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S. 695 (98th): International Lending Supervision Act of 1983

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The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.


8/3/1983--Passed House amended. (Measure passed House, amended, in lieu of H. R. 2957) International Recovery and Financial Stability Act - Title I: Export-Import Bank Act Amendments of 1983 - Export-Import Bank Act Amendments of 1983 - Amends the Export-Import Bank Act of 1945 to extend the authority of the Export-Import Bank of the United States until September 30, 1985. Declares that it is the policy of the United States to insist that participants in the Guidelines for Officially Supported Export Credits honor their pledge not to offer "tied aid credit" containing a grant element less than the minimum specified in the guidelines. Defines "tied aid credit" to mean credit which is: (1) provided for development aid purposes; (2) financed by public funds or, as a mixed credit, partly from public and partly from private funds; and (3) tied to the purchase of exports from the country granting the credit. Declares that the United States shall try to negotiate an increase in the minimum grant element of tied aid credits. Requires the Board to report to Congress if, at the end of any quarter of any fiscal year after FY 1983, the value of the total capital stock and retained earnings of the Bank falls below 50 percent of the capital stock and retained earnings of the Bank at the end of FY 1983. Emphasizes that the Bank's primary policy is to support U.S. exports in all the Bank's programs. Requires the Bank to reserve not less than: (1) six percent of the Bank's new FY 1984 loans and loan guarantees for financing exports by small businesses; and (2) ten percent of the Bank's new FY 1985 loans and loan guarantees for financing exports by small businesses. Requires the Bank to submit its annual report to Congress on January 1 of each year. Requires the report to contain a comprehensive and detailed description of plans for implementing the provisions relating to loans and loan guarantees to small businesses. Requires that the Bank's annual report to the appropriate congressional committees shall be submitted within three months of the end of the reporting period. Requires the President to appoint at least one member of the Bank's Board to represent the interests of small business. Requires the Bank to work to ensure that U.S. companies are afforded an equal opportunity to bid for insurance in connection with transactions assisted by the Bank. Directs the Chairman of the Bank to review the Bank's policy with respect to insurance and to undertake actions to promote equal and nondiscriminatory opportunities to bid for insurance in connection with international trade. Requires the Bank to report by May 15, 1984, to the appropriate congressional committees concerning insurance problems. Increases the number of members of the Bank's Advisory Committee from nine to 12. Requires at least three of those members to be representatives of the small business community. Requires the Committee to meet once each quarter and to submit with the Bank's annual report its comments and suggestions to the Congress. Lists information which must be included in the Bank's annual report to the Congress. Authorizes appropriations to prepare the U.S. International Trade Commission report on the adverse effect of the Bank's loans and guarantees on domestic industries. Imposes a 60 day deadline for completion of inquiries into purported foreign noncompetitive financing. Requires the Secretary of the Treasury to authorize the Bank to issue financing to U.S. sellers who are competing with foreign exporters who have received noncompetitive financing only if: (1) the availability of foreign official noncompetitive financing is likely to be a "significant" (currently "determining") factor in the sale; and (2) such foreign noncompetitive financing has not been withdrawn. Requires the Bank, in order to be competitive with the financing programs of other countries, to: (1) provide medium-term financing at interest rates equal to the rates established by the Organization for Economic Cooperation and Development and in amounts up to 85 percent of the costs of the exports involved; and (2) cooperate with the Secretary of Commerce and the Small Business Administration to inform small businesses about such medium-term financing. Title II: International Economic Recovery - Directs the President to encourage industrialized nations to: (1) take multilateral actions to adopt fiscal policies which will result in sustainable, noninflationary economic growth and increased worldwide employment; (2) develop plans for reducing the financial pressures on certain debt-ridden nations by extending the maturity of such debt; and (3) begin to promote the effectiveness and consistency of the regulation and supervision of international banking. Requires the President to report to Congress on such activities and to include in such report recommendations for legislation. Title III: International Monetary Fund - Amends the Bretton Woods Agreements Act to express the sense of the Congress that the Secretary of the Treasury shall instruct the U.S. Executive Director of the International Monetary Fund to work for the adoption of specified policies. Requires the U.S. Executive Director of the Fund, in negotiating with third World countries, to work for policies which assist low- and moderate-income families to increase their level and standard of living and which foster democratic institutions. Directs the Secretary to instruct the Director to propose and work for the adoption of policies that would strengthen efforts to promote conditions contributing to greater stability of exchange rates. Requires the Secretary to report semiannually to Congress on these instructions to the Director. Increases the amount which the Secretary is authorized to lend to the Fund from $2,000,000,000 to $4,250,000,000 Special Drawing Rights. Requires that the Secretary, before making a loan to the Fund, shall certify that supplementary resources are needed to forestall or cope with an impairment of the international monetary system and the Fund has fully explored other means of funding. Authorizes appropriations. Prohibits any representative of the United States from instructing the U.S. Executive Director of the Fund to consent to any amendment to the February 24, 1983, decision of the Fund's Executive Directors if the amendment would significantly alter the terms of U.S. participation in the General Arrangements to Borrow. Authorizes the U.S. Governor of the Fund to consent to an increase in the U.S. quota in the Fund. Directs the Secretary to consult with specified Members of Congress to discuss international negotiations concerning any future quota increase for the International Monetary Fund which may involve an increased U.S. contribution, subscription, or loan. Expresses the sense of the Congress that: (1) the lack of sufficient information currently available to international lenders threatens the stability of the international monetary system; and (2) the Fund should adopt measures to ensure the availability of more complete and timely financial information. Directs the Secretary of the Treasury to instruct the U.S. Executive Director of the Fund to: (1) initiate relevant discussions with other directors of the Fund and with the Fund management; and (2) propose and vote for certain information collection and publication procedures. Authorizes the President to require persons subject to U.S. jurisdiction to provide information to the Fund. Requires the Secretary to report to the appropriate congressional committees on progress made toward establishing information collection procedures within the Fund. Amends the Special Drawing Rights Act to prohibit any representative of the United States from approving a new allocation of Special Drawing Rights unless Congress authorizes such action. Amends the Bretton Woods Agreements Act to require the U.S. Executive Director of the Fund to oppose any credit drawings on the Fund or any of its facilities by countries which practice apartheid or Communist dictatorship. Requires the U.S. Executive Director of the Fund to present proposals to the Fund's Executive Board that ensure that each member country using Fund resources takes steps to eliminate import restrictions and unfair export subsidies which are inconsistent with international agreements and which have serious adverse impact on any member's exports or employment. Requires the Secretary, if the Fund does not adopt such proposals, to consult with the appropriate congressional committees before instructing the U.S. Executive Director to provide Fund resources for a country which has such import restrictions or unfair export subsidies. Requires the Secretary to be informed of all such restriction and subsidies implemented by member countries. Directs the President to report to the appropriate congressional committees on the role of the Fund and the U.S. Government with regard to maintaining realistic market-related exchange rates with other currencies and making recommendations on how to avoid exchange rate manipulation. Directs the President to instruct the Secretary to propose and work for the adoption of proposals by the Fund to promote conditions contributing to the stability of exchange rates and to avoid the manipulation of exchange rates between major currencies. Directs the Secretary to instruct the U.S. Executive Director of the Fund to work for the adoption of a policy requiring that Fund borrowers, before receiving any Fund assistance, must eliminate all predatory agricultural export subsidies which might result in the reduction of other member countries' exports. Requires the Secretary to report to Congress within 180 days of enactment on the progress achieved in enacting this policy. Directs the Secretary to submit to Congress, within 180 days of enactment of this Act, a report on the policies of the Fund. Sets forth the information to be contained in the report. Directs the President to instruct the appropriate Federal officials to encourage countries to formulate economic adjustment programs to deal with their balance of payment difficulties and external debts. Directs the U.S. Executive Director of the Fund to recommend and work for changes in Fund guidelines which would: (1) convert short-term bank debt into long-term, lower-interest debt; (2) assure that the annual external debt service is a manageable percentage of the projected annual export earnings of such country; and (3) require the Fund, in approving any economic adjustment program, to take into account the number of countries applying for such programs and the aggregate effects of such programs. Requires the U.S. Executive Director of the Fund to oppose Fund assistance for an economic adjustment program for a country in which the annual external debt service exceeds 85 percent of the annual export earnings of such country unless the Director first determines and notifies Congress that the program meets specified conditions. Prohibits the Director from opposing such a program if the Director notifies Congress that: (1) an emergency exists that requires an immediate short-term loan to avoid disrupting orderly financial markets; (2) a sudden decrease in export earnings in the country applying for assistance has increased the ratio of the annual debt service to annual export earnings to greater than 85 percent; or (3) other extraordinary circumstances exist. Requires the National Advisory Council on International Monetary and Financial Policies to include in its annual report to Congress copies of the Director's notifications to Congress and other materials. Requires the appropriate Federal banking agencies to develop regulations to prohibit banking institutions which have excessive foreign loans from making any new loans to foreign countries if the growth rate of such institution's aggregate loans to all such foreign countries shall exceed a specified rate. Defines a banking institution's foreign loans as excessive if at any time between June 30, 1983, and January 1, 1986, the institution's foreign loans exceed its primary capital. Permits a banking institution with excessive foreign loans to exceed the limit on foreign loans if the annual growth rate of the institutions domestic lending exceeds a specified limit. Prohibits enforcement of these limits if the Secretary and the Chairman of the Federal Reserve Board find that such enforcement would adversely affect the domestic economy or if the President determines that enforcement would be detrimental to the national interest. Prohibits any banking institution from charging, in connection with the restructuring of an international loan, any fee exceeding the administrative cost of the restructuring unless it amortizes such fee over the effective life of each such loan. Directs the Secretary to instruct the U.S. Executive Director of the Fund, except in specified circumstances, to: (1) oppose any Fund drawing by a member country where the Fund resources would be used mainly to repay loans which have been imprudently made by banking institutions to member countries; and (2) work to insure that the Fund encourages debt rescheduling negotiations where consistent with sound banking practices and the country's ability to pay. Directs the Secretary, in consultation with the Secretary of State and the U.S. Trade Representative, to begin discussions with other countries regarding the economic dislocations resulting from structural exchange rate imbalances. Requires the Secretary to report to Congress within 180 days of enactment on proposals to reform the floating exchange rate system. Requires the National Advisory Council on International Monetary and Financial Problems to report at intervals of 180 days for the next three years to the President and the Congress on all applications filed with the Fund for project assistance which would establish or enhance a foreign country's capacity to produce a commodity for export if: (1) the commodity is in surplus or is likely to be in surplus on world markets by the time the resulting productive capacity is expected to become operative; and (2) such project assistance will cause substantial injury to U.S. producers of the same, similar, or competing commodity. Requires the general policy objectives of the Fund and the Export-Import Bank to take into account the effect that country adjustment programs have on individual industry sectors and international commodity markets: (1) to minimize projected adverse impacts; and (2) to avoid government subsidization of production and exports of international commodities without regard to economic conditions in the markets for such commodities. Directs the Secretary to report to Congress within 180 days of enactment on the actions taken to consider basic human needs in economic adjustment programs supported by the Fund. Requires the U.S. Executive Director of the Fund, in carrying out his or her duties, to consider, if appropriate, whether a recipient country: (1) has detonated a nuclear device; (2) is not a party to the Treaty on Non-Proliferation of Nuclear Weapons; and (3) is not a party to the Treaty Banning Nuclear Weapon Tests in the Atmosphere in Outer Space, and Under Water. Directs the Secretary to instruct the Director to propose that the Fund adopt specified policies relating to international lending. Directs the National Advisory Council on International Monetary and Financial Policies to study and report to Congress and the President on the impact on the U.S. steel industry of steel subsidies by nations who are borrowers from the Fund. Prohibits any banking institution from charging, in connection with the restructuring of an international loan, any fee exceeding the administrative cost of the restructuring. Requires any such fee to be amortized over the effective life of the loan involved. Requires the Secretary to instruct the U.S. Executive Director of the Fund to propose and work for the adoption of Fund policies regarding the remuneration paid on use of member's quota subscriptions and the rate of charges on Fund drawings to bring those rates in line with market rates. Requires each depository institution to report to the Secretary: (1) all loans made to foreign countries; and (2) specified information with respect to each such loan, including interest rates, service charges and the unpaid balance of the loan. Authorizes the Secretary to examine the books of such institutions to insure compliance with the reporting requirements. Directs the Secretary to consult with appropriate Federal and State agencies to obtain information or foreign loans by such institutions which may have been reported to such agencies. Directs the Secretary to determine which loans made by depository institutions or their subsidiaries have been extended, refinanced, or made more secure by the increased U.S. quota contribution to the Fund. Directs the Secretary to determine which of those loans have earned for the depository institution involved a rate of return which is greater than the rate which would have been earned had the amount been lent in the United States to a corporate borrower with a AAA rating for a similar maturity. Requires the excess amount to be paid to the Treasury as reimbursement for the increased quota contribution. Prohibits any person or agency, on behalf of the United States, from consenting to any borrowing by the Fund of funds denominated in U.S. dollars unless the Secretary notifies Congress of the proposed borrowing at least 60 days before the date on which such borrowing is scheduled to occur. Prohibits the U.S. Governor of the Fund from consenting to the increase in the U.S. quota in the Fund unless the Fund has established limits on employee salaries and interest rates on loans to employees. Directs the Secretary to report to Congress: (1) the amount of new funding which will be provided by the Fund as a result of the U.S. quota increase; and (2) the countries which will receive loans as a result of such quota increase. Directs the Secretary to instruct the U.S. Executive Director of the Fund to propose and work for the adoption of an amendment to provide that the balance of any quota increase shall be paid by member countries in specified currencies. Title IV: International Lending Supervision - International Lending Supervision Act of 1983 - Requires each appropriate Federal banking agency to evaluate banking institution foreign country exposure and transfer risk. Requires each such agency to establish examination and supervisory procedures to assure that factors such as foreign country exposure and transfer risk are considered in evaluating the adequacy of the capital of banking institutions. Requires each such agency to require a banking institution to establish and maintain a special reserve whenever the agency determines that: (1) the institution's assets have been impaired by a protracted inability of a foreign country's public or private borrowers to make payments on their external indebtedness; or (2) there is a substantial likelihood that such debt cannot reasonably be expected to be repaid according to its original terms without additional borrowing or a major restructuring. Requires each appropriate Federal banking agency to promulgate regulations to account for fees charged by a banking institution in connection with international lending. Requires each appropriate Federal banking agency to require each banking institution with foreign country exposure to submit, at least four times each year, information regarding that exposure. Requires each such agency to require banking institutions to publish information regarding material foreign country exposure in relation to assets and to capital. Requires the Federal banking agencies to consult with foreign banking supervisory authorities to achieve the adoption of consistent supervisory policies with respect to international lending. Requires each appropriate Federal banking agency to achieve and maintain adequate capital by establishing minimum levels of capital for such institutions. Declares that failure of a banking institution to maintain its established level of capital shall constitute an unsafe and unsound practice within the meaning of the Federal Deposit Insurance Act. Requires each such agency to require any banking institution which does not maintain its prescribed capital level to adhere to a plan to achieve its prescribed level. Authorizes each appropriate Federal banking agency to deny a proposal which would divert earnings, diminish capital, or otherwise impede progress toward achieving minimum capital. Directs the Chairman of the Federal Reserve Board and the Secretary of the Treasury to encourage governments, central banks, and regulatory authorities of other major banking countries to work toward maintaining and strengthening the capital bases of banking institutions involved in international lending. Prohibits banking institutions from extending more than $1,000,000 in credit to finance a project involving the construction or operation of any mining, processing, or manufacturing facility located outside the United States unless a written economic feasibility evaluation of such foreign project is prepared and approved by a senior official of such institution. Sets forth the factors to be included in the evaluation. Requires such evaluations to be reviewed by the appropriate Federal banking agencies. Sets forth the general authorities of the appropriate Federal banking agencies. Sets forth penalties for violations of this Act. Directs the Comptroller General to audit the appropriate Federal banking agencies but permits the Comptroller General to carry out an onsite examination of an open insured bank or bank holding company only if the appropriate Federal banking agency has consented in writing. Prohibits audits of the Federal Reserve Board and Federal Reserve banks from including specified transactions. Prohibits employees of the General Accounting Office from disclosing information identifying an open bank, an open bank holding company, or a customer of a bank or bank holding company. Exempts certain information from such prohibition. Sets forth the method which the Comptroller General shall use in carrying out an audit. Requires the Secretary to report to the Congress, within 120 days of enactment, on the statutes, regulations, and examination and supervisory procedures governing international banking in each of the Group of Ten Nations and Switzerland. Requires the Chairman of the Federal Reserve Board and the Secretary to report to the Congress within 120 days of enactment on the progress made in strengthening the capital bases of banking institutions involved in international lending. Requires each appropriate Federal banking agency to report to Congress on the actions taken to implement this title. Requires that the Federal Deposit Insurance Corporation shall be given equal representation with the Federal Reserve Board and the Office of the Comptroller of the Currency on the Committee on Banking Regulations and Supervisory Practices of the Group of Ten Countries and Switzerland. Title V: Multilateral Development Banks - Amends the Inter-American Development Bank Act to authorize the U.S. Governor of the Bank to vote for certain pending resolutions which were proposed at a special meeting in February 1983 and which provide for increases in the Bank's authorized capital stock and subscriptions and in the resources for the Fund for Special Operations. Authorizes the U.S. Governor of the Bank, upon adoption of the resolutions, to subscribe to a specified number of shares of the Bank's capital stock and to contribute a specified amount to the Fund for Special Operations. Authorizes appropriations. Declares that it is the policy of the United States that no personnel actions of the Inter-American Development Bank, the African Development Bank, or the Asian Development Bank shall be based on the political philosophy or activity of the individual under consideration. Amends the Asian Development Bank to authorize the U.S. Governor of the Bank to: (1) subscribe to a specified number of shares of the Bank's capital stock; and (2) contribute a specified amount to the Asian Development Fund. Authorizes appropriations. Expresses the sense of the Congress that the United States will terminate its support for the Asian Development Bank if the Republic of China is denied full membership in the Asian Development Bank. Amends the African Development Fund Act to authorize the U.S. Governor of the Fund to contribute a specified amount to the Fund. Authorizes appropriations. Amends the International Financing Institutions Act to require the U.S. Government to try to channel multilateral assistance to countries other than those whose governments: (1) engage in a pattern (current law refers to a "consistent" pattern) of gross violations of human rights; or (2) provide refuge to international terrorists. Requires that, within 30 days of the end of each calendar quarter, the Secretary of the Treasury shall issue the quarterly report to Congress on the instances of U.S. opposition to multilateral assistance to a country based on the country's human rights record. Requires the Secretary to conduct a study to be submitted to Congress on how the multilateral development institutions could more actively encourage foreign direct investment and commercial capital flows and channel such investment and capital flows to developing countries for sound and productive development projects through a new investment banking facility at one or more of these institutions. Requires the study to evaluate whether the multilateral institutions could help increase foreign direct investment and commercial capital flows by insuring that the interests of investors and host governments are adequately protected. Directs the Secretary to solicit comments on the study from multilateral development institutions.