Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, February 1, 1995 TAG: 9502010083
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
``We cannot risk further delay,'' Clinton said.
Racing against what the administration said was the imminent threat of financial default by Mexico, Clinton invoked presidential authority to commit $20 billion for loans and loan guarantees to the Mexican government.
``The situation was dire in Mexico,'' Secretary of State Warren Christopher said of Monday's plunge in the peso's value.
Treasury Secretary Robert Rubin said, ``The likelihood is very high'' that the new aid will avert a financial catastrophe.
Mexican financial markets and the peso rallied Tuesday after Clinton's announcement.
International lenders increased their aid pledges by $15 billion, to a total of $27.8 billion.
The end run around Congress was a gamble for Clinton, drawing on money that usually would be used to defend the value of the U.S. dollar. It also means he shoulders most of the political risk of supporting Mexico's nose-diving peso rather than sharing the risk with Congress.
``This is in the interest of America, contrary to what some have said,'' Clinton asserted, answering criticism that his proposals amount to a bailout for U.S. banks and Wall Street investors with millions tied up in Mexican bonds.
House Speaker Newt Gingrich and Senate Majority Leader Bob Dole joined Democratic leaders in endorsing Clinton's move. ``This is an important undertaking, and we believe that the risks of inaction vastly exceed any risks associated with this action,'' they said in a joint statement released at the White House.
``He [Clinton] didn't have the votes on the loan guarantees,'' Dole said on Capitol Hill. ``He wouldn't have the votes next week. He wouldn't have the votes the week after that.''
Clinton urged Mexican President Ernesto Zedillo to adopt a strong economic program and to cooperate closely on immigration, narcotics and law enforcement.
The new plan replaces a proposed $40 billion loan guarantee program that would have made the United States, in effect, a co-signer for Mexico's borrowing.
Unlike Clinton's earlier plan, the new one does not require congressional approval. The Treasury Department said repayment of U.S. loans would be guaranteed by revenue from Mexican oil exports.
Rep. Steve Stockman, R-Texas, complained that Clinton ``bypassed Congress and the American people. ... The American taxpayer is still on the hook if Mexico defaults.''
by CNB