any document concerning efforts by the international 
        community to stabilize the economy of Mexico and the current 
        status of negotiations with other countries to improve the 
        capacity of international institutions to handle similar 
        crises.
          (8) Any document concerning the extent to which Mexico is 
        complying with the terms and conditions agreed to in connection 
        with the exercise of the authority under section 5302 of title 
        31, United States Code, with respect to any credit facility 
        described in paragraph (5), including any document concerning 
        the extent to which--
                  (A) the Government of Mexico has agreed to use the 
                proceeds of any loan which has been made, or any 
                security for which any guarantee has been issued, 
                through any such facility to help strengthen the 
                Mexican peso and help stabilize financial and exchange 
                markets by facilitating the refinancing or redemption 
                of short-term debt instruments issued by the Government 
                of Mexico;
                  (B) the Government of Mexico has agreed to provide--
                          (i) a comprehensive financial plan which 
                        includes a description of the intended use of 
                        any such loan or security; and
                          (ii) ongoing reports on the implementation of 
                        the financial plan while any such loan or 
                        security is outstanding;
                  (C) the Government of Mexico is respecting the 
                autonomy of the central bank of Mexico and the mandate 
                of such bank to seek stability with respect to the 
                purchasing power of the Mexican peso;
                  (D) the central bank of Mexico is pursuing a 
                noninflationary monetary and credit policy that 
                controls credit expansion and the growth of the Mexican 
                money supply in order to maintain the Mexican peso as a 
                strong currency;
                  (E) the central bank of Mexico is providing on a 
                periodic basis to the Board of Governors of the Federal 
                Reserve System and other appropriate governmental 
                entities information necessary to make an assessment 
                with respect to the policy described in subparagraph 
                (D), including central bank money supply and monetary 
                policy data;
                  (F) the Government of Mexico is implementing the 
                privatization policy established by such Government to 
                transfer enterprises currently owned or controlled by 
                the Government to private ownership;
                  (G) the Government of Mexico continues to permit 
                entry of foreign direct investment into Mexico and the 
                repatriation of investments from Mexico by United 
                States nationals; and
                  (H) the Government of Mexico is pursuing market-
                oriented measures to stem the flow of domestically 
                owned capital from Mexico.
          (9) Any document concerning any analysis of the resources 
        which the International Monetary Fund has agreed to make 
        available in response to the Mexican financial crisis.
          (10) Any document concerning--
                  (A) the percentage of the resources which the 
                International Monetary Fund has agreed to make 
                available in response to the Mexican financial crisis 
                which are attributable to capital contributions to such 
                Fund by the United States; and
                  (B) the extent to which the participation of the 
                International Monetary Fund in international efforts to 
                strengthen the Mexican peso and stabilize the economy 
                of Mexico is likely to require additional contributions 
                to such Fund by the member states of the Fund, 
                including the United States.
          (11) Any document concerning any agreement between the United 
        States and the Government of Mexico detailing the fee structure 
        and the terms and conditions under which loans, loan 
        guarantees, and other financial support may be made available 
        to Mexico through the stabilization fund established under 
        section 5302 of title 31, United States Code, including--
                  (A) any document concerning background materials on 
                the assessment of the Mexican economy and any United 
                States Government rationalization for pressing the 
                central bank of Mexico to increase interest rates from 
                40 percent to 50 percent;
                  (B) any document concerning the framework agreement 
                entered into on or about February 21, 1995, which 
                serves as the umbrella accord for the provision of any 
                such loan, loan guarantee, or other financial support;
                  (C) any document concerning the medium-term exchange 
                stabilization agreement entered into on or about 
                February 21, 1995, which specifies the terms and 
                conditions for medium-term swap transactions between 
                the United States and Mexico;
                  (D) any document concerning the guarantee agreement 
                entered into on or about February 21, 1995, which 
                specifies the terms and conditions for the issuance of 
                guarantees by the United States of debt securities 
                issued by Mexico; and
                  (E) any document concerning the oil proceeds facility 
                agreement entered into on or about February 21, 1995, 
                which establishes a mechanism to provide an assured 
                source of repayment of United States resources.
          (12) Any document concerning the assured source of repayment 
        to the United States for any short-, intermediate-, or long-
        term credit facility made available to Mexico after December 
        31, 1994.
          (13) Any document concerning the net worth of Pemex, the 
        historical annual revenues of Pemex, the projected annual 
        revenues during the 5-year period beginning on the date of the 
        adoption of this resolution, and the extent to which the 
        proceeds from the sale of Mexican oil to customers within 
        Mexico or outside of Mexico--
                  (A) are required to be paid to the Government of 
                Mexico as taxes or as payments in lieu of taxes; or
                  (B) have been pledged as collateral for the repayment 
                of any loans or other extensions of credit to the 
                Government of Mexico or to Pemex other than any credit 
                facility described in paragraph (12).
          (14) Any document concerning the value of any oil the 
        proceeds from the sale of which are pledged to assure the 
        repayment of any financial assistance provided by the United 
        States to Mexico, the documentation received by the United 
        States in connection with such pledge, and the manner in which 
        the United States may exercise any rights under such pledge to 
        obtain the proceeds as repayment for losses incurred.
          (15) Any document concerning any assurances given by the 
        Government of Mexico to the United States Government with 
        respect to changes in past economic policies or the adoption of 
        a new economic plan.
          (16) Any document concerning the decision by the President to 
        use the assets of the exchange stabilization fund established 
        under section 5302 of title 31, United States Code, in 
        connection with any short-, intermediate-, or long-term credit 
        facility made available to Mexico after December 31, 1994.
          (17) Any document concerning the criteria used by the 
        President or the Secretary of the Treasury (or any designee of 
        the Secretary) in making any decision to use the assets of the 
        exchange stabilization fund to respond to any economic, balance 
        of payments, or exchange crisis in any country and the facts on 
        which such determinations were made with respect to Poland, in 
        1989, and to Mexico in December of 1994 and early 1995.
          (18) Any document concerning how the use of the assets of the 
        exchange stabilization fund as a source of credit to Mexico 
        compares with all prior uses of the assets of the fund since 
        1945 for all other countries under section 5302 of title 31, 
        United States Code, with regard to--
                  (A) the dollar amount of each transaction;
                  (B) the type of the transaction, such as loan, loan 
                guarantee, or swap agreement (as defined in section 
                11(e)(8)(D)(vi) of the Federal Deposit Insurance Act);
                  (C) the purpose of the transaction, such as whether 
                it was to support the United States dollar, to support 
                a foreign currency, or any other purpose;
                  (D) the duration, in years, of the transaction during 
                which any credit was or is permitted to remain 
                outstanding;
                  (E) any security or collateral pledged to assure 
                repayment with respect to each such transaction; and
                  (F) the existence of any agreement involving the 
                International Monetary Fund or the Board of Governors 
                of the Federal Reserve System in connection with each 
                such transaction and the terms of each agreement by 
                such Fund or Board.
          (19) Any document concerning debts owed by the Government of 
        Mexico and any entity owned or controlled by the Government of 
        Mexico to United States public or private creditors which are 
        outstanding as of the date of the adoption of this resolution, 
        the status of each such debt (including whether such debt has 
        been refinanced), and the collateral or security pledged to 
        assure repayment of such debt.
          (20) Any document concerning an accounting of all the fund 
        flows through the exchange stabilization fund established under 
        section 5302 of title 31, United States Code, during the 24-
        month period ending on the date of the adoption of this 
        resolution, including the identification of the amount of and 
        purpose for each transaction involving such fund during such 
        period.
          (21) Any document concerning the balance of available assets 
        in the exchange stabilization fund as of the date of the 
        adoption of this resolution.
          (22) Any document concerning the amount by which the total 
        principal amount of loans, loan guarantees, and other 
        extensions of credit which the President has announced will be 
        made available to Mexico exceeds the total amount of available 
        assets in the exchange stabilization fund established under 
        section 5302 of title 31, United States Code, and the means for 
        covering the shortfall, if any.
          (23) Any document concerning the departure of the 
        International Monetary Fund from the Fund's customary 
        guidelines for country assistance, including any recommendation 
        made by the President or any other officer or employee in the 
        executive branch to the Fund regarding the amount of financial 
        assistance the Fund was preparing to make available to Mexico, 
        and any reciprocal agreement made by the executive branch to 
        the Fund for making such assistance available in an amount 
        greatly in excess of the customary guidelines.
          (24) Any document concerning the factual circumstances 
        pursuant to which the Bank for International Settlements has 
        become a lender to individual countries beyond the Bank's 
        customary role as a clearinghouse for central banks.
          (25) Any document concerning the financial obligations of the 
        Board of Governors of the Federal Reserve System to the Bank 
        for International Settlements.
          (26) Any document concerning the relationship among the Board 
        of Governors of the Federal Reserve System, the Bank for 
        International Settlements, and the central banks of other 
        countries which are affiliated with such Bank in any manner 
        with regard to assigning or apportioning the ultimate liability 
        for any loss incurred in connection with the extension of 
        credit by such Bank to the Government of Mexico.
          (27) Any document concerning any discrepancy between the 
        amount the President announced is available in the exchange 
        stabilization fund established under section 5302 of title 31, 
        United States Code, and the amount shown as being available in 
        such Fund in the monthly statement of the public debt of the 
        United States on December 31, 1994.
          (28) Any document concerning conditions which were put on the 
        credit facilities made available to Mexico through the exchange 
        stabilization fund or the Board of Governors of the Federal 
        Reserve System that were requested by members of the investment 
        community.

                         background and purpose

    House Resolution 80 requests the President to provide the 
House of Representatives with documents relating to the 
Administration's use of the Exchange Stabilization Fund (ESF) 
and the Administration's proposal to stabilize the Mexican 
peso. The documents are to be provided no later than 14 days 
after the adoption of the resolution by the House.
    According to Rule 22, clause 5, of the Rules of the House 
of Representatives, H. Res. 80 is considered to be a resolution 
of inquiry, which requires the Committee to act on the 
resolution within 14 legislative days after it is introduced. 
If the Committee does not act on the measure, a Member of the 
House may move to discharge the Committee from further 
consideration of the resolution, with such motion to discharge 
being considered a privileged one under the precedents and 
practices of the House. H. Res. 80 was introduced and referred 
to the Committee on Banking and Financial Services on February 
10, 1995, with action taken on February 23, 1995.
    Under the rules and precedents of the House, a resolution 
of inquiry is the means by which the House requests information 
from the President of the United States or the head of one of 
the executive departments. According to Deschler's Procedure it 
is a ``simple resolution making a direct request or demand of 
the President or the head of an executive department to furnish 
the House of Representatives with special factual information 
in the possession of the executive branch.'' The effectiveness 
of a resolution of inquiry derives from the comity extended by 
one branch of government to another, and not from any legal 
obligation. The resolution is a request for documents and its 
passage does not override any legal or constitutional privilege 
which may be afforded these documents.
    Under Rule 22, the practice of the House gives a resolution 
of inquiry a privileged status. To enjoy the privilege a 
resolution should call for facts rather than opinions, should 
not require investigations, and should not present a preamble.
    Turning from procedure to substance and to the implicit 
policy question at issue in the resolution--the President's 
decision to utilize up to $20 billion in resources from the ESF 
to help stabilize the Mexican currency and financial system--
Members on both sides of the aisle have differing judgments and 
perspectives.
    However, the scale of the proposed ESF swap and guarantee 
arrangements with Mexico are of such an unprecedented magnitude 
that unprecedented accountability is appropriate. The House of 
Representatives is therefore obligated to review how Mexico got 
into its present dilemma and what obligations the U.S. 
government has undertaken to resolve this crisis. It is also 
the obligation of the House to assess why and how Mexico made 
the major economic mistakes it has and whether the U.S. 
government failed to recommend or insist that Mexico follow a 
more prudential course.
    It is in the context of the paragraph above that the 
request for documents contained in this resolution should be 
interpreted. But the scope of this request for documents should 
not be construed to include drafts of documents provided in 
final form, nor any notes of any individual.
    The Committee further notes that under the rules and 
precedents of the House, requests for ongoing reports 
concerning actions taken through the ESF and international 
financial institutions are outside the scope of this resolution 
of inquiry.
    Nevertheless, many Members have expressed a strong desire 
that there be ongoing reporting on the U.S. and international 
financing package for Mexico. In this context, it is the strong 
expectation of the Committee that it should receive not later 
than March 31, 1995, and on the last day of each calendar 
quarter thereafter during which any loan or guarantee is made 
pursuant to the approval of the President issued on January 31, 
1995, a report describing:
          (A) The condition of the Mexican economy and 
        important financial and economic issues in Mexican-U.S. 
        relations;
          (B) Significant consultations between the Government 
        of Mexico and the Department of the Treasury, the 
        International Monetary Fund, or the Bank for 
        International Settlements;
          (C) Any funds disbursed to Mexico or any guarantees 
        issued with respect to securities issued by Mexico from 
        the Exchange Stabilization Fund;
          (D) Quarterly financial statements of the Exchange 
        Stabilization Fund including a balance sheet, income 
        statement, and notes;
          (E) Information concerning respect of the Government 
        of Mexico for the Mexican central bank (Banco de 
        Mexico) and the mandate of such bank to seek stability 
        of the purchasing power of the Mexican peso;
          (F) Pursuit by Banco de Mexico of a non-inflationary 
        monetary and credit policy that controls credit 
        expansion and the growth of the Mexican money supply in 
        order to maintain the Mexican peso as a strong 
        currency, and the provisions by such bank to the Board 
        of Governors of the Federal Reserve System and other 
        appropriate governmental entities on a regular basis of 
        information necessary to make this assessment, 
        including central bank money supply and monetary policy 
        data;
          (G) The resources which the International Monetary 
        Fund (IMF) has agreed to make available in response to 
        the Mexican financial crisis. The initial report should 
        include an identification of the percentage of IMF 
        resources available to Mexico which are attributable to 
        capital contributions by the United States to the IMF, 
        and an analysis of the extent to which the IMF's 
        participation in such efforts will likely require 
        additional contributions by member states, including 
        the United States, in the future.
    In the same vein, reflecting a desire on the part of many 
Committee Members to receive ongoing reports, after the 
expiration of the period during which any loan or guarantee is 
made available or may be made available to Mexico pursuant to 
the approval of the President issued on January 31, 1995, and 
until no loan or guarantee made available to Mexico pursuant to 
such presidential approval remains outstanding, it is the 
strong expectation of the Committee that it should also receive 
a semi-annual report concerning the same matters as are to be 
the subjects of the quarterly reports provided for in the 
paragraphs above.
    Likewise, it would also be the strong expectation of the 
Committee that not later than 90 calendar days after the 
adoption of this resolution, it will be provided with a 
description of the status of negotiations with other countries 
to improve the capacity of international institutions to handle 
similar crises in the future.

          rollcall votes on amendments; final committee action

    In compliance with clause (2)(l)(2)(B) of rule XI of the 
Rules of the House of Representatives, the record of Committee 
rollcall votes taken on final passage or amendments during the 
Committee's consideration of H. Res. 80 is set out below, as is 
a report on the Committee's final action on the bill.
    On February 23, the Committee met to consider H. Res. 80, 
the required quorum being present at all times when the 
Committee conducted legislative business.
    An amendment in the nature of a substitute was offered by 
Mr. King. The Committee approved by voice vote two second 
degree amendments to the King substitute, one offered by Mr. 
Roth and one by Mr. Sanders. The King substitute was then 
adopted by voice vote.
    The Committee, with a quorum present, ordered H. Res. 80, 
as amended, favorably reported by a record vote of 37 ayes and 
5 nays:
    Voting aye: Leach, McCollum, Bereuter, Roth, Lazio, Bachus, 
Castle, King, Royce, Lucas, Weller, Hayworth, Metcalf, Bono, 
Ney, Barr, Chrysler, Cremeans, Fox, Stockman, LoBiondo, Watts, 
Kelly, LaFalce, Vento, Schumer, Kanjorski, Flake, Mfume, Orton, 
Sanders, Maloney, Barrett, Wynn, C. Fields, Ackerman, Bentsen.
    Voting nay: Frank, Kennedy, Waters, Roybal-Allard, Watt.
    Mrs. Roukema and Mr. Heineman were present during most of 
the markup, but were unavoidably detained with business in 
other Committees when the bill was reported by the Committee. 
If they had been present they would have voted aye.

                      committee oversight findings

    The Committee in its conduct of its oversight duties under 
clause 2(b)(1) of rule X of the Rules of the House of 
Representatives held three hearings on the Mexican financial 
crisis and the international and U.S. Government's responses to 
this crisis.
    On January 25, 1995, Messrs. Robert Rubin, Secretary of the 
Treasury; Warren Christopher, Secretary of State; Alan 
Greenspan, Chairman of the Federal Reserve; Brent Scowcroft, 
from the Scowcroft Group; Arthur Laffer, Chairman of A.B. 
Laffer; V.A. Canto & Associates; and Ralph Nader, Consumer 
Advocate, testified on the Mexican economic situation and 
proposed legislation to stabilize the Mexican peso and economy. 
On February 9, 1995, Messrs. Greespan and Rubin again testified 
before the Full Committee on the Administration's initiative to 
stabilize the Mexican economy through the use of resources from 
the ESF. Messrs. Robert Reich, Secretary of Labor, and Peter 
Tarnoff, Undersecretary for Political Affairs for the 
Department of State also testified. On February 10, 1995, 
Messrs. Lawrence Kudlow, from the National Review, Rudiger 
Dornsbush, Professor of Economics at Massachusetts Institute of 
Technology, Clyde Prestowitz, from the Economic Strategy 
Institute, Jude Wanniski, from Polyconomics, Inc., C. Fred 
Bergsten, from the Institute for International Economics, and 
Robert Hormats, from Goldman Sachs also testified on the 
subject.
    The findings and recommendations of the Committee, as 
required under clause 2(l)(3)(A) of rule XI of the Rules of the 
House of Representatives, are incorporated in the above 
descriptive portions of this report.

         committee on government reform and oversight findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the Rules of the House of 
Representatives.

                new budget authority and tax expenditure

    Clause 2(l)(3)(B) of rule XI of the Rules of the House of 
representatives is inapplicable because H. Res. 80 does not 
provide for any new budget authority, any new spending 
authority, any new credit authority, or an increase or decrease 
in revenues or tax expenditures.

               congressional budget office cost estimate

    Since the resolution does not provide for any new budget 
authority, any new spending authority, any new credit 
authority, or an increase or decrease in revenue or tax 
expenditures, no Congressional Budget Office cost estimate is 
required under clause 2(l)(3)(C) of rule XI of the Rules of the 
House of Representatives.

                     inflationary impact statement

    In compliance with clause 2(l)(4) of rule XI of the Rules 
of the House of Representatives, the Committee estimates that 
H. Res. 80 will have no significant inflationary impact on 
prices and costs in the operation of the national economy.

         changes in existing law made by the bill, as reported

    No change in existing law is occasioned by the passage of 
this resolution.
                            A P P E N D I X

                              ----------                              

                          House of Representatives,
               Committee on Banking and Financial Services,
                                  Washington, DC, February 9, 1995.
Hon. Robert Rubin,
Secretary of the Treasury,
Washington, DC.
    Dear Secretary Rubin: I am writing to request that the 
Department of the Treasury prepare and transmit several reports 
to the House Committee on Banking and Financial Services 
regarding the U.S. and international response to the Mexican 
financial crisis. It would be my expectation that these reports 
would be transmitted no less frequently than once in each 
calendar quarter while any loans or guarantees to Mexico are 
issued through the Exchange Stabilization Fund (31 United 
States Code section 5302), and thereafter semi-annually while 
any such loan or guarantee remains outstanding.
    In general, it would be my expectation that the initial 
report would provide a detailed legal opinion regarding the 
Administration's usage of the authority provided under the ESF 
statute for loan and loan guarantee arrangements with Mexico. 
The initial report should also address in detail such issues 
as: the existence of adequate, assured sources of repayment for 
all payments made by the United States in connection with such 
loans or guarantees, including proceeds from the sale of 
Mexican oil to customers outside of Mexico; any agreement 
between the United States and the Government of Mexico (or any 
other appropriate Mexican entity) to provide assured sources of 
repayment exists for all payments made by the United States in 
connection with such loans or guarantees; and the extent to 
which proceeds from the sale of Mexican oil to customers 
outside of Mexico are pledged or otherwise committed to the 
repayment of obligations of the Government of Mexico (GOM) to 
sources other than the United States.
    In addition, the initial as well as all subsequent reports 
should detail the Administration's implementation of the 
authority under the ESF statute. Likewise, it should include a 
description of efforts by the international community to 
stabilize the economy of Mexico and the status of negotiations 
with other countries to improve the capacity of international 
institutions to handle similar crises in the future.
    It would also be my expectation that all such reports would 
address in detail Mexico's compliance with the terms and 
conditions under which the Administration proposes to use the 
ESF facilities, such as whether: Mexico has agreed to use 
proceeds of any loan or eligible security for which a guarantee 
is issued through the ESF to help strengthen the currency and 
help stabilize financial and exchange markets by facilitating 
the refinancing or redemption of short-term debt instruments 
issued by the GOM; the GOM has agreed to provide a 
comprehensive financial plan which includes a description of 
the intended use of the proceeds of the loan or security with 
respect to which any guarantee is issued, and over the life of 
the loan or security with respect to which any guarantee is 
issued, ongoing reports on the implementation of the financial 
plan; the GOM is respecting the autonomy of the central bank of 
Mexico and the mandate of such bank to seek stability of the 
purchasing power of the Mexican peso; the central bank of 
Mexico is pursuing a non-inflationary monetary and credit 
policy that controls credit expansion and the growth of the 
Mexican money supply in order to maintain the Mexican peso as a 
strong currency, and is providing the Board of Governors of the 
Federal Reserve System and other appropriate governmental 
entities on a period basis information necessary to make this 
assessment, including central bank money supply and monetary 
policy data; the GOM is implementing its privatization program 
to transfer enterprises currently owned or controlled by the 
Government to private ownership; and the GOM continues to 
permit entry of foreign direct investments into Mexico and the 
repatriation of investments from Mexico by United States 
nationals, as required by the laws of Mexico and is pursuing 
market-oriented measures to stem the flow of domestically-owned 
capital from Mexico.
    In addition, all such reports should include an analysis of 
the resources which the International Monetary Fund has agreed 
to make available in response to the Mexican financial crisis. 
The report should include an identification of the percentage 
of IMF resources available to Mexico which are attributable to 
capital contributions by the United States to the IMF, and an 
analysis of the extent to which the IMF's participation in such 
efforts will likely require additional contributions by member 
states, including the United States, in the future.
    The reports should also provide an evaluation of the role 
played by the Bank for International Settlements in responding 
to the Mexican financial crisis. This section should include a 
report on the extent of the financial exposure of the United 
States, if any, including the Board of Governors of the Federal 
Reserve System, with respect to BIS activities.
    Finally, the reports should suggest steps that can be taken 
by international financial institutions and the industrialized 
democracies to identify and deal with problems of comparably 
magnitude in the future.
    As you know, Congress has a constitutional duty to ensure 
the fullest accountability and transparency of the Executive 
Branch in this circumstance. More generally, given the public 
controversy surrounding U.S. and international efforts to 
stabilize Mexican financial markets, the novel usage of the ESF 
statute by the Executive Branch, the $20 billion in new 
contingent liabilities assumed by the United States Treasury in 
the President's January 31 initiative, it is inconceivable that 
any Congressional or public confidence in the Administration's 
program can be established absent such reports.
    Indeed, the timely issuance of such reports will not only 
be relevant to an assessment of the President's initiative in 
this instance, but crucial in the context of any future 
legislative branch discussions regarding the ESF statute and 
the flexibility it provides the Department of the Treasury to 
maintain orderly exchange arrangements. I look forward to your 
early response to this request.
            Sincerely,
                                            James A. Leach,
                                                Member of Congress.
                                ------                                

                          House of Representatives,
               Committee on Banking and Financial Services,
                                  Washington, DC, February 9, 1995.
Hon. Charles A. Bowsher,
Comptroller General of the United States, Washington, DC.
    Dear General Bowsher: I am writing to request that the 
General Accounting Office prepare and transmit a comprehensive 
report to the House Committee on Banking and Financial Services 
regarding the origins of the Mexican financial crisis, the U.S. 
and international response, and steps that can be taken by 
international financial institutions and the industrialized 
democracies to identify and deal with problems of comparable 
magnitude in the future.
    The report should include an analysis of the causes of the 
Mexican financial crisis--including but not limited to the 
economic policies pursued by the Government of Mexico, the 
position taken by the United States Government on those 
policies, and the extent to which our government was aware of 
the seriousness of the situation and its potential for 
necessitating a major commitment of American resources to 
resolve. The role of international financial institutions 
should also be carefully examined.
    Such report should include the opinion of the Comptroller 
General on whether any of the proposed actions of the 
President, as announced on January 31, 1995, to use the 
Exchange Stabilization Fund (31 United States Code section 
5302) to ensure orderly exchange arrangements and a stable 
system of exchange rates with respect to Mexico, requires 
Congressional authorization or appropriation.
    It should also provide a detailed evaluation of the terms 
and conditions of the commitments and agreements entered into 
by the President, or any officer or employee of the United 
States acting on behalf of the President, in connection with 
providing such support, including the terms which provide for 
collateral or other methods of assuring repayment of any 
outlays by the United States.
    In addition, it should include an analysis of the resources 
which the International Monetary Fund has agreed to make 
available in response to the Mexican financial crisis and in 
order to restore confidence to the international financial 
system. The section of the report should include an 
identification of the percentage of IMF resources available to 
Mexico which are attributable to capital contributions by the 
United States to the IMF, and an analysis of the extent to 
which the IMF's participation in such efforts will likely 
require additional contributions by member states, including 
the United States, in the future.
    The report should also provide an evaluation of the role 
played by the Bank for International Settlements in 
multilateral efforts to respond to the Mexican financial 
crisis. This section should include a report on the extent of 
the financial exposure of the United States, including the 
Board of Governors of the Federal Reserve System, with respect 
to BIS activities.
    Finally, the report should suggest steps that can be taken 
by international financial institutions and the industrialized 
democracies to identify and deal with problems of comparable 
magnitude in the future.
    Because the economic crisis in Mexico has raised a number 
of serious issues that merit examination by Congress, I believe 
a comprehensive report of this nature is well-warranted at this 
time.
            Sincerely,
                                            James A. Leach,
                                                Member of Congress.
                                ------                                

                          House of Representatives,
               Committee on Banking and Financial Services,
                                 Washington, DC, February 15, 1995.
Hon. Alan Greenspan,
Chairman, Board of Governors,
The Federal Reserve System, Washington, DC.
    Dear Chairman Greenspan: As you may know, I have written a 
letter to the Secretary of the Treasury requesting the fullest 
possible disclosure regarding the details of the U.S. and 
international response to the Mexican financial crisis. Because 
of the role the Federal Reserve System is playing in this 
initiative, I would hope that any reports by the Treasury 
Department would include supplementary information from the 
Federal Reserve or, alternatively, that the Federal Reserve 
issue reports on its activity with respect to Mexico.
    For example, it is my sense that the Congress is interested 
in gaining a fuller understanding of the Federal Reserve's role 
in various swap arrangements--such as with the Treasury, other 
countries or international financial institutions--as well as 
the operational details of the ``pass through'' function of the 
Federal Reserve Bank of New York with respect to Mexican oil 
revenues from in the event of default, and the Federal 
Reserve's relationship with the Bank for International 
Settlements.
    Because the economic crisis in Mexico has raised a number 
of serious issues that merit examination by Congress, I believe 
supplementary reporting by the Federal Reserve is well-
warranted at this time. I appreciate your attention to this 
request.
            Sincerely,
                                            James A. Leach,
                                                Member of Congress.
    Enclosure.

                            H. Con. Res. 27

  CONCURRENT RESOLUTION To express the sense of the Congress that the 
    Secretary of the Treasury should submit monthly reports to the 
Committee on Banking, Housing, and Urban Affairs of the Senate and the 
      Committee on Banking and Financial Services of the House of 
   Representatives concerning compliance by the Government of Mexico 
regarding certain loans, loan guarantees, and other assistance made by 
             the United States to the Government of Mexico

    Whereas Mexico is an important neighbor and trading partner 
of the United States;
    Whereas on January 31, 1995, the President announced a 
program of assistance to Mexico, that includes swap facilities 
and securities guarantees in the amount of $20,000,000,000, 
using the exchange stabilization fund established pursuant to 
section 5302 of title 31, United States Code, and the Federal 
Reserve System;
    Whereas the program of assistance also involves the 
participation of the Federal Reserve System, the International 
Monetary Fund, the Bank for International Settlements, the 
International Bank for Reconstruction and Development, the 
Inter-American Development Bank, the Bank of Canada, and 
several Latin American countries;
    Whereas the involvement of the exchange stabilization fund 
and the Federal Reserve System means that United States 
taxpayer funds will be used in the assistance effort to Mexico;
    Whereas assistance provided by the International Monetary 
Fund, the International Bank for Reconstruction and 
Development, and the Inter-American Development Bank may 
require additional United States contributions of taxpayer 
funds to those entities;
    Whereas the immediate use of taxpayer funds and the 
potential requirement for additional future United States 
contributions of taxpayer funds necessitates congressional 
oversight of the disbursement of funds from the exchange 
stabilization fund, the Federal Reserve System, and the 
International Monetary Fund; and
    Whereas the efficacy of the assistance to Mexico is 
contingent on the pursuit of sound economic policy by the 
Government of Mexico: Now, therefore, be it
    Resolved by the House of Representatives (the Senate 
concurring), That it is the sense of the Congress that--
          (1) the Secretary of the Treasury should, in 
        conjunction with reports required under section 5302 of 
        title 31, United States Code, by the 30th day after the 
        end of each month, submit a detailed report to the 
        Committee on Banking, Housing, and Urban Affairs of the 
        Senate and the Committee on Banking and Financial 
        Services of the House of Representatives describing, 
        with respect to such month--
                  (A) the condition of the Mexican economy;
                  (B) any consultations between the Government 
                of Mexico and the Department of the Treasury or 
                the International Monetary Fund; and
                  (C) any funds disbursed from the exchange 
                stabilization fund, including any swap 
                facilities or securities guarantees, pursuant 
                to the approval of the President issued on 
                January 31, 1995;
          (2) each report submitted under paragraph (1) should 
        include, with respect to the month for which the report 
        is submitted--
                  (A) a full description of the activities of 
                the Mexican Central Bank and Mexican exchange 
                rate policy, including the reserve positions of 
                the Mexican Central Bank and data relating to 
                the functioning of Mexican monetary policy;
                  (B) information regarding the implementation 
                and the extent of wage, price, and credit 
                controls in the Mexican economy;
                  (C) a complete documentation of Mexican tax 
                policy and any proposed changes to such policy;
                  (D) a list of planned or pending Mexican 
                Government regulations affecting the Mexican 
                private sector;
                  (E) any efforts to privatize public sector 
                entities in Mexico; and
                  (F) a full disclosure of all financial 
                transactions, both inside and outside of 
                Mexico, directly involving funds disbursed from 
                the exchange stabilization fund and the 
                International Monetary Fund, including 
                transactions with--
                          (i) individuals;
                          (ii) partnerships;
                          (iii) joint ventures; and
                          (iv) corporations; and
          (3) the Secretary of the Treasury should continue to 
        submit reports under paragraph (1) until the Secretary 
        determines that no further risk exists to United States 
        taxpayers of default by the Government of Mexico on 
        funds provided from the exchange stabilization fund, 
        the Federal Reserve System, or the International 
        Monetary Fund pursuant to the program of assistance 
        approved by the President on January 31, 1995.