[Weekly Compilation of Presidential Documents Volume 29, Number 44 (Monday, November 8, 1993)]
[Page 2237]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
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.