    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book II)]
    [November 1, 1993]
    [Page 1877]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Statement on Signing the Rural Electrification Loan Restructuring Act of
    1993
    November 1, 1993

        I am pleased to sign into law H.R. 3123, the ``Rural Electrification
    Loan Restructuring Act of 1993.'' This Act modifies the Rural
    Electrification Administration (REA) direct loan programs for rural
    electric and telephone cooperatives. It represents the culmination of
    many months of long, hard work by the Congress and the Administration in
    our commitment to revitalize the infrastructure of rural America.
        Earlier this year in my State of the Union Address, I announced my
    intent to reform the REA. H.R. 3123 does just that. It represents an
    important first step towards reforming the REA loan programs and is a
    good example of the Government doing more with less. This legislation
    will enhance our ability to provide affordable electric and telephone
    services in rural areas and to ensure access to the emerging
    telecommunications technologies that are essential for the economic
    strength of rural areas and the Nation as a whole. It also allows the
    REA for the first time to make loans for energy conservation purposes.
        This Act makes much needed program adjustments to minimize budget
    expenditures and save over $100 million in 1994 alone. Despite this
    reduction in Federal assistance, rural electric and telephone consumer
    bills should not change substantially. By using means tests to target
    Federal funds and raising the maximum interest rate, H.R. 3123 allows
    the REA to use scarce resources more effectively. We should no longer
    hear about wealthy electric and telephone borrowers that receive
    Government loans at extremely low interest rates.
        Although H.R. 3123 clearly represents a major improvement over
    current law, I have one concern with it. The Act places a 7 percent
    interest rate cap on certain REA loans, including those refinanced
    through the Department of the Treasury's Federal Financing Bank.
    Experience with Federal credit programs indicates that such statutorily
    fixed interest rate ceilings produce unpredictable and unintended
    results, including (1) inequities among borrowers using the program at
    different times; (2) extraordinary demands for loans when market
    interest rates are high; and (3) increased budget deficits. The ``open-
    ended'' character of subsidies resulting from the interest rate cap is
    inconsistent with the Administration's objective of managing Federal
    subsidies more effectively. Accordingly, my Administration will work
    with the Congress to remove this provision.
        Nevertheless, H.R. 3123 is, overall, a solid step forward. Today I
    wish to congratulate the Members of Congress and friends of rural
    America that helped to enact this first major reform of the REA loan
    programs.

                                                          William J. Clinton

    The White House,
    November 1, 1993.

    Note: H.R. 3123, approved November 1, was assigned Public Law No. 103-
    129.