Congress' growing opposition to the Clinton administration's handling of the Asian debt crisis is adding to bankers' worries about the deteriorating financial markets overseas.
Banking sources said that congressional opposition to proposed U.S. contributions to the International Monetary Fund are becoming a key concern for the industry. They said they are also worried about congressional efforts to curtail the administration's ability to participate in foreign financial bailouts.
"When Congress comes back on the 27th and starts throwing the crockery around on the Asian crisis, all hell is going to break loose," predicted Thomas Farmer, general counsel of the Washington-based Bankers Association for Foreign Trade.
Republican members of Congress have steadily increased their criticism of the IMF's handling of the Asian crisis as the situation has continued to deteriorate.
On Tuesday Rep. Jim Saxton, R-N.J., chairman of the House Joint Economic Committee, questioned the efficacy of the fund's efforts. He accused the IMF and the Treasury Department of being "misinformed about the regional economic implications of the problem" and "unprepared" for the magnitude of the crisis.
He said that despite previous assurances, U.S. taxpayers are likely to foot a portion of the bill for the Asian bailouts because of increased U.S. contributions to the IMF. He also expressed opposition to the use of the exchange stabilization fund, a $28 billion Treasury foreign currency fund, by the administration to help foreign governments overcome temporary liquidity shortages.
"More transparency is needed in Treasury and IMF operations, particularly in disclosure of loan terms involving taxpayer funds," Mr. Saxton said in a release. "The Treasury's prominent public role in planning the bailout strategy only increased the exposure of U.S. funds in Korea and other countries."
Congressional opposition to efforts by the administration to help bail out troubled Asian countries will be a focus of debate at the upcoming Bankers Association for Foreign Trade conference in Washington late next week. Mr. Farmer said the trade group is fully backing administration efforts to obtain increased funding for the IMF.
The group added in a release that still another item of concern is a report that some members of Congress may move to tighten sanctions against companies that invest in Iran by including banks that lend to companies investing in that country.
Any such move to bar foreign banks lending to companies investing in Iran from operating in the United States, Mr. Farmer said, could play havoc with the U.S. banking market and with the U.S. clearing systems.
Among those scheduled to participate in the conference are Stuart E. Eizenstat, under secretary of state for economic, business, and agriculture affairs; Stanley A. Fischer, first deputy managing director of the IMF; and William J. McDonough, president and chief executive officer at the Federal Reserve Bank of New York.
