Marcy Kaptur

Ms. KAPTUR

Ms. KAPTUR. Mr. Speaker, the administration announced yesterday that, because Congress was not acting quickly enough to throw good money after bad down that black hole that is the Mexican economy, it has used unprecedented Executive authority to extend billions of our taxpayers' money to bail out the Mexican peso and the Wall Street speculators who invested there without a vote of Congress. The last time Mexico devalued its currency was in 1988, just around the time of the Presidential election. Before that, Mexico devalued in 1982, again just around the time of the Presidential election, and now they did it again just after the Presidential election of 1994. I say to my colleagues, ``Some would like you to think that using Treasury's power to prop up the peso was a temporary fix, but they are wrong, This is not a currency problem. It is a problem of continuing mismanagement at the highest levels inside an emerging undemocratic country. The false security of Mexican oil is an illusion, too. That's already been pledged to past debts. If you're outraged like I am, come to room 2247 this afternoon, Members of Congress. Let's get the administration on the right track for a change.''

Ms. KAPTUR

Ms. KAPTUR. Today the administration, with the acquiescence of the top leaders in this Congress, announced a sweeping $47.5 billion bailout of the Government of Mexico and its Wall Street creditors by our taxpayers through the instrumentalities of the United States, including our U.S. Treasury, our Federal Reserve, the International Monetary Fund, into which the United States pumps money, and the Bank for International Settlements, on whose board sit the chairman of our Federal Reserve and the chairman of the New York Federal Reserve. All of this was done without a vote of the Congress of the United States, the only federally elected officials representing the people of this country. This newest proposal is a perpetuation of the worst kind of manipulative politics, both here in our country and in Mexico. And from a constitutional standpoint, it is absolutely precedent setting in the abuse of power by our own Federal Reserve, in collaboration with the U.S. Department of Treasury. This new proposal is nothing short of a circumvention of the democratic process and a circumvention of the proper role of the elected leaders of the Congress of the United States. The administration chose this path because they knew that they did not have the votes in this Congress, nor the support of the American public. In fact, over 80 percent of the American people oppose this bailout. This new proposal is representative of what is wrong with politics in our country: not reflecting the will of the people. Federal Reserve Chairman Greenspan, officials in the administration, and the top Republican leadership of this Congress have all exhibited this type of behavior during the present Mexican peso crisis and further through past trade policies which created this mess, an arrogance and abuse of power which knows no bounds. It is well known that people tend to change once they come into the beltway in Washington. In October 1979, Federal Reserve Chairman Greenspan told the Senate Banking Committee that a proposed $750 million loan, one-fortieth of what is being proposed here, for near-bankrupt Chrysler Corp. was a bad idea that flew in the face of the principles of free enterprise. This is the same man who by raising interest rates has increased your mortgage payments and increased your monthly credit card payments, eating into your wages over the last 20 years. Chairman Greenspan and the Federal Reserve are trying desperately to cover their own tracks in this crisis. In fact, it was the Federal Reserve's own interest-rate policies of the past 3 years that helped set Mexico up for a fall. Low United States rates in 1992 and 1993 led speculators to pump record levels of money into Mexico, some estimating over $70 billion, and other emerging markets, but then the Fed's interest rate increases of 1994, all six of them, led those same investors to pull their money back out and bring it home. If Chairman Greenspan was so concerned about Mexico, he would certainly not have raised United States interest rates six times over the last year. The latest increase in interest rates means that if you own a $60,000 home with a 30-year mortgage, your mortgage payments have gone up by an additional $100 a month. And as a result of the Fed's actions, your home will cost you about $1,200 more a year or about $36,000 over the life of your mortgage. Chairman Greenspan is unelected, unaccountable, and evidently unaware of the people's lives in this country that his policies affect. There is absolutely no reason that a proposal of this magnitude should not be considered by the Congress of the United States. Under the Constitution, we have the absolute authority to coin money and to regulate the flow of money between nations. What was done here, very cleverly through the back door, was that an entity within the U.S. Treasury Department, the Currency Stabilization Fund, took deutschemarks and yen that they hold and they said to the Federal Reserve, we will borrow against those. And essentially a flow of funds came from the Federal Reserve to the U.S. Treasury against the terms of the Constitution of the United States, which require all appropriated dollars to be voted on by the Congress of the United States.

Ms. KAPTUR

Ms. KAPTUR. If the gentleman will yield, I thank you for your tremendous work on focusing on the Federal Reserve and the important role they play in this country. They are unelected. They do not have to come up here. Most Americans do not know who the Board of Governors of the Federal Reserve are, and yet all of the money that the citizens put in their banks back home, those banks, if they should choose, and most of them do, then pay dues into the Federal Reserve System. They are organized by districts around the United States. The closest one to me is in Cleveland, OH, since I Federal Reserve here in Washington. It is my opinion not all Federal Reserve district banks have the same importance in the system, because it was not the banks that belonged to the Cleveland Federal Reserve that got into all the trouble 12 years ago or 13 years ago in making those loans to Mexico. It was largely money-center banks in New York City that caused all the trouble. Yet our member banks back home had to help cushion those blows. They were forced to charge higher interest rates to their customers. They did not cause the damage in the system, and I think what we have here is the predominance of one set of money-center banks from Wall Street and their related brokerage houses doing business in very close communication, not open to the general public. Of course, I mean, they do not see this happening. But yet they draw money in from the system, do things with it that causes problems, and they become very powerful in making economic decisions for this country. The gentleman was asking me about an article in the Wall Street Journal today. You know, we have been trying to figure out why interest rates are going up in the United States when there is no inflation, when people's wages are not going up; in fact, people are taking benefit cuts all over this country. We have so many part-time workers and temporary workers and people who are being outsourced, downsized, restructured, redeployed. There are all kinds of names for this. And you ask yourself why would interest rates be going up in the United States. Well, they are not really going up because of what is happening in this country, but the markets are reflecting, our market here, and the interest rates, are reflecting draws on the system because of decisions made by money-center banks and large corporations in other countries. The closest one at the moment is Mexico. I believe interest rates are going up in this country because the market is taking it out on the American people, the banks that have a lot at risk and have made some bad decisions, and the brokerages that borrow from them have made some bad decisions. And now the American people are having to pay for it in their checking accounts, in the mortgage payments that they make, as the gentleman said, and what you mentioned in terms of the price of a $100,000 house. I know I figured it out for a $60,000 house in Toledo, OH. The interest rates over last year will cost that family $100 more a month, $1,200 more a year. I do not care how much tax-cutting we do this year in this Congress, we are not going to be able to offset the real dollars people are paying every day through the worst taxes of all, which are these higher interest rates people pay on their credit cards and cars and on their homes. Some of the people that are causing the trouble were talked about today beginning on page A3 of the Wall Street Journal in an article called ``Mexico's Currency Plunges Nearly 10 Percent,'' and it continues on page A8. We have been asking the Clinton administration for a list of who Mexico owes money to, who are the creditors that are supposed to be bailed out. Of course, they have not sent us an answer. It is very interesting what it says in the top paragraph on page A8. It says that if the Congress and the taxpayers were to bail out Mexico, one beneficiary would be the firm that Treasury Secretary Robert Rubin used to run, Goldman, Sachs & Co., which ranked as the No. 1 underwriter of Mexican stocks and bonds in the United States and European markets for 1992 through 1994. In those 3 years, according to Security Data Co., Goldman underwrote over $5 billion worth in Mexican securities compared with $2 billion for the securities unit of J.P. Morgan & Co. Third was Bear, Stearns & Co. at $1.8 billion. So I would guess that even though the administration and the Treasury Department have not provided us with the specific list of creditors that we are looking for, we can begin by reading between the lines here and see whose wallets are really on the line.

Ms. KAPTUR. I would like to add a point to that in terms of who are wiling to bail out and who are not willing to bail others out. One of the most advanced industries in our country is the airline industry. Every day we see newspaper articles in papers across this country about the fate of USAir. That is one of our major carriers, which serves my hometown and has served different parts of the Northeast. There has been no surge as far as I have noted from those same three gentlemen mentioned by the gentleman from Vermont, who appeared before the Committee on Banking to try to help USAir work out of its situation or its handsome losses over the past several years, to keep thousands and thousands of people on their jobs. I have no seen any phone calls or comments made by anybody over at Treasury. In fact, it is interesting if you look at the Chrysler situation several years ago before I got to the Congress, Alan Greenspan at that time was opposed to any Federal involvement in the Chrysler bailout. Whether you agreed with the Chrysler bailout or you did not agree with the Chrysler bailout, they paid their money back with interest, as Lee Iacocca will remind us no matter where you meet him anywhere in the country; he was opposed. Yet he is for this, one of the chief sponsors of this effort to try to find a way, back doorway now of getting our taxpayers and our banking system to bail out Mexico. Yet when one of our own companies has been in trouble, now USAir needing a little bit of help, I have not seen the Secretary of the Treasury on the telephone or the Chairman of the Federal Reserve with the head of USAir. So I would agree with the gentleman. While I have the floor for a moment I just want to commend the gentleman from California [Mr. Hunter] who has also been on this floor so many evenings trying to give some incredible speeches that reached far beyond the Beltway into the hearts and minds of the American people, trying to show the people a new road, not a road that closes off America but a road that is fair to American workers and builds democracy abroad. That is what we should be about here. For those of us who have fought this long fight it is a great fight to be in because we know we are right. The American people are now listening. They know something is up. I thank the gentleman from Oregon for having this special order this evening.

Ms. KAPTUR. I am glad the gentleman brought up that point. Before I address that, let me just say that through our efforts 80 percent of the American people oppose this effort to try to prop up the peso so that Mexico can pay its debts to Wall Street speculators. What is interesting is the Wall Street Journal today also said that 75 percent of the residents of Mexico City, the people of Mexico, were against the loan guarantee packages as well, so if the people of the United States are against it, and the people of Mexico are against it, who is it that is ramming this through? And the gentleman asked about the Banking Committee. In my 8 years that I spent on the committee, Mr. Speaker, I never saw the Currency Stabilization Fund used for this purpose. It was always used in small amounts, never to the tune of $20 billion. We are trying to research back to see the largest such use of the fund. Maybe we found $2 billion back 10 years ago, but never to this extent, and never to defend the debts owned by another country. This is a very precedent-setting move that is occurring here. In addition to that, there is an additional, around $17.5 billion, coming through the International Monetary Fund, and at the moment it is unclear to us whether that is $17.5 billion in new money because the U.S. contribution to the IMF has to be appropriated dollars through here. Are those old dollars? Are those new dollars? Where are those dollars coming from? And then the third element of this is the International Bank for Settlements, which is $10 billion, and it is very interesting because the Bank for International Settlements has a board just like the Federal Reserve. It has 24 members on the board. The United States has never participated on that board before. We were not making payments. All of a sudden who ends up on the board of the 24 most recently? The Chairman of our Federal Reserve, Alan Greenspan, and the chairman of the New York Fed, Bill McDonough, all of a sudden. And Citibank, surprise, surprise, is all of a sudden making payments into the Bank for International Settlements. Now if it would happen that the debtors could not pay their debts, the burden of the Bank for International Settlements falls to the member countries to pay back. So they have a lot of different names, but it is the same people in these different institutions, and it all comes back right here, to the taxpayers of the United States, and every single economist that came before our hearings that the gentleman from California [Mr. Hunter], and the gentleman from Oregon [Mr. DeFazio] and the gentleman from Vermont [Mr. Sanders] helped us organize about a week ago, every single person said this was a set of credits that had high risk. This was not something where there was certain repayment. They expected losses. So, we expect that there will be claims that will be made on the taxpayers of our country under this new scenario. So, the gentleman is correct. I think what the President has done is just pushed the definition of what is in that section to the limits both in terms of his own authority and the amount of funds that will now be drawn down for the purpose of, not propping up the dollar, but propping up the debts that are owed to creditors by the Government of Mexico.

Ms. KAPTUR. First of all, I think the gentlewoman from Idaho, so early in her first term, for being down here in the well asking the right questions. Sometimes we do not always win our issues, but we find if we give voice to the American people, even though sometimes we feel like we do not have a lot of power, with that voice comes change. I think that is what we are about. I am not aware of what the dispute is. The Bank for International Settlements was a consortium of central bankers that was devised in order to try to deal with some of the currency differences and for central banks to band together for assistance if there were draws that went more to one country than another country. I, like the gentlewoman, am quizzical as to what the dispute would be in this case. And I am very concerned about what the U.S. financial obligation would be if bills come due you. I also wanted to place on the record this evening, to the gentleman from Vermont, who has been so steadfast in participating in these special orders, to say you have talked about the Wall Street Journal, one of the most respected publications in our country. And read it everyday and many, many analytical articles are just superb. But I think it is important for the record to indicate that the former president of Mexico, the most recent president of Mexico, Carlos Salinas, was appointed to the board of Dow Jones & Co., which owns the Wall Street Journal, and it does not surprise me, therefore, as I read the various headlines in the Wall Street Journal and some of the hype that has been put into trying to make it seem like if we do not do this there will be an apocalypse, ``Mexico worries spread to emerging markets,'' the headlines, ``Mexico's currency plunges 10 percent amid worries about U.S. rescue plan.'' The headlines, you worry. Headlines form policy. It is important to know who is in position to make opinions about this and influencing public opinion. So if I might further respond to the gentlewoman from Idaho, my hope is that as we get more details on the package, over the next day we hope--we were not able to get the fineprint today--we will be able to answer your constituents and our own with more specificity as to the role of the Bank for International Settlements in this. We know it is $10 billion. We do not know how that is being drawn down. We were not provided with any details today.

Ms. KAPTUR. Mr. Speaker, I just want to say what a pleasure it has been to participate in this special order with both gentlemen this evening, and to also mention that part of the reason we doubt this rescue package is simply because people like myself believe that the markets are being manipulated by those who have a great deal of power. In Mexico, for example, we know that both the government of Mexico and our own Government knew that the peso was overvalued. We tried to get it dealt with in the NAFTA agreement itself. They tried to prop up and they did prop up the value of the peso right before the Mexican election in August, and right after the election the peso began to drop in value. Then we had the GATT debate here in Congress, and right after GATT passed the peso went through the floor. So we know that that government manipulates the value of its money. Knowing that, we know we are now being manipulated; that much of what we see happening is being done to benefit the very same financial interests that created the overinflated peso during the 1993-1994 period. There is a lot of money on the line for many of these private interests. My point with them is when, especially for those interests in the United States which made over a 66 percent return on their emerging market funds since 1990, you greeted those gains and profits with smiles and parties in New York and boat parties off the docks and all the things that happened with a 66 percent return, while interest rates for average American families were going up at the same time as you ate your profits, now is the time to eat your losses. The private market is a very harsh referee, but you have to accept the market, both in the ups and the downs, and not come running to the taxpayers of the United States for some type of private or public relief for private actions. I just want to thank the gentleman for participating in this special order this evening, and to say what makes it worthwhile serving in the Congress of the United States. Though we don't always win, though we fight as hard as we know how, it is only bearable because of the people who send you here and because of the fine colleagues with whom you serve. I would say to the gentleman from Oregon [Mr. DeFazio] and to the gentleman from Vermont [Mr. Sanders] it is only worth serving because you are here, too. It has been a pleasure to be here with you.

Ms. KAPTUR

Ms. KAPTUR. Mr. Speaker, I move that the House do now adjourn.

Ms. KAPTUR

Ms. KAPTUR. Mr. Speaker, this morning we learned that the Clinton administration and Republican leadership here in Congress have abandoned their plan to seek congressional approval of $40 billion in loan guarantees to Mexico. Workers and taxpayers of America prevailed in our first round of debate over the proposed Mexican bailout. But President Clinton is scheduled to reveal an alternative plan when he addresses the Nation's Governors this afternoon. We should watch carefully to ensure that he defends the American people against Wall Street speculators. At the same time, the Federal Reserve Open Market Committee is meeting right now and is likely to raise your interest rates. That is the seventh time over the past year. What this means to you is that if you bought a $60,000 home a year ago on a 30-year mortgage, your payments today will be about $100 higher than they were a year ago. Now, why are interest rates rising when inflation has not gone up and your wages have not gone up? The reason is because the markets have discounted the cost of the $40 billion bailout, and more, that is related to NAFTA and Mexico. Too much hot money from Wall Street was bet on a gamble in Mexico that we are all having to pay for now.

Ms. KAPTUR

Ms. KAPTUR. Mr. Speaker, the administration claims it knew nothing of the pending financial disaster in Mexico. Mexico's administration claims it knew nothing. Let me remind both administrations of what they certainly did know. Both the Mexican and the United States Governments knew the truth about the shaky peso and United States speculators' interests down south for at least 2 years before the meltdown. As reported by the Wall Street Journal during the NAFTA debate, the two governments went so far as to negotiate a secret line of credit worth $6 billion because of the pending financial crisis in Mexico. Both governments knew; both governments kept it quiet. Now Congress is expected to remain muzzled with truncated committee hearings and limited debate. Congress cannot remain silent. Let the truth come out before we vote no on this taxpayer bailout of Wall Street speculators in foreign countries. Mr. Speaker, the Wall Street Journal article to which I referred is as follows: [From the Wall Street Journal Mar. 28, 1994] How Mexico's Behind-the-Scenes Tactics and a Secret Pact Averted Market Panic (By Craig Torres) Mexico City.--The muted reaction in Mexican stock and currency markets Friday after the assassination of presidential candidate Luis Donaldo Colosio was no accident-- but it also wasn't guaranteed. A panic developed among investors right after the slaying and could have sent the markets tumbling. But Mexican authorities managed to maintain calm through a once-secret agreement with the U.S. Treasury and a complex mix of moral suasion and vague threats to investors who might have profited from a panic. This is the story of that effort. At 9:30 p.m. in Mexico City last Wednesday--2\1/2\ hours after the assassination, Jose Angel Gurria, head of the powerful development bank Nacional Financiera, and several of Mexico's most senior financial officials were assembling at 2 Arturo Street, a colonial mansion converted into Finance Ministry offices. Mr. Gurria and everyone else in the room knew Mr. Colosio was dead, even though the government hadn't yet acknowledged that to the world, knowing the panic that could be created when the news was let out, Mr. Gurria reflected that either Mexico was about to prove the strength of its financial team, or the markets would send Mexico into chaos. ``It was like Colosio's body was lying on the table'' in front of the group, he says. ``We knew we had a job to do.'' Mexican financial markets were already fragile. Economic growth in 1993 registered a pathetic 0.4%. The Chiapas peasant revolt, the kidnapping of a well-known executive and surprising rifts within the ruling party had tumbled in recent weeks, and the peso was down 8.1% against the dollar this year. As calls poured into the Finance Ministry and Banco de Mexico, the central bank, it became clear that there could be a full-fledged run against the peso. Speculators were looking for ways to sell the peso short, a bet on its decline. Mexican banks, while friendlier to the government than foreign investors, would clearly dump pesos to protect themselves and make a profit, if they had to. In addition, the Finance Ministry knew that Japanese banks and corporations had already been unloading huge positions in peso securities to raise cash and dress up year-end financial statements. A currency crisis could spark further huge sales by the Japanese. However, Hacienda, as the Finance Ministry is know, had a secret weapon. Just before the North American Free Trade Agreement debate between Ross Perot and Vice President Al Gore, Hacienda's undersecretary of finance, Guillermo Ortiz, had quietly negotiated a $6 billion swap line with the U.S. Treasury. The idea was to give the Mexican central bank more dollars to use to support the value of the peso if Nafta failed to win approval. But the agreement--which had remained secret because it was never formally signed--was still around, and Mr. Ortiz hoped to invoke it now--Announcing the agreement would give Mexican authorities a crucial psychological boost with investors by showing that anyone attacking the peso would have to take on both Mexico and the U.S. But it might take a day to get all the approvals from the U.S. government. Could the Mexican markets be shut down? Mr. Ortiz wondered. By 11 p.m., with international investors nervous, and European markets about to open, Mexican financial officials were in discussions about shutting trading in stocks and the currency for a day, to let things settle down. But a full- scale argument broke out about the kind of signal the closings would show. The meeting split up into working groups and took until 2 a.m. to decide that at least the currency markets and the banks should be closed. Pedro Aspe, the finance minister, and Miguel Mancera, the central bank head, then left for President Carlos Salinas's offices. With at least some decisions made, officials called Roberto Hernandez, the chief executive of Banamex-Accival, Mexico's largest bank, informing him of the bank and currency-market closure. The Hacienda officials said the banks would certainly be free to trade Friday--but they also warned that Hacienda would be watching closely for any speculative challenge. At 3:30 a.m. in Boston, Robert Citrone, manager of Fidelity Investment Management's New Markets Income Fund, was back in the firm's warren-like offices. A few hours earlier he had stepped off the train in Acton, Mass., greeting his wife and newborn son. ``I have bad news,'' his wife had said. The garage flooded with snow-melt again, Mr. Citrone thought. Then his wife told him Mr. Colosio had been shot. At home through the evening, Mr. Citrone phoned central- bank contacts or anyone else who could give him a reading on the situation. A Mexican central-bank official at one point convinced him that it had enough currency reserves to defend the peso. That was true, but what if other investors panicked? Brokers were already talking about a 300-point decline in Mexican stocks, and that would also mean the currency would be in trouble. At 4 a.m., Finance Minister Aspe returned to Arture Street with an answer from President Salinas: Thursday would be a day of mourning for Mr. Golosio. Banks and currency markets would close. Now it was time to bring out the secret weapon, the $6 billion swap agreement. Mr. Ortiz, the undersecretary of finance, picked up the phone and dialed the home in Washington of Lawrence Summers, the undersecretary of international affairs for the Treasury. Mr. Summers thought he could secure the swap line. The hope was to close the Mexican stock exchange, too, but Bolsa authorities wanted to make sure that there wouldn't be any trading of Mexican shares in New York, either. Mr. Summers said he would see if that could be done. Later, Mr. Ortiz learned that Treasury had asked for a closure of Mexican stocks, but the U.S. Securities and Exchange Commission and the New York Stock Exchange were resisting the idea. It looked like the U.S. markets would open Mexican shares after only a short delay. But trading of Mexican stocks in London was turning out to be disorderly, a sign of panic. Shares in bellwether Telafonos de Mexico were down more than 5 percent. The Arturo Street team turned to Carlos Mendoza, a young Stanford Business School graduate who runs National Financiera's $1.5 billion Mexican stock fund. Mr. Mendoza had won the respect of international traders late last year when he managed to sell $1 billion of Telmex shares into the markets without anyone's noticing. Sleepless and worried, Mr. Mendoza called Mexican brokers in London, encouraging them to keep markets orderly. To keep things under control, while still not committing much of National Financiera's money, he gave the London trades an indication where he might buy or sell Telmex shares. That hint tightened the spread, or difference between the buying and selling price. Less than an hour before the New York opening, Telmex shares had recovered. With the Arturo Street meetings finally over as the sun was coming up in Mexico City, the finance officials began trying to win back investor confidence by calling everyone they could think of around the world from traders to chief executives. Judging by the calls, international investors were still scared. But the Mexicans began winning them back, one at a time. ``The performance was magnificent,'' says a Trust Co. of the West portfolio manager. ``Almost every investment bank and every investor in the U.S. was on the phones from 8 to 9 in the morning and had it all laid out for them by the Mexicans.'' By Thursday afternoon, the tide had turned. Stories burst across the news wires announcing the ``new'' $6 billion swap agreement, approved by President Clinton. Also, in a rare example of quick agreement, President Salines had managed to gather government, business and labor leaders to announce a re-signing of the country's basic economic pact. Telmex shares finished just 5.6% lower on the Big Board, and they rebounded Friday once the Mexican Bolsa reopened. Investor confidence had been restored. ``The whole world was grading our ability to manage the unexpected,'' Mr. Curria says. ``Everybody at the Arturo Street meetings said, We have to make this work because we have to make Mexico work.''

Ms. KAPTUR

Ms. KAPTUR. Mr. Speaker, if Members have not decided how to vote on the $40 billion Mexican bailout package, let me refer them to yesterday's U.S.A. Today business page which says that mutual fund speculators in emerging markets earned 66 percent yields on their investments since 1990. Would my colleagues not like to earn some of that money? Then today on the Washington Post editorial page Robert Dunn, an economist at George Washington University advises against a $40 billion bailout of Wall Street by saying the proposed bailout is really a rescue package for investment bankers and mutual fund managers in New York and other financial centers who took huge risks in exchange for very high-interest rates in Mexico. We now have a wonderful recipe for prosperity on Wall Street. When risky assets pay, keep the money and complain about high taxes; but when such high risk assets approach default, get the U.S. treasury and taxpayers to cover the losses. Vote against the Mexican bailout.

Ms. KAPTUR

Ms. KAPTUR. Mr. Speaker, today I rise in tribute to a man who for 46 years has represented the very best traditions of citizenship, corporate involvement, and support for his community. Sam Irmen began his career at a time when employers and companies were truly involved in their communities and served as a base of support and stability for their communities. Sam began his career with the Andersons of Maumee, OH, 46 years ago, and rose to the position of vice president and group manager of the grain division. And for those 46 years, he sought to share with his community and advantages his position gave him and the resources that his company could utilize to better his community. To Sam and his wife Charlee and their seven children, both his company and his community, Maumee, OH, were there home. Sam never stopped contributing. He served on the elementary school board, as president of the church's parish council, and as president of the school board at St. John's High School. He also served as a member and past vice president of the Maumee Chamber of Commerce. Good men and women can contribute endlessly when their companies encourage participation. Over the course of his 46 years with the Andersons, Sam's business participation stretched throughout the business community. He is a member of the board of directors at Mid Am National Bank & Trust Co., a member and past president of the National Grain and Feed Association and past chairman of the Grain Grades and Weights Committee, a member and past international president of the Grain Elevator and Processing Society, and a member of distinction of the Grain Elevator and Processing Society. In addition to these contributions and responsibilities, Sam has led numerous government and trade task forces, served three terms as president of the Toledo Board of Trade, and was a designated representative of agriculture on Ohio Governor Celeste's 1984 Ohio Trade Mission to the Far East. Simply put, Sam Irmen's career and contributions to his community deeply reflect the bonds that should join every company to its community. I would like all my distinguished colleagues to join me in congratulating Sam, his wife Charlee, and their wonderful family for 46 years of service and contributions to his company and his community. My fervent hope is that his career will become a lesson for future employees and their companies. His is an example we should all emulate.

Ms. KAPTUR

Ms. KAPTUR. What is really sad here is, if you look at the people who get appointed to our U.S. Treasury and to the Federal Reserve, not that they are not intelligent and hardworking Americans, but their mindset comes from, especially this group over the last several years, from the speculative Wall Street sector, which means that when they have been used to creating all this debt around the world, they are pretty well- heeled themselves, when they get appointed to a top Government position, they forget they are not just dealing with their own customers' funds anymore, they are dealing with taxpayers' public money. There is a difference. I think one of the problems we have is that when you have this revolving door between Wall Street and some of the institutions of the people of the United States, sometimes I think people forget where they are and they start gambling with our peoples' money rather than the private investors' and speculators' and gamblers' money. There is a big difference. Let me say to the gentleman from Vermont that I see the gentleman from Illinois [Mr. Lipinski] has joined us here. I am sure that both of these gentlemen face the same situation in their own districts. But I cannot get loans for my congressional district from the U.S. Treasury in order to clean up the toxic waterways in my community. They told us, ``Well, wait 5 years, wait 10 years, wait 15 years.'' I said, ``Wait a minute, I only get elected for 2 years. I cannot wait for 15. I came here to make it better.'' I cannot get money to build a new tower out at our airport field so that the airplanes do not crash into one another while landing because we have such an old tower that it is on the wrong side of the runway. Well, we cannot get that built. I cannot get a loan from the Treasury backed up by the taxpayers of the United States to do that. I cannot get money for an enterprise community in the center of our city because there was not enough to go around to every major city in Ohio. I could not get the attention of the Federal Reserve or the U.S. Treasury. I cannot get more money out of this Government to add to the new police class being hired in my district, in my major city and many of the rural communities in my State that are trying to hire policemen, police officers, because of the drug problem. Do you know the transit route, the chief transit route to Toledo, OH, in terms of the drug trade, is direct from Mexico, comes up direct to our community. And I cannot get a loan from our Government to help us deal with the crime situation in our community. So it gets pretty discouraging when you see the enthusiasm of these former Wall Street speculators down here helping their friends, but I cannot deliver as fast as I want to for the people of my home district, as hard as we try. I want to acknowledge that we have been joined by Congressman Bill Lipinski, a most esteemed Member from the great city of Chicago, which I like to call the capital of the Midwest. I know how hard he has tried to help not only his own city but this entire Nation through his work here and his years of service. I yield to the gentleman.

Ms. KAPTUR. We should cut those articles out, all this was supposed to do for America, with the name of the author right there.

Ms. KAPTUR. Mr. Speaker, I listened with great interest to my colleagues on the importance of keeping our national accounts in order. I have come to this well over the last decade of my service in the Congress echoing those very [[Page H384]] same concerns, especially as it relates to our people's ability to earn decent incomes in America and to benefit their families through their hard work as well as through gain-sharing in the workplace, where people in our country work very hard, they should gain from the productivity that they have been a part of increasing, and, therefore, I am a great supporter of all types of programs, for employee stock ownership, for worker gain-sharing so that people in our country can become self-sufficient. For too long Washington has turned a cold ear to so much of what has been happening across our country in the streets and blocks of our neighborhoods. This evening I come to the floor to talk about the connection between people's jobs and their incomes and our foreign trade policy, because one of the biggest budget-busting items that is likely to come before us next week has to do with the bailout of Mexico that will be put on the backs of our taxpayers, and of all things they want to put it off- budget, which means that as we consider this vote next week, and as I understand it, no hearings are going to be held in the House of Representatives on this issue. This bill is going to be moved only through the Committee on Rules at the will of the Speaker and will be brought here to the floor without any of the hearings that are normal procedure for a measure of this magnitude which already has cost our people over $18 billion--that's with a B--in lines of credit extended to Mexico, largely to hold up, to prop up the speculators on Wall Street who wanted to make big money in Mexico but now are not willing to eat their own losses, and we are told a bill is going to come here next week ringing in somewhere over 40 billion additional dollars, pledging the full faith and credit of the taxpayers of this country. Yet we cannot even have hearings in the subcommittees and full committees of jurisdiction in this Congress. What is wrong? What are people afraid of? How can we even think about having a debate on a balanced budget amendment when we can exempt major expenditures such as the bailout of the Mexican peso and the Wall Street speculators who now want to reach into the pocketbooks of our people? I want to put on the Record tonight that for 1994, last year, the latest bad news unfortunately has come in on our Nation's continuing trade hemorrhage with the world. This means we are still sucking in billions of dollars of imports more than we are exporting goods abroad. In fact, the 1994 ledger is dripping with even more red ink and more good jobs lost in our country. In fact, just in the month of November, America had a trade deficit of 10.5 billion additional dollars--that means more imports coming in here than our exports going out--and just in that month alone, over 200,000 more jobs lost in America. For those who listened to my remarks yesterday, yesterday morning, 7:30 in the morning, in Medina, NY, Fisher-Price/Mattel Co. gave the pink slip to 700 more workers in our country who were told, ``It's time to go home. Your jobs are moving to Mexico.'' Fisher-Price/Mattel does not make one Barbie doll in the United States. Yet they have millions and millions and millions of dollars of sales in our marketplace, and their product is not cheap, $29 to $200 for one of those little dolls. Each little girl in American owns between 8 and 12 of those today. They basically have shut down their production in this country. The trade deficit is related to your job, my friends, because if you do not have production located in your community and you have essentially out-sourced the real productive wealth of your community, you will have lower-wage jobs, you will have jobs without benefits, you will have part-time work, you will be downsized, you will be out- sourced. Until you understand the connection between international trade, your job and your pocketbook, 1994 will be known as the year in which the United States suffered the worst trade deficit in history. And for every billion dollars of trade deficit we lose an additional 20,000 jobs in this country. So that means for 1994 over 3 million more good jobs slowly disappeared. Probably, unless you live in these communities, you do not even know it happened. It is like death by pin pricks as companies shut their doors, like Mattel did yesterday in New York, and the list goes on and on and on. Nineteen ninety-four will be remembered as the year that NAFTA was implemented, and that trade agreement really kicked in and continued to put the tourniquet around the workers of the United States. It was the year GATT was signed and we will continue to lose more jobs. And the year that we ran up over $155 billion more in trade deficits, more imports coming in here than exports going out. It is hard to find anything made in America. In fact today I had a rather humorous experience if you want to think about it. People here in Washington are running around with little pins on that say Contract With America. But look at the button, it was made in Taiwan. I just shook my head. We do not even make buttons in this country anymore. Over 3 million Americans could have been more productive in our country last year if the trade deficit had not been so bad. And, you know, the amazing thing about it, prices are not going down in our country; profits are going up, prices are going up. The only thing that is coming down is workers' wages and their buying power. Something pretty fundamental is happening to the economic wealth, productive wealth of this country, and Washington better understand it, because it is at the nub of the unrest across our country. The latest trade data that has come in has special significance as Congress considers a bailout of the Mexican peso. And it is really a bailout of the Wall Street speculators because our former trade advantage with Mexico, which is what they said we had to pass NAFTA for, because America would continue to make money off of that deal, as that trade deficit got worse last year, guess which country we began moving into the red side of the ledger with? Our third largest trading partner, Mexico. In the month of October, for the first time in a generation, America accumulated a negative trade debt with Mexico. And in November the red ink quadrupled to over $370 million in the red, just in November. America's trade advantage, my friends, with Mexico, has now disappeared. The advantage has disappeared in less than a year, and now Mexico has its hand out to us to prop up that country's debts that are owed to our Wall Street investors. When the peso fell 40 percent in December in value, the United States is going to see a continued slide into red ink with Mexico as their exports and the prices of those exports become more attractive in our market and our goods down there become too expensive for them to purchase. Mark my words, the slide is slickening every single month. Let me now tell you more about the biggest budget buster that this Congress is going to be asked to vote on next week, with no hearings in the committees of this Congress, which essentially means you as a people cannot know. And it is going to hit our taxpayers very, very hard, in the wallet, with the jobs that they will lose to a much cheaper wage environment. You are going to pay in higher interest rates; you are already paying in higher interest rates because the market has discounted those losses. And you are going to pay in continuing obligations in increasing long-term debt that you will have to pay, because in effect what they are asking is for our people to become Mexico's insurance company, for the North American Free-Trade Agreement, NAFTA, sure is not free. We have lost a company a day to that nation since the agreement went into effect. Most Americans did not realize that, when NAFTA passed, at its heart was an investment guarantee to the Wall Street speculators, the multinational corporations, and the megabanks that in fact you as taxpayers now have to back up. If the gamblers went belly up in Mexico, the United States essentially had pledged your full faith and credit, and now the bills are coming due. Fifty-eight billion dollars for beginners. In fact U.S. taxpayers are now going to pay dearly and not just in more lost jobs. That is bad enough. But without a [[Page H385]] vote of Congress, last week our U.S. Treasury and Federal Reserve opened our lines of credit to Mexico to the tune of $18 billion, your tax dollars, your deposits in the institutions of this country already sent to prop up the paper investments that the gamblers on Wall Street love to play with. And as far as the Government of Mexico is concerned, what this really amounts to is a new backdoor multibillion-dollar version of foreign aid, but they do not want to call it that, they do not really want you to see it as that, so they are using all kinds of fancy names, figuring most people have not gone to business school, most people do not have a degree in finance. So the $18 billion they extended they did not call what it really is, they called it a line of credit, they called it a swap. Now they are coming up here next week with a bill they are going to call a guarantee, and backing up the guarantee will be fees. There will be a commitment fee, a basic fee, a supplemental fee. There are so many different fees, but essentially all it is putting debt on top of more debt on top of more debt on top of more debt with higher interest rates, and more debt with higher interest rates that you back up with your tax dollars. No matter what you call it, you essentially are Mexico's insurance company. But ask yourself what is the collateral? What are your chances of getting your money back? Last week the Clinton administration and the Federal Reserve started bailing out Mexico with that $18 billion of our currency through the U.S. Treasury, our Federal Reserve. It took no vote of Congress to do that, they do not have to come here for 6 months under the current law. Now the administration is asking us to guarantee this additional $40 billion in loans and there will be no hearings here in the Congress. Believe me, it is a bottomless pit. The troubling fact about these speculators from Wall Street is they are the very same people who gave us junk bonds back in the 1980's, the very same people who put all of these leveraged buyouts together, who threw white collar workers, blue collar workers, pink collar workers out of work across America because these very same people were so greedy that they cashed out corporations, they bought companies, they dried up their pension funds, they diversified those holdings, they essentially bled out the wealth of this country, they put it in different nations around the world where there is no cheap labor and no democracy. And notice now they are sending those goods back here, and now they are trying to do the same thing as a result of this Mexican deal. The troubling fact about being this kind of a banker, and I even hate to call it a banker, it is really a speculator form Wall Street, is that they can create money; I wish each of us could, even when there is no collateral to back it up. They have got powerful friends. Let me tell you, my friends, they have powerful friends in the Clinton administration, and they have very powerful friends inside this institution. They like to talk about free enterprise, and being beholden to the rules of the private sector. But basically they are now coming and running to the Government because they are about to lose a big chunk of money. So when they have gotten in trouble, they have not followed the rules of the marketplace which is when you take a risk to that extent and you lose, you are big enough to eat the losses yourself and not come running to the taxpayers of our country. The Clinton administration is doing this along with the top leadership of this institution and taking this unprecedented action and doing it very quickly so that you do not really understand it, so you cannot complain and really have input through your elected Representatives here because the value of Mexico's currency has fallen by so much. Basically Mexico cannot pay its bills. It never has, and with the peso meltdown, keep this in mind, if you think about what is the collateral, its workers' wages have also been cut by 40 percent; the value of its people's savings accounts have been cut by 40 percent. Do you think they will be able to pay back what they owe us on top of all of the old debt that they still owe us? And I see our colleague from Vermont has joined us, the gentleman from Vermont [Mr. Sanders], and we are so happy to have him here this afternoon without question, and I know he has traveled the world, as I have; the pain of our people who have lost their jobs, the pain of our families who are worried about affording their mortgages and affording sending their children on to college, when they need help, they do not have the Secretary of the Treasury running around the corridors up here. They do not have the Speaker of the House running around the corridors for them. They do not have the Chairman of the Federal Reserve running around the corridors up here. They do not even return phone calls. But for this particular deal where their friends, and I underline friends, on Wall Street stand to lose $40 billion and should eat their own losses, believe me, they have worn out the carpets of reception up here. We may have to have a little congressional expenditure to replace the mats that have been worn out over the last 2 weeks as these meetings have occurred behind closed doors. Why should the Mexican people and the people of our country have to pay for the mistakes made by the Wall Street kingfishers and their friends around the world? Why? I yield to the gentleman, and I am so happy to see him here tonight.

Ms. KAPTUR. One of the interesting points here is how people get hold of these bonds. You know, part of what Mexico owes is money that is owed on the old Brady bonds. For those of you who are TV junkies, maybe you know this, back in the 1980's, the early 1980's, there were all kinds of debt Mexico could not pay back. Then part of it was turned into these Brady bonds. The yield on Brady bonds was 40 percent. Can you imagine, just think if you owned those bonds. So part of these are [[Page H386]] being rolled over as a part of this new debt that Mexico has to pay to its creditors. Now, with this new group they are paying 20 percent at the moment, but, of course, it could go up. Would we not love for the depositors in our communities to be able to earn a 40-percent interest rate at their bank?

Ms. KAPTUR. If I might just reclaim a moment, last week I sent a letter along with several Members of Congress to our Secretary of the Treasury asking 14 very specific questions, since we are not going to have hearings here in Congress on this major bailout. I will not read all 14 questions, but just the first two, asking him to, please, expeditiously reply to these questions. No. 1, in view of the fact that U.S. banks are earning historic profits, why is this U.S. Government intervention in the form of a currency swap and lines of credit, this was the $18 billion from last week, necessary? When the private sector gambles and loses, should not those losses be borne by the private sector? That is question one. Question two is: To what specific banking and corporate interest does Mexico owe the $26 billion in outstanding obligations that come due this year, $10 billion due in this first quarter of the year, and $16 billion of which is allegedly owed to United States interests, the rest being owed to Japanese interests and German interests? Which means our people's tax dollars would have to pay for foreign creditors to Mexico. And how much in additional obligations come due in 1996 and 1997? But the bottom line is specifically, not in general, to whom is it owed? Which Wall Street investment houses, which speculative investors that are out there in our country and elsewhere? If our people are going to pay this off, all we are asking is let us know who we owe the bills to.

Ms. KAPTUR. That is what we are told, Friday, when everybody is worn out and wants to get home to meet with their constituents over the weekend. So they are going to bring the balanced budget amendments up early in the week, and all the discussion on that, so all the people will be all vented out by the end of the week. There will have been no hearings in the House. They will just slip it in here from the Committee on Rules.

Ms. KAPTUR. And not surprisingly, because this has happened before, but Mexico has many wealthy families, and they have billions of dollars' worth of deposits. Now, you might ask yourselves, where is that money? If you look back at 1991, there were two billionaires in Mexico, according to Fortune Magazine. Now there are over 2 dozen. Where do they have their money? Do you know what happened back in the early 1980's when Mexico got into trouble before when it owed several billion dollars? There was between $40 and $60 billion dollars worth of money from citizens in Mexico deposited in United States banks, the very same banks that Mexico owed money to. So being very simple-minded, I said just let them take their money back home. What happened in this particular situation--and it was carefully orchestrated--the smart money left Mexico before the peso meltdown. If you look at the trade figures for the last year, you will see one of the top three exports to Mexico from the United States after NAFTA has been in two or three interesting areas: art, antiques, and collectibles. Now, who would buy art, antiques, and collectibles to hedge against a possible devaluation? So they took their money out of the country, brought into the country goods that will sell anywhere in the world. So part of our job should be to drive it back in the country rather than put the money out.

Ms. KAPTUR. This is why we asked the Secretary of Treasury which specific interests, which banks, which investment houses, which corporate interests are Mexico's creditors at this point. We would like to see who owns those firms. We would like to see who the depositors are, we like to understand who we are giving our money to, because it is likely, based on past history, that Mexico will default again and the taxpayers of the United States, the new insurance company to Mexico, will help to bail them out. We just would like to know who we are bailing out. Do you not think that the American people have the right to know?

Ms. KAPTUR. Mr. Speaker, let me reclaim my time for a second. I had somebody divide it out for me. What it works out to is that every 28 cars that come up from Mexico to the United States, we send down 2 cars, and in trucks it is even worse. For every 33 trucks that are built by these companies sent into our market, we send down there about a third of a truck. It is absolutely upside-down.

Ms. KAPTUR. I thank the gentleman from Illinois [Mr. Lipinski] for his heartfelt and enlightened statement, and I know that probably in Chicago, as is true in Toledo and Vermont, the fastest growing category of jobs are temporary jobs, part-time jobs, with no benefits. We have some restaurant work jobs being created. We have some health care jobs being created. In our factories what has happened is some people, because of the uptake in the auto industry, and I come from automotive America, we have been able to bring some people back into the plants. But we have not seen the kind of massive hiring that we would have expected with the kind of profits that are being made because people, extra people, are not being hired. What we are seeing is workers working 6 days a week. They have been doing this now for over 2 years, and they are making good money, but they are exhausted because they had a lot of overtime. But the benefits are not shared, and imagine if you can put 1,000 more people, 2,000 more people, to work in our plants, and we continue to see in our country declining buying power because essentially what these money traders are doing is they do not understand the difference between money and wealth and the fact that there is a difference between piling debt up and creating real investment that produces things, be it agricultural or industrial, that creates real wealth in our communities. There is a book, I think, that has been written, ``Barbarians at the Gate,'' that talks about how these folks on Wall Street behave, and they think that money, and paper, and piling up this debt really means something, and they miss the most important question, and that is the wealth-producing capacity of our country, and we have about had it with their kind of thinking, trying to make money for the few, but not wealth for the many, and I know how hard the gentleman has worked in his capacity on the Committee on Public Works to try to improve the climate for business in America, our ports, seaports, airports, roadways, railroad beds, to try to make us the most efficient producer in the world, and I know the problems you have run into. Imagine if your committee had had the chairman of the Federal Reserve and the head of the Treasury come in and say, ``OK, Chairman Lipinski, how about $40 billion in public works for America?'' I ask the gentleman, ``Wouldn't that have been a great feeling?''

Ms. KAPTUR. You know Congressman Sanders, one thing I think we would all be interested in, I call the NAFTA deal and deals like it death by pin pricks, because you have companies shutting down like Mattel-Fisher Price did yesterday in Medina, NY. But the workers from Medina, NY, do not always let us know they have lost their jobs and their production has been outsourced. I think it is very hard to get this information. We collect some of it, but there are just hundreds and hundreds of small companies, some of them employing under 50 people around our country, that have shut down. I am hoping if those citizens of our country who are listening who have been really put out of a job this past year, in fact some of them have had to go down to Mexico and train their replacement worker, I hope you will call our offices. I hope you will let us know who you are. We will be your voice here. We need to be your voice here. You do not have voices from Wall Street placed in high positions. You do not have people in some of the major financial instruments of this government who are your voice. We can be your voice, if you will let us know who you are. Some of you who are in union shops, you are organized, you know how to get to us. Many of you are in nonunion shops, 85 percent of you. We need to know who you are. We will be your voice here in the Congress of the United States.

Ms. KAPTUR. If the gentleman will yield on that point, on the Food Stamp Program, which is not a popular, politically popular program, I think it is important in my district to put on the record, half the people in my northwest Ohio area who are on food stamps, half are working people. They are working families who earn such low wages with such low benefits because their jobs have essentially been cashed out, they have to be in the embarrassing position, and I have seen some of them, of applying for these food stamps, because they can no longer earn a living wage in the United States of America. Frankly, I think that should be unconstitutional. I think these people should be able to earn a decent wage. I met a woman the other day, I went into one of the stores to buy like these muffins in the morning. I met a woman working three part- time jobs. She was a divorcee, and she must be putting in 60 or 70 hours a week just to support herself. It is sobering to meet these families, and there are millions of them across our country. They have very little voice here. We have been joined by our distinguished colleague from the State of New York, from Buffalo, NY, Chairman John LaFalce, Committee on Small Business, chairman of subcommittees on the Committee on Banking, Finance and Urban Affairs, and someone who was right month and months ago and they would not listen to you, Chairman LaFalce. They would not listen to you. And I hope that the citizens of Buffalo understand what kind of voice they have here in Washington, not just for themselves but for the Nation and the world. There are few Members of this body that understand as much about finance, and I think you talked yourself until you were blue in the face to try to get provisions in the NAFTA accord to deal with this very crisis, and they would not do it. They tried to ride their tractors right over you. You probably still got skid marks on your spine. Yet you were right. As I said a little bit earlier, this is one of those instances where it hurts to have been right. We welcome you this evening. I yield you time.

Ms. KAPTUR. The gentleman should be the very first person to be a part of such a hearing, because there is no one in this body that knows more about the internal debt structure of Mexico. It is an outrage, it is an outrage to this Congress and to the new leadership in this place that they would try to muscle the minds, not just of the people here, but also of the American people and not permit them to know what this is all about when they have to foot the bill. It is absolutely outrageous. You have, to me, a special right to be a part of those hearings. I think you would make a positive contribution to putting Mexico on a sounding footing toward the future. I personally do not believe this is the way to do it, because you cannot have free trade without free countries. I think Mexico needs a good dose of democracy as a basis for economic growth in the future. I know the time of our special order has expired, and we thank all of those who have been a part of this this evening, especially the gentleman from New York [Mr. LaFalce], the gentleman from Illinois [Mr. Lipinski], the gentleman from Vermont [Mr. Sanders], those who joined us to inform the American people.