Background Briefing by Senior Administration Officials
The Briefing Room
6:15 P.M. EST
Q: Can you tell us what the deal is and what happens next?
SENIOR U.S. OFFICIAL: Do we agree that we're on the terms of my colleague?
SENIOR U.S. OFFICIAL: Okay. I can tell you a little bit. I can't tell you everything because some of it needs to be worked out. This has all come up very quickly and I think really has -- somebody has just said to me -- it's remarkable how quickly people have moved and coalesced around the need to do something.
This is a very serious situation. It's a very serious situation for Mexico; it's a very serious situation for other countries in Latin America because the possible catalytic impact --it could have catalytic impacts on other parts of the world.
My colleague and I, as we've talked about this over the last couple of days, have both reflected that we've been around financial markets for a while; neither of us have seen anything that is quite like this. And, as a consequence, we spoke to the President. The President, after reflecting on our views, agreed with the severity of the situation. He spoke to the requisite people in the leadership. My colleagues and I have met with the leadership; we've met with various other groups that they have put together, and there's been a remarkably cooperative spirit about a very complicated situation.
The rough concept here is that Mexico has very substantial short-term liabilities, but it has an economy -- and I think my colleague really should speak about this rather than myself -- but an economy that is fundamentally sound. It's very much like a financial institution as a similar kind of problem. You've got to get from the short-term liabilities to a long-term debt structure, and that's what we want to accomplish -- the mechanism that we will work toward putting together. This requires a lot of work in a very short period of time.
We have covered enormous amount of ground in the last couple of days just getting people to coalesce around this concept and moving forward -- is a loan guarantee program of some sort. We have a lot of ideas that are more specific than that, but I think it is premature to discuss those. And we will do what is necessary to prevent this problem from happening.
Q: Is this a blank check?
Q: So you don't have an agreement on a plan, just an agreement that something has to be done?
SENIOR U.S. OFFICIAL: Let me put it this way. If the decision is made to supply the appropriate liquidity that is required to Mexico, which is a solvent nation, one that has made extraordinary progress in recent years -- if that decision is made, it is a technical issue of how it is implemented. There are all sorts of ways of doing it. What has been generally agreed upon is one which will not have any significant or measurable impact on the budget of the United States. It will basically be a form of program which has been implemented in the past. It is not a blank check. It's not definable in those terms because Mexico, as important and emerging country that it is, is still relatively a modest size, relative to the United States.
And so we have the capability without any major efforts to resolve what is a technical problem in Mexico. It is an issue of confidence in the financial markets. And there are innumerable ways of doing that, and we will endeavor to find a way which is the most appropriate in this context.
Q: Is it most likely to have loan guarantees of an x- amount that you'll set out?
SENIOR U.S. OFFICIAL: The issue is no specific number because it is a question of how one restores liquidity to a country which has been deprived of it. The amounts are, in an odd way, far less important than the issue of the commitment of the political leadership to indicate that this issue will be resolved.
Q: Are you prepared to guarantee that there will be sufficient liquidity for whatever short-term situation arises for Mexico?
SENIOR U.S. OFFICIAL: The statement as made by the leadership of this country -- which I must tell you, I've been around for a very long period of time, I find extraordinary and very impressive and, as one of my colleagues said -- and I won't tell you who it is -- it has restored his faith in the democratic system.
Q: Do you need congressional approval for this plan?
Q: You must be able to give us some ballpark figure, though, some way we can describe the size of this assistance.
SENIOR U.S. OFFICIAL: The best way of knowing, getting a sense of the size is recognize that Mexico is a small fraction of the United States. It is -- whatever is the ultimate amount that is involved it is a limited amount largely because this is not a huge economy. So if I were to give you a figure, I'd be -- it's really, it's not really technically relevant.
Q: You've got to give us a figure.
SENIOR U.S. OFFICIAL: No, I don't. And the reason why I don't is I think if you're thinking in terms of what the figure is, you're missing the point.
Q: Well, let me ask you --
Q: the markets --
SENIOR U.S. OFFICIAL: Let us -- we're not going to give you a figure for the very reasons my colleague said. Let me say, it is not a grant, it is not foreign aid; it is a loan guarantee.
Q: Are you talking about --
Q: Are the figures of $25 billion to $40 billion that have been previously reported at least within the ballpark?
SENIOR U.S. OFFICIAL: I think really the right way to say this is exactly what my colleague said. This is not the time to comment on a figure. This is the time to discuss a concept and let us work on it.
Q: Whether you give it to us or not, do you have a figure?
SENIOR U.S. OFFICIAL: We have given thought to the magnitude of the problem. We've give a lot of thought to structure. I think we have a very good sense of what it's going to take to get it done. We do not have a number at this point, but I think we have good sense of the magnitude of the problem and how to deal with it.
Q: Was there a figure proposed --
SENIOR U.S. OFFICIAL: It doesn't -- we will do what is necessary, and I think we have a pretty good sense of the kinds of things both structurally and quantitatively that it would be involved.
Q: Is this the same kind of loan guarantee program that the U.S. government and Congress have approved for Israel?
SENIOR U.S. OFFICIAL: Conceptually, it would have a lot of similarities.
Q: Would that require additional congressional --
SENIOR U.S. OFFICIAL: The structure, Wolf, is the same. We're not at a point yet where we can say precisely --
SENIOR U.S. OFFICIAL: But I think the issue that Wolf is raising, which is an important one, is that this type of deal, structure which is being contemplated is one in which there is a payment for the risks involved by the Mexican government. And it's that reason why it turns out to be effectively budget insignificant. It is effectively a guarantee in which, as my colleague said, this is not a grant; it's not foreign aid; it is as close as one can get in this type of arrangement to a commercial transaction.
Q: Can I follow up on that? There would have to be additional legislation required to authorize this, to approve this?
SENIOR U.S. OFFICIAL: That is correct.
Q: And once there is that legislation, there has to be a figure included, sort of a cap or whatever on how much of these loan guarantees there would be.
SENIOR U.S. OFFICIAL: Obviously, when the actual legal structure is put in place, there will be a figure. But what I'm trying to tell you is that the figure really is irrelevant. The question is that the commitment has been made by the leadership of this country essentially to have this limited issue resolved before it takes on larger proportions --
Q: How long will it take you to get it done?
SENIOR U.S. OFFICIAL: Wait a minute. We have one very impatient. Go ahead.
Q: Thank you. But the proportions of the problem, one might argue, are a little less serious today than they were two or three days ago because the markets in Mexico have stabilized or rebounded to a certain extent. Why do you consider it still --
SENIOR U.S. OFFICIAL: One might argue, but they'd be wrong.
Q: Okay. Tell us why, though, it's still so serious.
SENIOR U.S. OFFICIAL: Because the problem is exactly the same as it was two or three days ago. What's happened is there has been some sense in the markets that there may be a coalescence here to try to do something about it, and, as a consequence, you've had somewhat better markets. But the problem is precisely the same as it was three or four days ago.
Q: How long will it take you to get this through Congress?
SENIOR U.S. OFFICIAL: Rita, we're going to start working tomorrow morning, and we're going to work through the weekend. I don't know how long it's going to take to get it through Congress, but we are working full-speed ahead.
Q: Is the Canadian dollar also in trouble?
SENIOR U.S. OFFICIAL: The Canadian dollar has nothing to do with it. It is not -- it's unrelated to this issue.
x SENIOR U.S. OFFICIAL: I think this is the last question.
Q: Do you have an idea --
SENIOR U.S. OFFICIAL: You choose somebody. That way you take the blame for it. (Laughter.)
Q: Do you have an idea what the value of the peso might be in order to consider the confidence has returned to Mexico?
SENIOR U.S. OFFICIAL: I think the answer to that question is no.
Q: With regard to -- you said that there was a -- you were talking about a credit guarantee program. Would this be --
SENIOR U.S. OFFICIAL: Loan guarantee program.
Q: I'm sorry -- loan guarantee program. Would this be as a substitute for the $9 billion credit line that was being talked about, or an enhancement to that or --
SENIOR U.S. OFFICIAL: The $9 billion swap line, if that's what you're talking about, you know is a short-term facility. This is an effort -- not an effort -- what this will do is turn short-term liabilities into long-term liabilities. It's a totally different mechanism in order to, as I say, in effect, reschedule the debt from short-term to long-term.
Q: Did Speaker Gingrich guarantee he could deliver the votes to get this package through Congress?
SENIOR U.S. OFFICIAL: There are no guarantees in life. What's happened is that the leadership met with the President and the Chairman of the Federal Reserve Board. We've all committed ourselves to working this thing through as quickly as possible, and doing what is necessary to getting it done.
Q: So they're on board, Dole and Gingrich, they support this?
SENIOR U.S. OFFICIAL: Absolutely.
Q: Why do you have a right to know in a balanced budget amendment, but you don't have a right to know on this loan guarantee program? You demand a right to know on the balanced budget amendment.
SENIOR U.S. OFFICIAL: Well, we will -- this has nothing to do with the balanced budget -- I can give you an answer --
Q: I know it doesn't, but I'm just trying to provoke you into some kind of a response. (Laughter.)
SENIOR U.S. OFFICIAL: I know you are. But having spent two years here, I've become very hard to provoke, except late at night when I think to myself about things. But in any event, the answer is that the one has nothing to do with the other.
Q: You still don't want to give us a number?
SENIOR U.S. OFFICIAL: Correct. And I absolutely agree with my colleague, and I didn't think about it in the first place. This is a very important thing that's happened. It really is, when you think about it. The bipartisan leadership in Congress, the President of the United States and the Chairman of the Federal Reserve Board have gotten together, and to focus on a number to take the focus away from what's really being done --
Q: We got that point --
Q: And you said that the leadership agreed when you told them the number was irrelevant?
SENIOR U.S. OFFICIAL: Yes, absolutely.
SENIOR U.S. OFFICIAL: The number was not the point. The number was not the point.
We thank you.
END 6:26 P.M. EST
William J. Clinton, Background Briefing by Senior Administration Officials Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/269828