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Treas.
HI
10
.A13
P4
v. 376
Department of the Treasury
PRESS RELEASES
The following numbers were not used:
3125, 3135,3148,3169,3187,3201,3202,3212
The following number is not available:
3163
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
Contact: Peter Hollenbach
(202) 691-3502
FOR IMMEDIATE RELEASE
May 3,1999
BUREAU OF THE PUBLIC DEBT ANNOUNCES SERIES EE SAVINGS BOND RATE
FOR MAY THROUGH OCTOBER 1999
The Bureau of the Public Debt announced today the rate for Series EE savings bonds issued on or after May 1, 1997.
SERIES EE SAVINGS BOND RATE - 4.31 %
The 4.31 percent Series EE savings bond rate is in effect for bonds issued on or after May 1, 1997, that enter semiannual
earnings periods from May through October 1999. The rate is 90 percent of the average 5-year Treasury securities yields for
the preceding six months. A new interest rate is announced effective each May 1 and November 1. A 3-month interest
penalty is applied to these bonds if redeemed before five years. The Series EE bonds on sale now increase in value monthly.
The bond's interest rate is compounded semiannually.
SERIES EE BONDS ISSUED BEFORE MAY 1997
The 3.91 percent Short-Term Series EE savings bond rate is in effect for bonds issued from May 1995 through April 1997
for bonds that enter semiannual earnings periods from May through October 1999. See the tab Ie on the back of this release
for earnings on Series EE bonds issued from January 1980.
MATURED SERIES E SAVINGS BONDS AND SAVINGS NOTES
Series E savings bonds and Savings Notes continue to reach final maturity and stop earning interest. Bonds issued from
May 1941 through April 1959 along with those issued from December 1965 through April 1969, have stopped earning
interest. Savings Notes, issued from May 1967 through April 1969, have stopped earning interest. Bonds and Notes with
issue dates shown here will reach final maturity in the next six months.
.-
BondINote Issue Dates
Bonds !Notes Stop Earning.interest
May 1959 through October 1959
May 1969 through October 1969
May 1999 through October 1999
May 1999 through October 1999
MORE INFORMATION
ne latest United States Savings BondslNotes Earnings Report and other useful infonnation about savings bonds is available
t Public Debt's Internet website at www.savingsbonds.gov. Download the new Savings Bond Wizard TM version 2.01 an
asy to use program that lets you keep track of all your savings bonds, calculate the value of your portfolio, and more. The
Ible on the back of this release shows actual yields for Series EE bonds. The Earnings Report, which contains rate and yield
Ifonnation for Series E&EE bonds and Savings Notes, is also available by mail from Public Debt. Send a postcard asking
)r "Earnings Report" to Bureau of the Public Debt, 200 Third Street, Parkersburg, WV 26106-1328.
000
3120
www.publicdebt.treas.gov
VALUES AND YIELDS FOR $100 SERIES EE BONDS
May 1999 Thru April 2000
The table shows semiannual values for $100 Series EE bonds·. Values for other denominations are proportional
to the values shown. For example, the value of a $50 bond is one-half the amount shown and the value of a $500
bond is five times the amount shown. The Current Earnings column shows the annual yield that the bonds will earn
during the period indicated. The Eamings From Issue is the bond's yield from its issue date to the date shown or date
adjusted as shown in the footnotes.
Series EE Bond
Issue Dates
Earnin! Period
Start
End
Date Date -
5/1999 - 1011 999
11/1998 - 411999
5/1998 - 10/1998
11/1997 - 411998
5/1 997 - 1011 997
5/1/99
5/1/99
5/1/99
5/1/99
5/1/99
11/1/99
11/1/99
1111/99
11/1/99
1111/99
Earnin s to Date when held Syears ....
Redemption Value -Current
Earnings
Start
End
Start
End
Value
Earnings From Issue
Value
Value
Value
4.32%
4.32%
50.00
50.52
50.00
51.08
4.51%
4.38%
50.56
51.72
51.16
52.28
4.64%
53.00
4.27%
51.88
52.44
53.56
4.90%
53.32
54.48
4.30%
53.92
55.08
5.05%
54.80
56.04
4.33%
55.44
56.64
Earnings
Earnin! Period
Current
End
End
from
Start
Value
Value
Earnings
Issue
Date -11/1996 - 411997
5/1/99
1111/99
3.87%
4.37%
55.84
56.92
511/99
1111/99
4.35%
5/1996 - 10/1996
57.00
58.12
3.93%
11/1995 - 411996
5/1/99
1111/99
58.40
59.56
3.97%
4.42%
5/1/99
11/1/99
5/1995 - 1011995
61.08
3.87%
4.50%
59.92
11/1994 - 411995
1111/99
5/1/99
59.76
64.52
15.93%
5.16%
5/1994 - 1011994
5/1/99
1111/99
5.12%
4.08%
64.72
66.04
11/1993 - 411994
5/1/99
1111/99
67.48
4.24%
5.06%
66.08
5/1993 - 10/1 993
5/1/99
1111/99
67.64
69.08
4.26%
5.04%
311 993 - 411993
9/1/99
311/00
5.03%
69.40
70.80
4.03%
11/1992 - 211993
5/1/99
1111/99
73.44
75.64
5.99%
6.00%
5/1992 - 1011992
5/1/99
1111/99
75.64
77.92
6.03%
6.00%
11/1991 - 411992
511/99
11/1/99
77.92
80.24
5.95%
6.00%
5/1 991 - 10/1 991
5/1/99
11/1/99
6.08%
6.01%
80.24
82.68
11/1990 - 411991
5/1/99
11/1/99
82.68
85.16
6.00%
6.01%
5/1990 - 10/1990
5/1/99
1111/99
85.16
87.68
5.92%
6.00%
11/1989 - 411990
5/1/99
1111/99
87.68
90.32
6.02%
6.00%
5/1 989 - 10/1 989
5/1/99
1111/99
90.32
93.04
6.02%
6.00%
1111 988 - 411989
5/1/99
1111/99
93.04
95.84
6.02%
6.00%
5/1988 - 1011988
5/1/99
1111/99
95.84
98.68
5.93%
6.00%
11/1987 - 411988
5/1/99
1111/99
101.64
6.00%
6.00%
98.68
5/1987 - 10/1 987
5/1/99
1111/99
101.64
103.68
4.01%
5.92%
11/1986 - 411987
5/1/99
1111/99
103.68
105.76
4.01%
5.85%
5/1 986 - 10/1 986
5/1/99
1111/99
117.64
120.00
4.01%
6.59%
11/1985 - 411986
5/1/99
1111/99
120.00
122.40
4.00%
6.50%
5/1985 - 10/1 985
5/1/99
1111/99
122.40
124.84
3.99%
6.41%
11/1984 - 411985
5/1/99
1111/99
124.84
3.97%
6.33%
127.32
5/1984 - 1011 984
5/1/99
1111/99
129.20
131.76
3.96%
6.35%
11/1983 - 411984
5/1/99
1111/99
135.40
138.08
3.96%
6.45%
5/1983 - 10/1 983
5/1/99
1111/99
141.12
144.16
4.31%
6.52%
311 983 - 411 983
9/1/99
311100
149.04
15204
4.03%
6.65%
11/1982 - 211983
5/1/99
1111/99
153.40
158.00
6.00%
6.88%
5/1 982 - 10/1 982
5/1/99
1111/99
172.16
5.99%
7.37%
177.32
11/1981 - 411982
5/1/99
1111/99
177.32
7.33%
182.64
6.00%
5/1981 - 10/1981
5/1/99
1111/99
182.64
4.03%
7.24%
186.32
11/1980 - 411981
5/1/99
1111/99
192.68
198.48
6.02%
7.39%
5/1 980 - 10/1980
5/1/99
11/1/99
208.24
214.48
5.99%
7.61%
1/1 980 - 411 980
7/1/99
1/1/00
212.36
218.76
6.03%
7.52%
Monthly Increases In value, applicable to some bonds, are not shown In the table .
•• Each ·Start Date" and "End Date' is for the first date of the range in the "Issue Dates· column.
Add one month for each later issue month. For example, a bond issued in 1/1997
would be worth $55.84 on 7/1/1999 and $56.92 on 1/1/2000 .
••• A bond issued on or after May 1, 1997 is assessed a three-month interest penalty if
redeemed less than five years after its issue date. "Redemption Value" shows bond values
after penalty. "Earnings to date when held 5 years· shows the amount upon which future
earnings will compound.
Series EE Bond
Issue Dates
.
Start
Date -
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
Contact: Peter Hollenbach
(202) 691-3502
FOR IMMEDIATE RELEASE
May 3,1999
I BONDS BOUGHT FROM MAY THROUGH OCTOBER 1999
TO EARN 3.3% OVER AND ABOVE INFLATION
Series I, inflation-indexed savings bonds purchased from May through October 1999 will earn a 3.3 percent fixed rate of
return over and above inflation. The 3.3 percent fixed rate applies for the 30-year life of I Bonds purchased during this
six-month period.
Treasury's inflation-indexed I Bonds are designed to offer all Americans a way to save that protects the purchasing power of
their investment by assuring them a real rate of return over and above inflation. I Bonds have features that make them
attractive to many investors. They are sold at face value in denominations of $50, $75, $100, $200, $500, $1,000, $5,000,
and $10,000 and earn interest for as long as 30 years. Two new denominations, a $200 bond honoring Chief Joseph of the
Nez Perce, and a $10,000 bond, honoring Senator Spark Matsunaga went on sale May 1,1999. I Bond earnings are added
every month and interest is compounded semiannually. They are State and local income tax exempt, and Federal income tax
on I Bond earnings can be deferred until the bonds are cashed or they stop earning interest after 30 years. Investors cashing
I Bonds before five years are subject to a 3-month earnings penalty.
I BOND EARNINGS RATE - 5.05 %
The earnings rate for I Bonds is a combination of a fixed rate, which will apply for the life of the bond, and the inflation rate.
The 5.05 percent earnings rate for I Bonds bought from May through October 1999 will apply for the first six months after
their issue. The earnings rate combines the 3.30 percent fixed rate of return with the 1.72 percent annualized rate of inflation
as measured by the Consumer Price Index for all Urban Consumers (CPI-V). The CPI-U increased from 163.6 to 165.0 from
September 1998 to March 1999, a six-month increase of 0.86 percent.
EARNINGS RATES FOR ALL I BONDS
Earnings rates and actual yields for I Bonds are shown in the I Bond Earnings Report on the back of this release.
MORE INFORMATION
Jet the latest information about I Bonds and Series EE bonds at Public Debt's savings bond website at
vww.savingsbonds.gov. Download the new Savings Bond Wizard™, version 2.01 a free easy to use program that lets
IOU keep track of all your savings bonds, calculate the value of your portfolio, and more. The latest United States
")avings Bonds/Notes Earnings Report, containing rate and yield information for Series E, EE and I bonds along with
;avings Notes, is also available at the website or by mail. Send a postcard asking for the "Earnings Report" to the
3ureau of the Public Debt, 200 Third Street, Parkersburg, WV 26106-1328.
000
'A-405
RR-3121
www.publicdebt.treas.gov
VALUES AND YIELDS FOR $100 SERIES I BONDS
May 1999 Thru April 2000
The table shows semiannual values for $100 Series I bonds'. Values for other denominations
~ proportional
to the values shown. For example, the value of a $50 bond is one-half the amount shown and the value of a $500
bond is five times the amount shown. The Current Earnings column shows the annual yield that the bonds will earn
during the period indicated. The Earnings From Issue is the bond's yield from its issue date to the date shown or date
adjusted as shown in the footnotes.
Redemption Value ott
Earnin s to Date when held 5 years ***
Earnin~ Period
Series I Bond
Earnings
Start
Current
Start
End
Start
End
EndIssue Dates
Date **
Date **
Value
Value
Value
Earnings From Issue
Value
5/1999 - 10/1999
5/1/99
5.04%
5.04%
11/1/99
100.00
102.52
100.00
101.24
11/1998 - 4/1999
5/1/99
11/1/99
102.52
105.12
5.07%
5.06%
101.24
103.80
9/1998 - 10/1998
3/1/00
104.96
107.64
5.11%
9/1/99
4.97%
103.64
106.32
Monthly Increases In value, applicable to some bonds, are not shown In the table .
•• Each "Start Date" and "End Date" is for the first date of the range in the "Issue Dates" column.
Add one month for each later issue month. For example, a bond issued in 7/1999
would be worth $100.00 on 7/1/1999 and $101.24 on 1/1/2000 .
••• A bond issued on or after May 1, 1997 is assessed a three-month interest penalty if
redeemed less than five years after its issue date. "Redemption Value" shows bond values
after penalty. "Earnings to date when held 5 years" shows the amount upon which future
earnings will compound.
.
D EPA H. T l\I E N T
TREASURY
0 F
T II E
T REA SUR Y
NEWS
omCE OF PUBLIC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W. • WASHINGTON, D.C ... 20220 .. (202) 622-2960
Text as Prepared for Delivery
Embargoed for 12:30 p.m. EDT
"Riding the Storm: Latin America and the Global Financial Market"
Remarks by Lawrence H Summers
Deputy Secretary of the Treasury
Council of the Americas
Washington, DC
May 3,1999
Thank you. We meet at a time of profound challenges for the economics of our hemisphere, and for
the global economy as a whole. But I think we can also say it is a time of fresh hope.
The mood at last week's World Bank/International Monetary Fund meetings here in Washington
was very different than it was in October. At that time, in the wake of the Russian financial crisis,
amid signs of significant strain in United States, I ,atin American and global financial markets and
evident concerns about global growth, the G7 warned that the balance of risks in the global
economy had shifted, and emphasized their commitment to promote sustainable global growth.
Six months on, as the recent G7 Communique noted, there have been improvements in some areas,
reflecting both better performance in some emerging market economies and growth-oriented policy
steps that have been taken in a number of G-7 countries. But nowhere more than in Latin America,
the ebbs and flows of global sentimellt usually shift more quickly than the ground beneath. The
sense of crisis has abated. But major challenges remain.
To be sure, stable finance is not an end in itself. Stable finance will not alone educate our children,
protect our environment or build all of our nations. But these things cannot happen without it. Now
more than ever, if the gains of the past decade arc to be preserved and the economies of this
hemisphere are to keep on the path of integration and openness, Latin America needs to build
confidence in finance - and financial confidence in Latin America.
I would like to spend most of my time today reflecting what will be the main ingredients ofa
stronger. safer financial system in Latin America and globally. First, though, let me say a few words
about the more immediate outlook.
RR-3l22
For press release.l, speeches, public schedules and official biographie\. call our 24.fzour/ax line at (202) 622-2040
I.
The Regional Outlook
Around the world and in this hemisphere, the United States remains a heacon of strength. If anyone
a few years ago had predicted the combination of inflation, unemployment and growth rates we see
today - not to mention a rising fiscal surplus - it is fair to say that the prediction would have heen
greeted with some skepticism.
This remarkablc performance can be traced to a three-part national economic strategy based on a
strong macro economic foundation, a commitment to open markets and to key public investments.
But we know that in an interdependent world, our economic success will be linked ever more
closely to that of the global economy - and the success of our closest neighbors most of all.
When the Inter-American Development Bank met in Paris in March, some saw the region as reeling
after a year of unpleasant shocks:
•
Events in Brazil had challenged the region's largest economy in its commitment to low inflation
and steady growth and sent unwelcome tremors through several of the region's markets.
•
Private capital inflows into the region were drying up. In the last five months of 1998, monthly
hond issuance by Latin American countries was only $1 hillion, down from $4.4 hillion in the
first seven months of the year.
•
Commodity markets had suffered another downward spiral. This infl icted major terms of trade
shocks on Chile, Venezuela, Mexico, Ecuador and others in 1998 - costing, in some cases,
more than 5 percent of GOP.
•
Worst of all, a series of major natural disasters had hit countries that had already seen more than
their share: with hurricanes hitting Honduras, Nicaragua, EI Salvador, Guatemala, the
Dominican Repuhlic and Haiti, floods from EI Nino and a tragic eal1hquakc in Colombia.
It was clear when we met in Paris that these shocks would take their toll on the region for some
time to come and that no country will be left untouched. This surely remains true today - for the
victims of Mitch and other disasters most of all. As you knuw, an unprecedented multilateral and
bilateral effort has bcen under way to hclp countries rehuild their brokcn economies, with a
combination of immediate support and medium-term debt rescheduling. This broad initiative
remains on track, and I hope we will make further progress at a special donors' meeting latcr this
month in Stockholm.
At the same time, ifthcrc were encouraging signs for the future six weeks ago, it is fair to say that
there arc rather more of them today.
Perhaps the most important have been cvents in Brazil. The devaluation of the real was not
followed by the contagion that many would have feared. That it did not do so is a tribute to Brazil's
success in implementing strong fiscal policies to regain confidence and also partly a reflection of
the fact that the crisis had takcn so long to play out. This meant that a large volume of trade and
other finance had already moved out of Brazil. When the devaluation tinally did take place, this
money was there on the sidelines, ready to return if and when credible policies were restored.
As the G7 noted last week, Brazil has recently made important progress implementing the revised
economic program that was supported by the IMF in March in the context of coordinated voluntary
assurances on the part of Brazil's major private creditors. This is having palpable efrects: inflation
is regularly coming in below expectations; interest rates have fallen significantly, the currency has
strengthened; and market economic forecasts for 1999 have been revised sharply upwards.
Increased confidence in Brazil, a continuation of strong policies in Mexico and Argentina and
others, broadly prudent policies in Venezuela, where investors had feared missteps, rising oil prices
and a more general upturn in global tinancial and commodity markets: all of these factors have
contributed to a sharp improvement in regional market sentiment relative to last fall. Indeed, Latin
American borrowers raised $11 billion in international bond markets in the first quarter of 1999.
This more favorable market environment will be an important asset to the region's governments in
helping reduce the immediate pressure on their economics. But it is an asset that we will quickly
squander if we allow ourselves to succumh to complacency.
•
In countries where sound policies are not yet in place, notably Ecuador, policy makers will need
to rememher that a rising regional tide, in itselt~ will do little to stop rising inflation, widening
fiscal deficits, and crises in the financial system. Problems that were homegrown need to be
fixed at home, and soon.
•
In Brazil, especially, policy makers will need to show continued vigilance in meeting shortterm, macro-economic goals and show that they can move forward on addressing medium
-term fiscal and structural challenges.
•
Venezuela and others favorably affected by the recent market improvements will need to ensure
that new capital intlows are sustainable for the long-term, and windfall gains in commodity
markets are invested in long-term fiscal and structural reform, not spent as they have often been
in the past.
•
And as elections approach in Mexico and Argentina, policy makers will need to continue to
work to bui Id an institutional basis for strong policies that can withstand the vagaries or the
electoral cycle. As President Zedillo recognizes, there is no more important legacy that he could
leave to his successor - whoever that may be - than a growing and stable Mexico.
I>et me note here that regional and sub-regional agreements hetween governments in the
hemisphere have played and will continue to play an important role in preserving contidence that
countries will keep to the path of opening markets and deeper integration. NAFTA and Mercosul
are two very important examples. Another that deserves mention is the Andean Trade Preferences
Act, which offers investors in the Andean countries the assurance that the United States market will
remain open to them. The United States has supported this agreement in the past and I expect that
we will continue to support it as a part of a strong regional policy framework for stability and
growth.
II. Building Financial Confidence
The novelty of the financial crises we have seen in the 990s is that they have been what might be
called capital account crises. The dominant source of pressure has been less economic contraction
caused by the reluctance to finance expenditure in excess of national incomes than it has been
pressure to withdraw a large amount of capital, caused hy domestic and foreign investors alike. In
each case, macro-economic and micro-economic weaknesses made a crisis possible. Sharp, selffulfilling declines in confidence made it happen with such speed and virulence.
Building a safer global and regional financial system wi'\1 mean individual governments getting the
basics right: pursuing strong, mutually consistent monetary, fiscal and exchange rate policies. It will
require them to put in place legal and regulatory underpinnings for markets to lessen the probability
that imbalances will arise and contain the effects when they do occur. Because every ill-judged
credit has a lender and a borrower, it will surely also mean stronger risk management systems and
more prudent credit decisions on the part of private lenders. And it will mean the international
community doing its part, by providing stronger incentives for countries to act to prevent crises and
by devising more effective means of resolving them when they do take place.
This is a global and wide-ranging agenda, as it needs to be. Let me just focus here on four
challenges of special relevance to Latin America, whose importance has been underscored by the
events of the 1990s.
A. HuddinK SlronK£'r. Deeper National Financial ,')'ystems
While we think of the global capital market when we think about I ,atin American finance, the most
important capital market is the one at home. I think most would agree that the strength of the
Brazilian banking system played an important role in limiting the broader consequences of the
Fehruary devaluation.
To build on and learn from the experience of the past year, the region's governments need now to
step up their crforts to create a domestic financial infrastructure that absorbs the right kind of
capital and is more impervious to shocks. That means etfective supervision and regulation and
appropriate prudential management. And it means transparent accounting and corporate governance
and effective domestic bankruptcy regimes.
Ifone were writing a history of the American capital market I think one would conclude that the
single most important innovation shaping that market was the idea of generally accepted accounting
principles. GAAP are not a single institution. They are not a single magic bullet. They are an
ongoing proccss that really is what makes our capital market work and makes it as stable as it is.
Very much the same kind of thing is needed in Latin America and in all of the emerging economies.
Private foreign financial sector participation can and already does support these goals in Latin
America. Today fully 50 percent of the banking sector, 70 percent of private banks, in Argentina
arc foreign-controlled, up from 30 percent in 1994. In Mexico morc than one fifth of banking sector
assets are foreign-controlled. The result is a deeper, more efficient financial market, and external
investors with a greater stake in staying put.
The international community can and must also playa role, by developing more effective ways to
induce countries to put the right policies in place. Concrete steps toward this end include:
•
Effol1s to expand and reinforce norms of transparency in economic and financial data, including
the development and expansion of the IMF's Special Data Dissemination Standard (SODS).
This has now been widely adopted by industrial and emerging market economies and will
incorporate full details on reserves, and any claims against them, from April 2000.
•
Development of new codes to help investors and the onicial community judge national policies
better and set "best practice" standards for governments themselves. The IMF's new Code on
Fiscal Policy has now been adopted, and we expect that a Code on Monetary and Financial
Policy will be formally adopted in October. International groups have now endorsed new
standards on insolvency and debtor-creditor regimes.
•
Development of stronger standards and shared principles for the financial and corporate sector
worldwide. I might say here that the Committee on llemispheric Financial Issues created at the
Summit of the Americas in Miami in 1994 has already made an important difference, in helping
to disseminate application of the Basle Core Principles for banking supervisors across the
region and help develop key parts of the infrastructure for stronger national financial markets.
B.
Safer Management of Puhlic Risks
Countries across the region also need to match their financial pol icies to the challenges posed by a
more developed and more truly global financial market. In this context the most crucial lesson of
recent events is surely the need for prudent - and long-termist - debt management. We now know
that countries are courting trouble when they reach for cheap short-term capital. We saw it in
Mexico, with the increasing resort to issuing dollar-denominated Tesobonos in 1994 - and we saw
it most recently in Russia, in the government's continued efforts to encourage foreign purchases of
domestic GKOs.
In the wake of these crises, the countries of Latin America need to think long and hard about the
structure of their liabilities, their exposure to rollover and other risks; and about new structures that
share more risk with lenders. And they need to recall that longer-term debt is the simplest and best
kind of insurance of all. As I will discuss in a moment, among other things, provision of the IMF's
new Contingency Credit Line will be structured around encouraging countries to adopt safer
practices in this area. Efforts are also under way to encourage safer risk management on the part of
lenders.
C.
Enduring exchange rate regimes
No search for better ways to prevent crises can overlook the place wherc so many past crises have
begun-in the market for foreign exchange. To sustain confidence in the future, Latin America,
especially, will need exchange rate regimes that can command the trust of domestic citizens and
foreign investors, accommodate regional and global integration, and stand the test of time.
The merits of more fixed versus more floating exchange rates arc forever debated and surely vary
greatly from situation to situation and context to context. But history - and economic theory - do
tell us that the three objectives of free capital mobility, an independent monetary policy and the
maintenance of a fixed exchange rate objective will ultimately prove to be mutually incompatible.
I sllspect this means that as capital market integration increases, countries will be forced
increasingly to more flexible or more purely fixed regimes. In any event, we have to recognize that
in a more integrated hemisphere - and a more integrated world - the contagion caused by failed
regimes gives all of us an increasingly large stake in the right choices being made.
Analysts in several Latin American countries have been seeking an answer in dollarization. This
would be a highly consequential step for any country, one that has to be considered with a careful
eye to various potential costs and benefits.
•
On the one hand, experience with discretionary monetary policy in a number of countries in
r,atin America has been that its potential henefits have not been fully realized. In this context
the presumed irrevocability of dollarization holds the promise of lower interest rates, greater
stability and possibly deeper financial markets, by adding to the credibility and discipline of its
own policies and advancing its integration with the world economy. It is striking that dollarized
Panama is the only country in Latin America with an active 30-year fixed rate mortgage market.
•
On the other hand, countries considering dollarization need to remember that it is not a magic
bullet. No exchange rate regime can be more credible than the fundamentals that underpin it. A
dollarized country must he prepared to embrace an equally irrevocable subordination of
domestic monetary policy to that discipline.
As Secretary Rubin has said, a country's choice of exchange rate regime is its own to make. We do
not have an a priori view on dollarization. There are a variety of means and modalities for
achieving it and we would expect to discuss these with any government seriously considering
taking such a momentous step. There are, however, certain limits on the steps that the United States
would he prepared to take in the context of such a decision: specifically, it would not, in our
judgment, he appropriate for United States authorities to extend the net of bank supervision, to
provide access to the Federal Reserve discount window, or to adjust the procedures or orientation of
United States monetary policy in light of another country deciding to adopt the dollar.
IJ
Appropriate Toolsfor Crisis Re5ponse
Without the right national policies, any amount of external official support or extension of private
debt obligations in time of crisis will be in vain. But as we have seen in Brazil, where the reform
commitment is present, conditioned provision of finance and private sector coordination may both
be needed to create an environment of confidence when something akin to a bank run psychology
has taken hold.
The challenge we face, glohally and regionally, is to devise mechanisms for responding to these
new kinds of crisis, and the bank run psychology that can drive them. In this regard the IMF's
Supplemental Reserve Facility, created in 1997, was a major innovation. In line with similar moves
by the World Bank, the IDB has followed this up at the regionallcvel, in providing conditioned,
fast-disbursing, premium interest rate emergency loans for Argentina, Colombia and Brazil.
Last week, the international community took another very important further step with the creation
of the ceL. Like the SRF, the eeL will carry premium interest rates and shorter maturities, to
maximize countries' incentive to seek alternative, private sources of finance. It is designed to
reduce the risk of contagion to countries with strong polices and institutions and directly encourage
countries to reduce their vulnerability to crisis before the worst happens, through the adoption of
sounder policies and practices.
The question of the appropriate private sector role in resolving such crises is a delicate one. We are
very much aware that debt is an obligation which must be honored whenever possible; that growth
depends on the continued flow of private capital, which in turn depends on meeting obi igations; and
that confidence is the mirror image of moral hazard. It is the irony of financial crises that while they
are usually caused by too much lending, they are ended by lending more.
At the same time, as we have seen recently in Brazil, private sector coordination in its mutual
interest can playa crucial role in crisis resolution. In a healthy global financial market, instruments
that were issued carrying spreads of many hundreds of basis points surely cannot be counted on
with absolute certainty to be repaid on time and in full.
As I consider these questions, I am convinced that cookie-cutter formulae or preset procedures can
never be pre-designed to respond to the various circumstances that will arise. A case-by-case
approach, based on the inter~sts of the country involved, its creditors, and the system as a whole,
will work best, in this region and globally.
Let me say here that effective crisis response extends well beyond the immediate financial
imperative to restore confidence. The best - the primary - reason for wanting to respond better to
crises is to lesscn the economic and social distress that crises bring. But then preparing for crises
has to mean preparing every member of our economy to cope with their effects.
Effective social safety nets are morally right because they provide a floor below which no one
should be permitted to drop. And they make sense in narrow economic terms: because they can act
as automatic stabilizers for the economy in a downturn; and because adjustments that are less
painful for people are more likely to be made in good time.
III.
Concluding Remarks
The platform of stable finance is one upon which so much can be laid-so much that will further the
goals for the Americas that we laid down in our Guadalajara meeting in 1994 and the Santiago and
Miami Summits. Even as we work through the immediate effects of the crises we need to keep
focused on those goals of inclusion, integration, increased prosperity and strengthened democracies.
We have made major progress toward these goals in this decade. What is critical today is that we
maintain forward momentum on the work of reform - even as the storm clouds that were so evident
a few months ago begin to seem more distant. Thank you
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PUBLIC DEBT NEWS
Department of the Treasury • Bureau or the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
May 3,1999
Contact: Peter Hollenbach
(202) 691-3502
PUBLIC DEBT TO END WALK-IN SERVICE FOR TREASURY SECURITIES
The Bureau of the Public Debt announced today that due to increasing customer use of its new
telephone and Internet services, Treasury securities walk-in service at 37 locations will be
discontinued, the frrst step in a process to save taxpayers $5 million annually.
At the close of business August 31,1999. the Bureau will shut down the Treasury security window
operations at 36 Federal Reserve Banks and the Capital Area Servicing Center in Washington. D.C.
Then. over the next few years, Public Debt will create customer call centers at the Federal Reserve
Banks in Boston, Minneapolis and Dallas. Accessible by a toll-free phone number, the call centers will
serve customers of TreasuryDirec{, the Bureau's direct-hold program for Treasury bills, notes and
bonds. Until the call centers are fully operational, TreasuryDirec1 customers should continue to do
business by mail and phone with their regular servicing offices. When completed, the changes will
save about $5 million per year.
"Combined with an existing array of automated services available by phone and Internet, the centers
will create a modem service environment that not only saves money for the taxpayer, but adds
convenience for the customer," Public Debt Commissioner Van Zeck said.
Public Debt introduced the new business environment for TreasuryDirect in August 1997, by allowing
customers [0 reinvest securities electronically. Today, more than half of all reinvestments and nearly
40 percent of purchases are transacted over the phone and Internet.
Partly because of the popularity of the phone and Intemet services, Public Debt estimates that less than
2 percent of its 620,000 TreasuryDirect investors conduct business in person. Even before the
electronic services were introduced, most customers did business by mail rather than in person.
The shutdown of walk-in services also affects owners of Treasury registered and bearer paper
securities. The processing of those instruments will be transferred to Public Debt's operations center in
Parkersburg, WV. The Department of the Treasury stopped issuing marketable note and bond
certificates in 1986. The paper bonds still outstanding represent less than one-fourth of 1 percent of the
marketable debt. Because redemption and other transactions in paper Treasury bonds are expected to
number only about 5,000 each year, continuing to service these securities at 37 locations would be too
costly.
RR-3123
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http://www.publicdebt.treas.gov
Investors holding registered and bearer certificates can deposit them into a TreasuryDirect account free
of charge through Public Debt's Sman Exchange program. Those investors wishing to convert their
securities to safe, convenient TreasuryDirect accounts should contact Public Debt at 1-800-366-3144.
Most investors who own Treasury bearer bonds find it more convenient to have commercial banks
handle their interest coupons. The few customers who present coupons in person at Federal Reserve
Banks can continue to do so until August 31, 1999. After thac date those investors can mail coupons
Federal Reserve offices.
[0
The tennination of walk-in service also will impact a small number of savings bond customers. Public
Debt consolidated savings bond processing at five Federal Reserve offices several years ago. Window
service for savings bonds at the Federal Reserve offices in Buffalo, Kansas City, Minneapolis,
Pittsburgh and Richmond will end after August 31. Savings bond investor~ can, as always, look to
their local financial institutions for service. More than 40,000 banks, savings and loans. and credit
unions serve as savings bond issuing and paying agents.
All other services offered by Federal Reserve Banks to walk-in visitors will remain unchanged.
000
TOTRL P.02
I)
E I' .\ I{ T " F :\ T
0...
.. II L
T I{ E ..\ S 1I R \'
NEWS
IREASURY
omCE OF PUBUC AFl'AIRS -1500 PENNSYLVANIA AVENUE. N.W. • WASHINGTON. D.C. • 20~~O - (202) 622·2960
For Immediate Release
May 3,1999
CONTACT: Public Affairs
(202) 622-2960
TREASURY ANNOUNCES MARKET BORROWING ESTIMATES
The Treasury Department announced on Monday that its net market borrowing for
the April - June 1999 quarter is estimated to be a paydown of $116 billion with a cash
balance of $55 billion on June 30. The Treasury also announced that its net market
borrowing for the July - September 1999 quarter is estimated to be a paydown of
approximately $10 billion with a cash balance of $45 billion on September 30.
In the quarterly announcement of its borrowing needs on February 1, 1999. the
Treasury estimated net market borrowing for the April - June quarter to be a paydown in
the range of $110 billion to $115 billion with a cash balance of $35 billion on June 30. The
improvement in the estimated cash balance is a combination of higher receipts, lower
outlays and larger net issuances of State and Local Government Series securities.
Actual net market borrowing for the January - March 1999 quarter was $5.8 billion
with an end-of-quarter cash balance of $21.6 billion. On February 1, the Treasury
estimated net market borrowing for the January - March quarter to be a paydown of
$5 billion with an end-of-quarter cash balance of $20 billion. The increase in net market
borrowing was the result of higher outlays and larger tax refunds.
The regular quarterly Press Conference will be held at 9:00AM on Wednesday,
May 5.1999.
-30~
RR-3124
tr~ releases,
4
speeches, public: scMdulD and olJir:ull biogmplait!S, ttdl our 24-lwur~ line at (202) 622·2040
t
~UBLIC
DEBT NEWS
)epartment of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
IMMEDIATE RELEASE
03, 1999
CONTACT:
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
May 06, 1999
August 05, 1999
912795CJ8
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
4.480%
Investment Rate 1/:
4.605%
Price:
98.868
All noncompetitive and successful competitive bidders were awarded
:urities at the high rate.
Tenders at the high discount rate were
otted 61%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Competitive
Noncompetitive
Tendered
$
PUBLIC SUBTOTAL
24,129,557
1,400,813
$
SUBTOTAL
28,483
28,483
25,558,853
7,516,053
4,558,010
1,517
4,558,010
1,517
Federal Reserve
Foreign Official Add-On
$
6,086,757
1,400,813
7,487,570 2/
25,530,370
Foreign Official Refunded
TOTAL
Accepted
30,118,380
$
12,075,580
Median rate
4.470%: 50% of the amount of accepted competitive tenders
tendered at or below that rate.
Low rate
4.380%:
5% of the amount
accepted competitive tenders was tendered at or below that rate.
[-to-Cover Ratio = 25,530,370 / 7,487,570 = 3.41
Equivalent coupon-issue yield.
Awards to TREASURY DIRECT = $1,091,073,000
·3126
http://www.publicdebt.treas.gov
L>UBLIC DEBT NEWS
)epartment of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
IMMEDIATE RELEASE
03, 1999
Office of Financing
202-691-3550
CONTACT:
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Term:
Issue Date:
Maturity Date:
CUSIP Number:
High Rate:
182-Day Bill
May 06, 1999
November 04, 1999
912795CU3
4.495%
Investment Rate 1/:
4.675%
Price:
97.728
All noncompetitive and successful competitive bidders were awarded
urities at the high rate.
Tenders at the high discount rate were
otted 57%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Competitive
Noncompetitive
Tendered
$
PUBLIC SUBTOTAL
$
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
3,705,841
1,162,067
4,867,908 2/
23,6ll,427
Foreign Official Refunded
TOTAL
22,449,360
1,162,067
Accepted
2,633,517
2,633,517
26,244,944
7,501,425
3,965,000
133,483
3,965,000
133,483
30,343,427
$
ll, 599, 908
Median rate
4.480%: 50% of the amount of accepted competitive tenders
tendered at or below that rate.
Low rate
4.380%:
5% of the amount
lccepted competitive tenders was tendered at or below that rate.
to-Cover Ratio = 23,611,427 / 4,867,908 = 4.85
,quivalent coupon-issue yield .
.wards to TREASURY DIRECT = $886,687,000
:R-3127
http://www.publicdebt.treas.gov
DEPARTMENT
OF
THE
TREASURY
NEWS
....:~78l)~• • • • • • • • • • • • • • • •
•••••••••••••••
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W. • WASHINGTON, D.C .. 20220" (202) 622-2960
__
~AH7'~
FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
May 4, 1999
DIRECTOR OF TilE OFFICE OF MACROECONOMIC ANALYSIS
JOHN H. AUTEN
REMARKS TO THE TREASURY BORROWING ADVISORY COMMITTEE
OF THE PUBLIC SECURITIES ASSOCIATION
When you were here three months ago, the economy had completed a quarter of 6
percent real growth, more than twice the private consenSllS expectation when the fourth quarter
began. It was elear at the time, however, that there had been special positive factors pushing
up growth in the fourth quarter which were unlikely to be repeated in the first quarter, and
some which might reverse. There had heen a rehound in the fourth quarter from effects of the
General Motors strike earlier in the year, unusually favorahle weather for construction activity
that persisted well into the winter months, and improvement in net exports which came at a
time when the fundamentals seemed to point more toward further deterioration than
improvement.
In view of those considerations, it seemed likely that a slower pace of real growth
might emerge in the first quarter for statistical reasons alone. That turned out to he the casc_
Last week the Commerce Department reported first-quarter real growth of 4-112 percent, down
from 6 percent in the fourth quarter. But one would be hard pressed to explain in what
important respcct the first quarter was weaker than the fourth. If anything, it appears to have
been stronger. Gross domestic purchases, a measure of domestic demand calculated as GDP
less net exports increased at a 6.8 percent annual rate in real terms in the first quarter after
increasing at a 5.4 percent rate in the fourth.
The reason that growth in real GDP fell between the fourth and first quarters was that
net exports subtracted nearly 2-1/2 percentage points from first quarter real growth after
adding about '/2 percentage point to the fourth quarter. There has becn a recurrent tendency
for net exports to improvc temporarily in the final quarter of a year and then to deteriorate in
RR-3128
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the following first quarter. This seems to retlect residual problems in seasonal adjustment of
the trade data and was probably aggravated in its effect late last year by a bunching of aircraft
exports. While primarily a statistical phenomenon, it tends in the current situation potentially
to obscure full recognition of the strength of domestic demand.
In terms of domestic considerations alone, there were few signs in the first quarter data
of any emerging imbalances that might seem to threaten continued expansion. Business capital
spending was well maintained a little below the fourth-quarter rate. Residential construction
activity remained at a high level in the first quarter with good prospects for the future. Early
last year, inventory investment seemed to be moving up to an unsustainable pace, but over the
course of the year it gradually subsided. In the first quarter of this year, inventory investment
was moderate and seemed to be closely aligned with sales. Inventory-sales ratios are currently
at low levels by historical standards.
The economy has averaged close to 4 percent real growth for the last three years with
only minor variations from quarter to quarter, such as between the final quarter of last year
and the first quarter of this year. Perhaps the most remarkable feature of recent experience is
the combination of solid growth with a low, and by some measures even declining, rate of
intlation. In terms of the chain-weighted GDP price index, intlation fell over the past three
years from about 2 percent to less than I percent. In the first quarter, this measure of inllation
did rise to a 1.4 percent annual rate from 0.8 percent in the fourth quarter. A one-time
Federal pay raise accounted for about 0.2 percentage point of the acceleration.
Good intlation performance received further confirmation last week with the release of
the employment cost index, our most comprehensive measure of the cost to employers of
employee wages, salaries and henefits.
•
The employment cost index rose by only 3.0 percent in nominal terms during the
twelve months ending in March, well below the market expectation of a 3.4 percent
rise, and down from a twelve-month increase of 3.7 percent only six months ago.
There was a 3.3 percent increase in wages and salaries (down from 4.0 percent six
months ago) and a 2.3 percent increase in benefit costs (down from 2.6 percent six
months ago). There is some indication that weakness in incentive pay in the highflying finance, insurance and real estate sector may have had a measurable impact on
the latest results.
•
The recent behavior of compensation costs is most unusual given tight labor markets
with the unemployment rate at 4-1/2 percent or below for the past year. In
comhination with the more rapid growth of productivity, it has meant less-thanexpected inflationary pressures and sharp increases in private wages and salaries in real
terms.
2
Direct information on the second quarter is still very limited but generally positive.
The report this Friday on the April employment situation will provide the first comprehensive
View.
•
During the week ended April 24, initial claims for state unemployment insurance
benefits fell by 20,000 to 294,000. The sizable decline reversed most of a rllnup that
occurred at the beginning of the month. Along with the recent behavior of continued
claims and the state-insllred unemployment rate, this suggests that labor markets
remain very tight.
•
A sharp rise in orders for nondefense capital goods excluding aircraft at the end of the
first quarter, as well as the fact that orders have been above shipments for several
months, suggests that business equipment investment may post another solid increase in
the second quarter.
•
Scattered reports on chain store and auto dealer sales suggest some moderation from the
steamy first-quarter pace with the early date of Easter possibly having pulled some
retail sales into late March. Consumer confidence surveys remain at relatively high
levels.
•
The National Association of Purchasing Management index fell back a little in April
but remained above the 50 percent level which indicates that manufacturing activity is
expanding.
The economy grew strongly in the first quarter without signs of increased inflationary
pressure or cyclical imbalance. This extends a long record of good performance, generally
exceeding consensus expectation, and suggests that further gains lie ahead. Information on the
second quarter is too limited at this stage to provide much guidance, but continued expansion,
possibly at a rate closer to the economy's long-term potential, would seem to be a likely
outcome.
That is a summary of recent economic developments and the near term economic
outlook.
-30-
3
() E P :\ R T :\. E 1\ T
0 F
TilE
T REA SUR Y
NEWS
OFF1CE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W. • WASHINGTON, D.C .• 20220. (202) 622·2960
EMBARGOED UNTIL 8 p.m. EDT
Remarks as Prepared for Delivery
May 3, 1999
Remarks by Secretary Robert E. Rubin
Carter Center Conference
It is a pleasure to speak with you this evening. I would like to thank Tim Haas for
that introduction, and President Carter and the Carter Center for hosting this conference
which focuses on what I believe is an absolutely critical issue for the deVeloping world,
including Latin America: Corruption. Corruption, is of course, a moral and social issue,
but tonight I would like to discuss corruption as a critical economic and financial issue,
and what the developing world, the industrial world and multilateral institutions can do to
combat it.
Since taking office more than six years ago, the Clinton Administration has
worked intensely to promote reform and growth in developing countries around the
world, in part because of the increasing importance of the developing countries to our
own economy. In recent years, they have purchased over 40% of our exports. Latin
America, as all of you know well, has undergone a remarkable political and economic
transfonnation in the past decade, and has been the fastest growing market for U.S.
exports over the past four years, accounting for nearly 50% of total U.S. export growth.
The United States now trades almost as much with Latin America as with Western
Europe.
The longer 1 have worked on promoting growth in developing countries - and in
the countries transitioning from communism - the more I have come to believe that
corruption is a prime impediment to economic growth and economic well being.
or course, no country can claim purity in this area - corruption certainly exists in
the industrial world -. and among developing countries there is a wide range in the
severity of the problem. But corruption is particularly pernicious in the developing world
because it diverts the scarce resources that are needed so badly for critical priorities such
as health, education and housing. I n some developing countries, it may even be the
single most important impediment to sustained economic growth.
RR-3129
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The global financial crisis of the last two years highlighted the economic
dimension of corruption. In some countries, corruption increased vulnerability to crisis.
In others, corruption was a significant impediment to implementing the necessary
response to crisis and to restoring confidence in global financial markets.
Corruption - and especially the widespread or even pervasive corruption f()und in
some countries -- affects the economies of the developing world in a number of ways. It
benefits the few at the expense of the many. It distorts normal business and public policy
decision-making, leading to inefficient resource allocation. It discourages small
businesses and entrepreneurs who simply cannot afford the costs of bribery. It creates
uncertainty, which discourages investment, and it particularly discourages foreign
investment.
Another way of saying this, is that corruption undermines the rule of law, and can
become the way business is conducted. This is the anti-thesis of the effective legal
system that is a principal requisite for a successful economy. Moreover, by undermining
the rule of law and by undermining confidence in public institutions, corruption
diminishes the willingness of people to pay taxes, which reduces resources available for
essential public sector services and public investment, and undermines fiscal stability.
Finally, corruption creates an environment conducive to organized crime - in fact,
comlption and organized crime can create a vicious cycle. Drugs, organized crime and
even street crime feed corruption, and corruption undermines or can even preclude efforts
to combat drugs, organized crime and street crime - and these too are severe impediments
to economic activity.
I have spoken with CEOs of large American companies who have told me that
they simply will not undertake a major operation in a particular otherwise promising
country because of organized crime, extortion and street violence.
When you consider how corruption can become integrated in the normal conduct
of commerce, how it can become intertwined with organized crime, money laundering
and narcotics trafficking, and how it can become pervasive in a political system, you get a
sense of both how critical reducing corruption is and how difficult that can be. Having
said that, however, there are a number of developing countries that are relatively free of
corruption with some notable examples in Latin America, and a few where high rates of
corruption have been substantially reduced. The challenge is very great -- indeed, some
at Treasury who know this issue feel that if anything world-wide corruption has increased
over time --but can be met. It is valuable to look at countries that have shown success in
combating corruption to see what we can learn, to apply elsewhere.
As I have focused on this issue, it seems to me there are at least five elements
critical to effectively combating corruption.
2
First, although it may seem obvious, nations should have sensible, clear laws and
regulations, since ambiguity and complexity create greater opportunities for corruption in
administration and adjudication. Then, the court system must be independent of political
pressure, and to the extent possible adequately funded, and complemented by honest,
well-trained and adequately compensated regulators, judges, prosecutors and law
enforcement officers. This is difficult for poor countries that cannot afford proper
training, adequate salaries and all the rest, and that puts eill even greater onus on the
international community to help. And that is happening, as the IMF, the World Bank,
and 113RD focus more on good governance and combating corruption, but more should be
done.
Second, is to eliminate all non-essential licensing, regulatory approvals and other
discretionary controls. Reducing administrative discretion of government can greatly
reduce the potential for corruption. If a license is no longer required to engage in some
activity, then that is one less opportunity for bribery.
Third, is to create a well-supervised, soundly regulated and competitive financial
system that operates on a commercial basis and is not subject to credit decisions based on
personal or political connections. As part of the Summit of the Americas process, the
finance ministers are working together to promote financial sector regulatory reform.
But, again, this can be very difficult for a resource constrained developing country, and
the World Bank and IBRD have substantially increased assistance in these areas.
Fourth, is to increase the transparency and accountability of government
operations and decision-making. Shining light on the activities of government by
publishing information about its operations and decision-making, and where appropriate,
by including public participation in those decisions, is a powerful deterrent to corruption.
Lct me also add that a free and vibrant press and the active participation of nongovernmental organizations can make an enormous contribution here. At the Vice
President's conference on combating corruption, the Secretary of Finance of the City of
Buenos Aires noted that exposing the bidding for municipal contracts to the press and
NGOs has significantly cut costs for the city.
Fifth, and finally is to create a sound civil service system with strict conflict of
interest rules, appropriate sanctions for malfeasance and adequate compensation for
employees. This has proven to be a difficult problem ior many of the poorer cOlmtries of
this hemisphere, in part because they lack thc resources to pay their civil servants
adequate salaries. In some countries, it may well be desirable and feasible to have fewer
government employees, and to pay them better.
While much of the responsibility for putting in place these five elements to
combat corruption lies with developing nations, there is much the rest of the world can
do. The international financial institutions - including the International Monetary Fund,
World Bank, and thc Regional Development Banks .- have greatly increascd their
involvement in combating corruption, and they can and should do morc.
3
IMF Managing Director Camdessus has been outspoken in his condemnation of
comlption, and the IMF is increasingly giving explicit consideration to weakness in
governance and to corruption in all its country programs - including Latin America. The
Fund has developed a code of fiscal transparency, vfhich calls for governments to
accurately track and disclose expenditures and thcrSby make them more accountahle f()r
their spending decisions. The Fund also is increasiIW its support for open and transparent
markets, price decontrol and trade liberalization, eaoh of which will reduce the
opportunity for bribery and corruption.
Under President Wolfensohn's leadership, tHe World Bank has become highly
engaged in the fight against corruption. The Bank has developed new methodologies and
techniques for analysis of the nature and extent of cOmIption in specific countries.
Eleven countries, including Bolivia and Ecuador, have adopted this approach to help
understand their cOmIption problems and to formulate targeted anti-comIption programs.
An important aspect of the Bank's approach is to increase transparency and
accountability by encouraging grass-roots involvement of "civil society" such as the
media, schools, churches, and business and consumer organizations. The Bank also has
made loans to support judiciary reforms, and has begun to integrate anti-corruption
measures into its overall lending programs.
The Inter-American Development Bank is by far the largest multilateral lender in
Latin America, which creates particular opportunities in the fight against cOmIption. The
lOB organized a very successful and well-attended conference last year on transparency
in public sector procurement, but we believe the bank can and should make this struggle
an even higher priority.
It is also critically important to recognize that corruption is a two way street: For
every bribe taker, there is a bribe giver. Developed countries must deal with their own
involvement in developing country cOmIption. For the last several years, we have been
urging the OECD countries to do more to discourage bribery. The OECD Bribery
Convention, which was signed in December 1997 and required that bribery of foreign
officials be made a crime, went into effect this year in the United States and cleven other
countries. Signatories to the Convention - including Mexico and non-OECD members
Argentina, Brazil, and Chile - who have not yet ratified and implemented the convention
should so do promptly. Moreover, there are still a few OECD countries that have not yet
eliminated the tax deductibility of bribes, and that is simply inexcusable.
There is also another international treaty pending, the OAS's "Inter-American
Convention Against COmIption." We are working to obtain U.S. ratification and to build
support for an effective monitoring process. Since four major Latin American countries
signed the OECD Convention and thus will participate in that Convention's explicit
provisions for mutual evaluation and monitoring, we would hope that other Latin
American nations also will be agreeable to an effective monitoring mechanism.
4
Industrial nations can also help by increasing technical assistance and financial
aid to developing nations for implementing the sorts of measures I discussed a few
moments ago. In addition, all nations can combat corruption hy cooperating in
combating money laundering, since the corrupt often need to launder the proceeds of
corruption into useable legitimate assets.
In the last few years, there has been real progress in international cooperation on
money laundering, but there is much still to do. Reflecting, in part, the work of the
Summit of the Americas process, Caribbean Financial Action Task Force, and OAS
CICAD, a significant number of states in the Americas have criminalized money
lalilldering, enhanced the regulation of their financial services sectors to more readily spot
money laundering and instituted measures to improve assistance on investigations and
prosecutions. At the same time, the United States Treasury has worked directly with
many of the nations of the Hemisphere, providing technical assistance and training on a
host of anti-money laundering issues. However, much more needs to be done, by all
nations of the Hemisphere including our own.
Let me conclude by saying again that corruption is a critical economic issue for
developing nations and the countries transitioning from communism, and combating
corruption is_a daunting task. Having said that, the increasing recognition of these
realities, and the increasing work in that area, are important steps forward. I can
remember not so long ago when discussing corruption in any conference like this would
have been unthinkahle, tahoo. Similarly, last year, I visited Kenya and gave a speech on
corruption and the level of interest and the wide ranging discussion we held afterwards,
involving students, goverrunent officials~ business people, and representatives from nongovernmental organizations, on the impact of corruption on Kenyan society, was
remarkable.
Just a few months ago, the Vice President hosted a conference on corruption, and
now President Carter and the Carter Center have brought together an impressive group of
individuals from this hemisphere to focus on the problem in the Americas. Such
conferences can contribute greatly, by the work product they develop, by identifying and
promulgating best practices, and by increasing awareness of corruption and its corrosive
effects on a society and an economy. This last, in tum, can help make corruption socially
unacceptable, which may deter both the givers of bribes and the recipients of bribes.
Along these lines, my own view is that far too little has been done to expose to public
shame the providers of bribes from developed countries, and the developed countries
themselves that are not acting energetically to combat conuption in developing countries.
As I mentioned earlier, there are still OECD members who have not eliminated the tax
deductibility of such bribes, or ratified the OEeD convention criminalizing this activity.
All of us must continue to work together - developed and developing nations, groups like
the Carter Center, the international financial institutions, and NGOs like Transparency
International - to move forward in the crucial struggle against corruption. And by doing
so, I helieve we will importantly contribute to helping lay the groundwork for stronger
economies around the world, which will benefit all of us. Thank you very much.
-305
D EPA R T 1\1 E N T
() F
THE
T REA SUR Y
NEWS
TREASURY
OFFICE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C.. 20220. (202) 622·2960
Weekly Release of U.S. Reserve Assets
May 4, 1999
The Treasury Department roday released U.S. reserve assets data for the week endJng
;\pril 30, 1999.
A.s indicated in this table, U.S. reser:e assets totaled $7 3,6H 1 1111I!Jo[1 as () f [\ pnl 3(J, 1999,
down from $73,833 million as of April 23, 1999.
U.S. Reserve Assets
(millions of US dollars)
1999
Total
Reserve
Special
Drawing
Assets
Gold
Stock II
April 23, 1999
73,833
11,049
April 30, 1999
73,681
11,049
Week Ending
Foreign
Currencies
Reserve
3/
ESF
SOMA
Position in
IMF 2/
9,649
15,033
15,027
23,076
9,635
14,981
14,976
23,041
Rights
2/
II
Gold stock is valued monthly at S42.2222 per fine tw\, ounce. Values shown arc as of March 31. 1999. The February 28, 1999
lalue was $11,047 million.
~I SDR holdings and the reserve posltion
In the IMF arc based on 10[f data and revalued In dollar terms at the offiClal
Consistent wlth current reporung practices, Il\.fF data for April
1999 are final. Data for SDR
10idings and the reserve position in the Il\.ff shown as of J\pril 30, 1999 (in Italics) ref1ect prelinunar\' adJustments by the Treasury
o the April 23, 1999 IMf data.
;DRI dollar exchange rate.
n,
II Includes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's 5\'stem Open Market
\ccount (SOMA). These holdings are valued at current market exchange rates or, where appropnatc, at such other rates as mal be
greed upon by the parties to the transactions.
RR-3130
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DEPARTMENT
OF
'IREASURY
THE
TREASURY
NEWS
~178~9~. . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
..............................
OmCEOFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C.- 20220 - (202)622-2960
EMBARGOED UNTIL 10 A.M. EDT
Text as Prepared for Delivery
May 5,1999
TREASURY SECRETARY ROBERT E. RUBIN
SUBCOMMITTEE ON FINANCE AND HAZARDOUS MATERIALS
HOUSE COMMITTEE ON COMMERCE
Mr. Chairman, Members of the Subcommittee, I appreciate this opportunity to
discuss the Administration's views on financial modernization, including H.R. 10, the
Financial Services Act of 1999.
Mr. Chairman, as we approach financial modernization legislation, the
Administration's overall objective has been to do what best serves the interests of
consumers, businesses and communities, while protecting the safety and soundness of our
financial system. We will support legislation that achieves those aims.
Let me begin by noting that the U.S. financial services industry is stronger and more
competitive in the global market than at any time in many decades. The United States is
dominant in global investment banking and highl~' competitive in other segments of
financial services. U.S. commercial banks are today more competitive abroad than at any
time I can remember. The problem our financial services firms face abroad is lack of
access rather than lack of competitiveness.
Financial modernization is occurring already in the marketplace through
innovation, technological advances, and the lowering of regulatory barriers. Banks and
securities firms have been merging; banks are selling insurance
products; and insurance companies are offering products that serve many of the same
purposes as banking products •. all of which increases competition and thus benefits
consumers.
RR·3131
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Financial modernization will continue in the absence of legislation, but it can, with
good legislation, occur in a more orderly fashion. TreasuJ!' has long believed in the
benefits of such legislation, but we haye also been clear that if this is going to be done, it
needs to be done right.
Let me turn now to H.R. 10. The Administration strongly supports H.R. 10, which
was reported by the Banking Committee by a bipartisan 51-8 vote. H.R. 10 takes the
fundamental actions necessary to modernize our financial system by repealing the GlassSteagall Act's prohibitions on banks affiliating with securities firms and repealing the
Bank Holding Company Act prohibitions on insurance undenvriting. And it takes two
other steps that are of critical importance to the Administration: it presen'es the relevance
of the Community Reinvestment Act, and it permits financial sen'ices firms to organize
themselves in whatever way best senes their customers and their businesses.
Today, I would like to focus primarily on how H.R. 10 gets these two issues right. I
will then discuss four ways that we belieye that H.R. 10 could be improved.
The first issue is preserving the relevance of the C()mmunity Reinvestment Act
(CRA). CRA encourages a bank to sen'e creditworthy borrowers throughout communities
in which it operates. Since 1993, a greatly invigorated CRA has been a key tool in the
effort to expand access to capital in economically distressed areas and to make loans to
rebuild low and moderate-income communities.
We strongly support H.R. 10's requirement that any bank seeking to conduct new
financial activities be required to achieye and maintain a satisfactorv CRA record. Ifwe
wish to preserve the relevance of CRA at a time when the relative importance of bank
mergers may decline and the establishment of non-bank financial activities will become
increasingly important, the authority to engage in newly authorized activities must be
connected to a satisfactory CRA performance. \\le strongly urge the Committee to retain
this important provision and otherwise leave CRA intact.
The second Administration priority is to allow banking organizations to choose the
structure that best serves their customers. Before getting into specifics, I would like to
make two general points.
The first is that the subsidiaJ!' option is a proven success, not a risky experiment,
and one that every current and recent financial modernization bill -- including the bill
reported by this Committee last year -- would continue to allow in some form. For
example:
•
Subsidiaries of U.S. banks currently engage overseas in securities underwriting,
merchant banking and other non-banking activities. These subsidiaries -- which
currently constitute $250 billion of assets -- would be allowed to continue under all
recent versions of H.R. 10, including last year's hill. These subsidiaries, I might
add, have been approved by the Federal Reserve and are supervised by the Federal
Reserve.
•
Foreign banks are currently permitted to engage in securities undern'riting through
subsidiaries in the United States. These subsidiaries -- which currently constitute
$450 billion of assets -- would be allowed to continue under all recent versions of
H.R. 10. These subsidiaries, too, have been approved by the Federal Reserve and
supervised by the Federal Reserve.
•
Subsidiaries of state banks are currently authorized to engage in a broad range of
non-bank activities permitted by their state charter, provided that the FDIC does
not find these activities to pose a risk to the deposit insurance funds. Such non-bank
activities would continue in some form under all recent bills.
The second point is that the idea of allowing the choice of subsidiary or affiliate has
received broad support. The subsidiary option is supported not just by Treasury but also
by the current Chairman of the FDIC, the agency responsible for insuring bank deposits,
and her four predecessors -- two Republicans and two Democrats -- and by independent
economists and other academics. The FDIC chair has testified that the subsidiary is
actually preferable to an affiliate for purposes of safef)' and soundness. Of the 18 other
countries composing the European Union and the G-IO, none requires the use of separate
bank holding company affiliates for underwriting and dealing in securities. Of those
authorizing links between banking and insurance undenniting, all but one allow the
choice of a subsidiary or an affiliate. By allowing a choice of structure, H.R. lOis clearly in
the mainstream of economic and legal thinking in this area.
Now, for the specifics. In ".R. 10, subsidiaries and affiliates are subject to safety
and soundness safeguards that are absolutely identical. The bill contains the following
rigorous safeguards:
•
Subsidiaries of banks would be functionally regulated in exactly the same manner as
affiliates of banks. The authority of the SEC, for example, over a subsidiary
engaging in securities activities would be exactly the same as over an affiliate
engaging in those same activities, and customers of that subsidiary would benefit
from the same customer investor protections as customers of an affiliate.
•
Every dollar a bank invests in a subsidiary would he deducted from the bank's
regulatory capital, just as is the case with evel)' dollar a h~lDk pays as a dividend to
its parent holding company for investment in an affiliate. A bank would have to be
well-managed and well-capitalized before and after such investment is deducted
from its capital and on an ongoing basis.
The capital investment would remain on the bank's books for purposes of Generally
Accepted Accounting Principles (GAAP), since all of the assets and liabilities of the
subsidiarY are consolidated with the bank for GAAP purposes. But that accounting
consolidation does not affect safe~' and soundness in any way: as I noted, the bank
must maintain capital at the highest level set by the banking regulators -- the well
capitalized level -- even assuming the investment is a total loss, and the bank cannot
lose more than its investments in and loans to the subsidiary, which are expressly
limited by statute.
•
A bank could not invest any more in a subsidiary than it could pay as a dividend to
its parent holding company for investment in an affiliate.
•
The rules governing loans from a bank to a subsidiary would be exactly the same as
they are for a loan from a bank to an affiliate.
These safeguards are primarily addressed to safety and soundness, but they also
resolve another potential concern: the possibili~' of a subsidiary gaining a competitive
advantage by receiving subsidized funding from its parent bank. While the idea that a
bank receives a net subsidy is debatable, these funding restrictions ensure that banks are
no more able to transfer any such subsidy to a subsidiary than to an affiliate.
Now it has been argued that, even with these restrictions in place, the bank would
still have an incentive to operate through a subsidiary because its funding costs would be
lower. A bank may have such an incentive, but that incentive has nothing to do with the
transfer of any subsidy that may exist. Rather, it is based on the interests of creditors -- the
same interests that have caused the current and three former FDIC Chairs to conclude that
the subsidiary is preferable to the affiliate with respect to safety and soundness.
If a company has a valuable subsidiary, then the capital markets will reward that
company with lower funding costs because it is a better credit risk. Creditors prefer to see
valuable assets lodged in a place where creditors can reach them if the company defaults.
The FDIC shares this preference, as it seizes the assets of a bank in the event it fails. A
subsidiary meets this test, but an affiliate does not. Thus, market incentives in this area are
rational -- and have nothing to do with any subsidy received hy the bank. It is difficult to
understand why Congress would wish to disrupt these sound market incentives __
incentives that also promote safe~' and soundness.
One last point on subsidy. As I have said, if there is a subsidy it could be equally
transferred to an affiliate and a subsidiary. And ifthere is one, it is not significant enough
to make a practical difference. If banks received a net suhsidy significant enough to make
a competitive difference, then presumably they would dominate the low-margin
government securities market. They do not. Presumably, mortgage banking subsidiaries
of banks, which currently operate without any of the funding restrictions imposed by
4
H.R. 10, would dominate their non-bank competitors. They do not. I cannot help but
conclude from our real world experience that the net suhsidy is not that significant and,
more importantly, that under the funding limitations of H.R. 10, any subsid~' that a
subsidiary would manage to extract from its parent hank would he inconsequential.
Thus, we see no public policy reasons to deny the choice of a subsidiary; however,
there are four important policy reasons to allow that choice.
First, financial services firms should, like other companies, have the choice of
structuring themselves in the way that makes the most business sense and this, in turn,
should lead to better service and lower costs for their customers.
Second, the relationship between a subsidiary and its parent bank provides a safety
and soundness advantage. As I have noted, firms that choose to operate new financial
activities through subsidiaries are, in effect, keeping those assets available to the bank
rather than transferring them outside the bank's reach. The bank's interest in the
subsidiary could be sold if it ever needed to replenish its capital. If the bank were ever to
fail, the FDIC could sell the bank's interest in the subsidiary in order to protect the bank's
depositors and the deposit insurance fund.
Third, one of an elected Administration's critical responsibilities is the formation of
economic policy, and an important component of that policy is hanking policy. In order for
the elected Administration to have an effective role in banking policy, it must have a strong
connection with the banking system. That connection would be weakened if new financial
activities were off limits to OCC supervision.
We also believe it is very important that the Federal Reserve Board maintain its
strong connection with the banking system, and therefore we have taken steps to help
ensure that the Federal Reserve's jurisdiction is not weakened. Under H.R. 10, the Federal
Reserve would continue to be the sole regulator of bank holding companies and their
affiliates, and the largest banks would be required to operate through a bank holding
company. The Federal Resen'e would also supen'ise suhsidiaries of State member banks,
and would continue to supervise overseas subsidiaries of national banks and U.S.
subsidiaries of foreign banks. Insurance undenHiting would he conducted solely in
Federal Reserve-supervised bank holding company affiliates. And the Federal Reserve
would have the authority to veto any new activity for a suhsidiary -- Fed-supervised or not
-- just as the Treasury would have the authorit), to veto any new activity for an affiliate.
While we strongly support the House Banking Committee bill, there remain certain
aspects of the bill that concern us.
We are concerned about the Federal Home Loan Bank System provisions of
H.R. 10. The FHLBank System is currently the largest issuer of debt in the world. Last
5
year, it issued approximately S2.2 trillion in debt, and it currently has S350 billion in debt
~utstanding. As a government sponsored enterprise directed to foster home ownership, the
SYStem receives tax benefits, an exemption from SEC re~istration for its securities, and
b~nefits from a market perception that the government stands behind the System, even
though there is no legal obligation to do so. Yet a great deal of the government subsidized
debt raised by the System is used, not to advance its home ownership purpose, but rather to
fund arbitrage activities and short-term lending that benefit the System and its bank and
thrift members. For those who care about the market-distortin~ effects of government
subsidies on U.S. markets, the Federal Home Loan Bank System should be a substantial
concern.
The System's arbitrage is not only an abuse of its ~overnment subsidy but also
injects risk into a System that was designed -- by requirin~ all loans to be collateralized by
stable, low-risk mortgages -- to have very little.
As currently drafted, H.R. 10 effects no reform of the System's arbitrage and takes
no steps to ensure that the funds it raises will be used for a public purpose. Rather, H.R.
10 would allow the System's regulator to cut the capital requirements of the System in half.
We believe such a step is very unwise.
We are also concerned about a provision of H.R. 10 that would allow greater
affiliations between commercial firms and savings associations. \Ve have serious concerns
about mixing banking and commercial activities under any circumstances, and these
concerns are heightened as we reflect on the financial crisis that has affected so many
countries around the world over the past two years. Thus, we are concerned that H.R. 10
would allow commercial firms to acquire any of the over 6()() thrifts currently owned by
unitary thrift holding companies. Currently, only a few unitary thrifts are owned by nonfinancial firms -- many are owned by insurance companies and securities companies, for
example -- but if H.R. 10 were to break down the barriers to affiliation among financial
firms, then their need for owning thrifts would be substantially reduced. The logical
buyers at that point would be non-financial firms.
We continue to believe that any financial modernization bill must have adequate
protections for consumers. We believe that improvements should be made by this
Committee and approved by the full House. Thus, we look fon\'ard to working with the
Committee on provisions addressing sales of securities re~ulation issues.
Mr. Chairman, let me conclude by reiterating that financial modernization
legislation can produce significant benefits, but the ,job must be done right. H.R. 10 has
received broad industry and bipartisan Congressional support, and we believe its critical
provisions should be preserved.
6
We in the Administration look forward to working with you and others in Congress
to move the bill fonvard and improve it where necessa~' in order to produce legislation
that truly benefits consumers, businesses and communities, while protecting the safety and
soundness of our financial system. Thank you ve~' much.
-30-
7
E P .\ R T "
I)
E N T
() F
TilE
T l~ E :\ S li I~ \'
NEWS
OFFICE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W.• WASIllNGTON, D.C.• 20220 • (:l02)
FOR IMMEDIATE RELEASE
62~2960
Contact: John Longbrake
(202) 622-2960
May 5,1999
STATEMENT BY TREASURY SECRETARY ROBERT E. RUBIN
The Clinton Administration's policy offiscal discipline has dramatically improved our
fiscal situation, and has changed our task from financing a deficit, to managing a surplus. Now,
we have reached a new milestone in our nation's financial history: We are paying down $116
billion offederal debt - the largest debt pay-down that has ever been achieved in a single quarter,
or even in a single year.
It is a great accomplishment for this Administration that we are now reducing the debt.
Less government debt outstanding means lower interest rates, higher national savings, more
investment and a stronger economy. We have reduced privately held marketable debt from $3.1
trillion in March of 1997, to $2.76 trillion - a pay-down of $330 billion in just over two years.
-30-
RR-3132
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• U S. Go.,.,,,,,.,,.,,, Printing OH;(;e; 1~e
TnTClI
- 6' ').~~9
p
n1
DEPARTMENT
OF
THE
TREASURY
~~/78~9~. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1I
..............................
OFFICE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlDNGTON, D.C. - 20220 - (202) 622-2960
EMBARGO TIME WILL BE SET
May 5, 1999
REMARKS BY GARY GENSLER
UNDER SECRETARY FOR DOMESTIC FINANCE
MAY 1999 TREASURY QUARTERLY REFUNDING
Good morning. Each quarter, I have the opportunity to discuss the government's
refunding needs with you in this forum. In the past year, these refunding announcements have
reflected our nation's ever-strengthening financial condition. Today, I am pleased to read to you
a statement from Secretary Rubin:
The Clinton Administration's policy of fiscal discipline has
dramatically improved our fiscal situation, and has changed our task
from financing a deficit, to managing a surplus. Now, we have
reached a new milestone in our nation's financial history: We are
paying down $116 billion offederal debt -- the largest debt pay-down
that has ever been achieved in a single quarter, or even in a single
year.
It is a great accomplishment for this Administration that we are now
reducing the debt. Less government debt outstanding means lower
interest rates, higher national savings, more investment, and a
stronger economy. We have reduced privately held marketable debt
from approximately $3.1 trillion in March of 1997, to less than $2.8
trillion -- a pay-down of $320 billion in just over two years.
This is, indeed, a remarkable accomplishment.
Terms of the May Refunding
I will now turn to the terms of the quarterly refunding. We are offering $27 billion of notes
to refund $28.8 billion of privately held notes maturing on May 15, and to pay down approximately
$1.8 billion.
RR-3133
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622-2040
The securities are:
1.
A 5-year note in the amount of$15.0 billion, maturing on Mayl5, 2004, will be
auctioned on Tuesday, May 11.
2.
A IO-year note in the amount of $12.0 billion, maturing on May 15, 2009 will be
auctioned on Wednesday, May 12.
Both of these notes will be auctioned on a yield basis, at 1:00 p.m. Eastern time. As Secretary
Rubin has said, we estimate that the Treasury will pay down $116 billion of marketable securities
during the April-June quarter. This estimate assumes a $55 billion cash balance at the end of June.
Including the securities we are announcing today, we have paid down $ 114-112 billion of marketable
securities so far this quarter. (See the attachment for details.) We estimate that a cash management
bill will be needed to bridge the cash low point from early June until after the June 15 tax payment
date
Looking forward to the July-September quarter, we estimate that the Treasury will pay down
approximately $10 billion of marketable securities, assuming a $45 billion cash balance on September
30.
The next quarterly refunding will be announced on August 4, 1999.
-30Attachment
2
NET MARKET BORROWING
April-June 1999
(Billions of dollars)
TOTAL
-116.3
DONE *
-114.4
BILLS
Regular weekly bills
52 - week bill
Cash management bills
Total
COUPONS
7- year note
2- year notes
5- year notes - end of month
30- year inflation-indexed bond
May refunding
-5.4
-0.9
.:IQJ.
-76.4
-10.2
0.3
-33.7
7.4
=1...a
-38.0
TO BE DONE
-1.9
* Issued or announced through May 5, 1999.
)artment of the Treasury
ce of Market Finance
May 5,1999
DEPARTMENT
OF
THE
TREASURY
NEWS
TREASURY
OFFICE OF PUULlC AFFAIRS .1500 PENNSYLVANIA AVENUE, I\.W .• WASIII:"I(;TO:-.l,
FOR RELEASE WHEN AUTHORIZED AT PRESS CONFERENCE
May 5, 1999
I).c..
20220. (202) f>22-2960
CONTACT: Office of Financing
202/691-3550
TREASURY MAY QUARTERLY FINANCING
The Treasury will auction $15,000 million of 5-year ~otes and $12,000
million of 10-year notes to refund $28,800 million of publicly held securities
maturing May 15, 1999, and to pay down about $1,800 million.
In addition to the public holdings, Federal Reserve Banks hold $4,607
million of the maturing securities for their own accounts, which may be
refunded by issuing additional amounts of the new securities.
The maturing securities held by the public include $4,943 million held
by Federal Reserve Banks as agents for foreign and international monetary
authorities. Amounts bid for these accounts by Federal Reserve Banks will
be added to the offering.
TreasuryDirect customers requested that we reinvest their maturing
holdings of approximately $204 million into the 5-year note and $10 million
into the 10-year note.
Both of the auctions being announced today will be conducted in the
single-price auction format.
All competitive and noncompetitive awards
will be at the highest yield of accepted competitive tenders.
The notes being offered today are eligible for the STRIPS program.
Tenders will be received at Federal Reserve Banks
the Bureau of the Public Debt, Washington, D. C. This
securities is governed by the terms and conditions set
Offering Circular for the Sale and Issue of Marketable
Bills, Notes, and Bonds (31 CFR Part 356, as amended) .
and Branches and at
offering of Treasury
forth in the Uniform
Book-Entry Treasury
Details about the notes are given in the attached offering highlights.
000
RR-3134
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II
~
<:-~.rJ:~rc#I.-r$
C>P"
MAY
-r~E!:J't..:3~.~")£
1999
C>P"P"'JB::Fl.:L~~!J
QUARTERLY
-rc>
~-lI':LC
"·'--S.~1~1<-
FINANCING
May
5,
1999
Offering Amount . . . . . . . . . . . . . . . . . . . . . . . . . . $15,000 million
$12,000 million
Description of Offering:
Term and type of security . . . . . . . . . . . . . . . . 5-year notes
Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2004
CUSIP number
. . . . . . . . . . . . . . . . . . . . . . . . . . . 912827 SF 5
Auction date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May 11, 1999
Issue date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May 17, 1999
Dated date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May 15, 1999
Maturity date . . . . . . . . . . . . . . . . . . . . . . . . . . . . May 15, 2004
Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . Determined based on the highest
accepted competitive bid
yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Determined at auction
Interest payment dates . . . . . . . . . . . . . . . . . . . November 15 and May 15
Minimum bid amount and multiples . . . . . . . . . $1,000
Accrued interest payable by investor .... Determined at auction
Premium or discount . . . . . . . . . . . . . . . . . . . . . . Determined at auction
10-year notes
B-2009
912827 SG 3
May 12, 1999
May 17, 1999
May 15, 1999
May 15, 2009
Determined based on the highest
accepted competitive bid
Determined at auction
November 15 and May 15
$1,000
Determined at auction
Determined at auction
STRIPS Information:
Minimum amount required . . . . . . . . . . . . . . . . . . Determined at auction
Corpus CUSIP number . . . . . . . . . . . . . . . . . . . . . . 912820 DU 8
Due date(s) and CUSIP number(s)
for additional TINT(s)
.. , . . . . . . . . . . . . . Not applicable
Determined at auction
912820 DV 6
Not applicable
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids
Accepted in full up to $5,000,000 at the highest accepted yield.
Competitive bids . . . . . . . . (1) Must be expressed as a yield with three decimals, e.g., 7.123%.
(2) Net long position for each bidder must be reported when the sum of the total bid
amount, at all yields, and the net long position is $2 billion or greater.
(3) Net long position must be determined as of one half-hour prior to the closing time
for receipt of competitive tenders.
Maximum Recognized Bid
at a Single yield .... 35% of public offering
Maximum Award . . . . . . . . . . . 35% of public offering
Receipt of Tenders:
Noncompetitive tenders .. Prior to 12:00 noon Eastern Daylight Saving time on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time on auction day
Competitive tenders
Payment Terms . . . . . . . . . . . By charge to a funds account at a Federal Reserve Bank on issue date, or payment of full
par amount with tender.
TreasuryDirect customers can use the Pay Direct feature which
authorizes a charge to their account of record at their financial institution on issue date.
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
May 5, 1999
Contact: Peter Hollenbach
(202) 219-3302
BUREAU OF THE PUBLIC DEBT AIDS SAVINGS BONDS OWNERS
AFFECTED BY TORNADOES IN OKLAHOMA
The Bureau of Public Debt took action to assist victims of tornadoes in Oklahoma by expediting
the replacement or payment of United States Savings Bonds for owners in the affected areas. The
emergency procedures are effective immediately for paying agents and owners in those areas of
Oklahoma affected by the tornado. These procedures will remain in effect through June 30.
1999.
Public Debt's action waives the normal six-month minimum holding period for Series EE and
Series I savings bonds presented to authorized paying agents for redemption by residents of the
affected area Most financial institutions serve as paying agents for savings bonds.
Oklahoma counties involved are Canadian, Cleveland and Oklahoma. Should additional counties
be declared disaster areas the emergency procedures for savings bonds owners will go into effect
for those areas.
The replacement of bonds lost or destroyed will also be expedited by Public Debt. Bond owners
should complete form PD-I048, available at most financial institutions or by writing the Kansas
City Federal Reserve Bank's Savings Bond Customer Service Department, 925 Grand Boulevard.
Kansas City, Missouri 64198; phone (816) 881-2000. This form can also be dO\\"nloaded from
Public Debt's website at: www.publicdebureas.gov. Bond owners should include as much
information as possible about the lost bonds on the form. This information should include how
the bonds were inscribed, social security number, approximate dates of issue, bond
denominations and serial numbers if available. The completed form must be certified by a notary
public or an officer of a financial institution. Completed forms should be forwarded to Public
Debt's Savings Bond Operations Office located at 200 Third S1., Parkersburg. \Vest Virginia
26106-1328. Bond owners should write the word "TORNADOES" on the front of their
envelopes, to help expedite the processing of claims.
000
RR-3136
.
DEPARTMENT
.
OF
THE
...
TREASURY
,
.;
.
.
.
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W .• WASHINGTON, D.C.. 20220. (202) 622-2960
EMBARGOED UNTIL 10 A.M. EDT
Text as Prepared for Delivery
May 6, 1999
TREASURY UNDER SECRETARY GARY GENSLER
TESTTh10NY BEFORE THE HOUSE COMMITTEE ON BANKING
AND FINANCIAL SERVICES
Good morning Chairman Leach, Ranking Member LaFalce and members of the
Committee. It is an honor to appear before you tOday to discuss the President's Working
Group on Financial Markets' report entitled "Hedge Funds, Leverage, and the Lessons of
Long-Term Capital Management. If I might add a personal note, as I was only recently
sworn in as Under Secretary for Domestic Finance at the Treasury Department, I look forward
to working with this committee and its staff on these and other matters.
II
I am also pleased to appear on this panel with my colleagues from the other Working
Group agencies. I commend all of the agencies on how they cooperated in the production of
this report. The Working Group's report represents the outcome of discussions among the
four principals of the Working Group and their staff, as well as principals and staff of the
Council of Economic Advisers, the Federal Deposit Insurance Corporation, the National
Economic Council, the Federal Reserve Bank of New York, the Office of the Comptroller of
the Currency, and the office of Thrift Supervision. The Working Group has jointly agreed on
the key public policy issues raised by Long-Term Capital Management ("LTCM"), and has
jointly forwarded a series of recommendations.
The near collapse of LTCM highlighted the risks of excessive leverage, and the
possibility that problems at one financial institution could potentially pose risks to the financial
system as a whole. The Working Group also found that, although LTCM is a hedge fund, the
issues it presents are not limited to hedge funds. The events highlighted a breakdown in
private market risk practices at major commercial banks and securities firms. In addition, a
number of other financial institutions are larger and more highly leveraged than hedge funds.
RR-3137
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
'U S Government Prln!ln,;
Oflt(~
19-:'~·
619--559
Today I would like to summarize our findings, and the recommendations that are
presented in the Working Group's report.
Long-Tenn Capital Management
Let me first say a few words of background about LTCM. Long-Term Capital
Manaoement is a private investment partnership located in Greenwich, Connecticut. At the
end of 1997, LTCM had balance sheet assets of$129 billion on only $4.7 billion ofcapital-or a ratio of assets to equity of 28-to-1. This ratio does not include, however, any leverage
that LTCM may have been able to assume through derivatives or other off-balance sheet
transactions. LTCM' s notional derivatives position stood at $1.3 trillion at the end of 1997.
LTCM's high degree of leverage, combined with the nature of its investments, made it .
vulnerable as it struggled to meet margin and collateral calls from counterparties during a
period of market turbulence.
LTCM's trading strategies also made it vulnerable to market shocks. While LTCM
traded in a variety of financial markets in a number of different countries, its strategies proved
to be poorly diversified. Most of LTCM's trading positions, in fact, were based on the belief
that prices for various risks were high. They thought that the prices for these risks, such as
liquidity, credit, and volatility, were high compared to historical standards. They were wrong,
however, in these judgments. In addition, these markets proved to be more correlated than
LTCM had supposed, as markets around the world received simultaneous shocks last fall.
On August 17, Russia devalued the ruble and declared a debt moratorium. This
sparked a "flight to quality" as investors shunned risk and sought out liquid markets. As a
result, risk spreads widened and many markets around the world became less liquid and more
volatile. LTCM was affected, even though the vast majority of their trading risks were related
to markets in the major industrialized countries. Thus, LTCM found itself losing money on
many of its trading positions and near insolvency.
By mid-September, 1998, LTCM's capital had fallen to less than $1 billion, from $4.7
billion at the beginning of the year. LTCM faced severe problems as it tried to unwind some
of its positions in illiquid markets. The large size of LTCM's positions in many markets
contributed to its inability to unwind its positions. As a result, market participants began to be
concerned about the possibility that LTCM could collapse and the consequences this could
have on world markets that were already turbulent.
LTCM's creditors and counterparties were concerned about two things. First, they
were concerned about the direct losses they would most likely face in the event of default.
These losses would have resulted from liquidating significant amounts of collateral and rehedging derivatives contracts. At the time, LTCM prepared estimates that these direct losses
would be in the range of $3-5 billion for its 17 largest counterparties. Individually, many of
the firms were estimated by LTCM to face potential losses of between $300 to $500 million.
2
Although we have not tried to verify LTCM's estimates independently, our conversations with
some of LTCM' s counterparties have supported these estimates.
Second, LTCM's creditors and counterparties were concerned about the possible
significant effect of a default on global financial markets, and hence on the rest of their trading
positions. Since LTCM's counterparties were themselves large, highly leveraged financial
institutions, a number of them believed that this indirect, second-order effect could have lead
to even more significant losses than the direct effects of a default.
It was in this environment that 14 of LTCM's key counterparties came together and
decided that it was in their best interest to prevent a default. These firms collectively decided
to invest a total of $3.6 billion rather than risk the possible direct and indirect losses suggested
by LTCM's and their own internal estimates.
The Working Group's Key Findings
The central policy issue raised by the near collapse of LTCM is how to constrain
excessive leverage more effectively. Excessive leverage greatly amplified LTCM's
vulnerability to market shocks and increased the possibility of systemic risk. Systemic risk is
the risk that problems at one financial institution could be transmitted to the entire financial
market and possibly to the economy as a whole.
To constrain leverage, our market-based system relies heavily on the discipline
provided by creditors, counterparties, and investors. Market discipline is generally effective,
because it relies on these same participants. If one looks at the history of financial markets,
however, it is also true that market-based constraints can break down in good times as
creditors and investors become less concerned about risk, and fail to manage risk
appropriatel y .
Risk management practices broke down at both LTCM and its creditors and
counterparties. Reviews by regulators indicate that some financial firms did not effectively
limit their exposures to LTCM. In addition, the firms' risk models and risk management
procedures may have underestimated the possibility of significant losses.
At the same time, many of LTCM's creditors and counterparties were themselves
highly leveraged. Other financial institutions, including some banks and securities firms, are
larger, and generally more highly leveraged, than hedge funds. For example, at the end of
1998, the five largest commercial bank holding companies had total assets in excess of $260
billion, and the five largest investment banks had total assets in excess of $150 billion. While
LTCM had a leverage ratio of 28-to-1 at the end of 1997, the five largest investment banks'
average leverage ratio is currently about 27-to-1. The five largest commercial bank holding
companies, however, currently have an average leverage ratio of nearly 14-to-1. And while
LTCM had a notional derivatives position of over $1.3 trillion in December 1997, six
3
commercial bank holding companies and two investment banks had notional derivatives
amounts of over $1 trillion at the end of last year.
We believe that leverage plays a positive role in our financial system. It increases
market liquidity and improves the efficiency of risk and resource allocation in our economy.
Problems can arise, however, when financial institutions go too far in extending credit to their
customers and counter parties. The near collapse of LTCM well illustrates the need for all
participants in our financial system, not only hedge funds, to face constraints in the amount of
leverage they assume;
The Working Group report recognizes that the best way to mitigate risk to the financial
system is by motiv?-ting the private sector. Many of the measures that the Working Group is
recommending are intended to reinforce private market discipline.
The Working Group's Recommendations
Let me now turn to the Working Group's recommendations. As you may have had
time to review our report, let me summarize the recommendations here.
The Working Group has recommended a number of measures in the two broad areas of
public disclosure and risk management, and has also made some other important
recommendations. Many of the recommendations contained in the report can be implemented
by the Working Group members through regulation. Legislation will be required, however, in
order to implement three of the recommended measures. I will highlight the three measures
that require legislation as we go along. Finally, the Working Group also considered a number
of potential additional measures that could be implemented if evidence emerges that indirect
regulation of currently unregulated market participants is not effective in constraining
leverage. The Working Group, however, is not recommending any of these potential
additional measures at this time.
Public Disclosure. The Working Group made two recommendations on public
disclosure. We believe it is important to improve transparency by increasing and enhancing
the information that is available to the public, in order to reinforce private market discipline.
First. we think that private market behavior would be enhanced if hedge funds were
required to disclose their financial statements to the pUblic. These financial statements would
include more meaningful and comprehensive measures of market risk, without requiring the
disclosure of proprietary information. Hedge funds can constitute large pools of risk, and we
believe that it would be best if all financial market participants were aware of this risk. While
LTCM was larger than any other reporting hedge fund family at the end of 1997, 10 other
reporting hedge funds had assets eXCeeding $10 billion at that time. Currently, hedge funds
are not requlfed to make their financial statements public. Requiring them to do so will need
4
legislation, and we look forward to working with Congress on the best mechanism for
accomplishing this goal.
Second, all public companies, including financial institutions, should publicly disclose a
summary of their direct material financial exposures to significantly leveraged financial
institutions, including hedge funds. One of the lessons of events in global financial markets
over the past two years is the interlocking nature of our global financial system. Events in one
country's banking system, or even in one hedge fund in Connecticut, can put investors around
the world at risk, and the effects can even reach to small savers. That is why the SEC will
promulgate rules, taking into account public comments through the normal rule-making
process, to require that public companies disclose their exposures to significantly leveraged
institutions. To the extent covered, these entities should be aggregated by sector (c.g.,
commercial banks, investment banks, insurance companies, hedge funds and others).
Risk Management Practices. One of the questions that the Working Group examined
was whether creditors lacked adequate information on LTCM, or whether they had adequate
information but didn't use it effectively. The four bank regulators and the two market
regulators canvassed the industry last fall in the wake of LTCM. The regulators found serious
weaknesses in how firms used what information they did have, and how they incorporated this
information into their judgments. Therefore, the Working Group has made three categories of
recommendations for enhancing financial institutions' risk management practices.
First, regulators should promote the development of more risk-sensitive but prudent
approaches to capital adequacy. Thus, we believe that the Basle Committee on Banking
Supervision should update the Capital Accord for the financial markets of the 21 sl century.
Our report has a series of specific recommendations related to the need for greater
differentiation among claims (or instruments or counterparties) based on credit quality. In
addition, value-at-risk or other risk models should be subject to validation procedures,
including rigorous back-testing.
Second, regulators have issued guidance to address some of the risk management
weaknesses that have been identified. U.S. banking regulators have put banks on notice that
examiners will be looking at a series of specific risk management practices.
Third, the report outlines a number of practices that the private sector itself should
adopt. A number of private sector initiatives are underway to publish sets of sound practices.
The International Swap Dealers Association has produced a report with 22 recommendations
concerning collateral. The Counterparty Risk Management Group is developing some
recommendations concerning risk management. We also think it would be appropriate for a
group of hedge funds to publish a set of sound practices for their risk management and internal
controls.
5
The Working Group is also making recommendations in three other, more technical
areas: risk assessment for the affiliates of securities firms and FCMs; bankruptcy; and
offshore financial centers.
Expanded Risk Assessment Authority for Unregulated Affiliates. Regulators' current
authority to require financial information about the unregulated .affiliates of br.oker-.dealers and
FCMs should be enhanced. Regulators need a greater window mto these affilIates 10 order to
monitor the risks posed by these market participants and the highly leveraged institutions
which are their counterparties. As mentioned earlier, the five largest securities firms have
total assets ranging from $150 billion to over $300 billion, and on average their leverage ratio
is about 27-to-l. Thus, these firms are larger in size than LTCM and have comparable
leverage, and they are able to put a significant portion of their assets and risk in unregulateD
affiliates. During the 1990s, there has been a dramatic growth in the activity of these
unregulated affiliates. In the case of LTCM, the unregulated affiliates of broker-dealers
extended a significant amount of credit, particularly through derivatives. While the SEC
currently regulates broker-dealers, securities firms are placing a significant and increasing
share of their trading positions, leverage and activity in unregulated affiliates.
This authorization should be accompanied by the authority to review risk management
procedures and controls at the holding company level, and the ability to examine the records
and controls of the holding company and its material unregulated affiliates. This measure
would require legislation. While we are not at this time recommending capital standards for
the unregulated affiliates of securities firms ("fully consolidated supervision "), the report
suggests that this issue may be worthy of further consideration.
Bankruptcy. Although LTCM did not file for bankruptcy, the Working Group studied
what might have happened had LTCM filed for bankruptcy, and has two principal
recommendations. First, LTCM's near collapse highlighted the importance of adopting
legislation to improve the close-out netting regime for financial contracts. These proposals
would improve the netting regime under the Bankruptcy Code by expanding and clarifying the
definitions of the financial contracts eligible for netting. In addition, the proposals would
explicitly allow eligible counterparties to net across different types of contracts, such as swaps,
security contracts, repos and forward contracts. Putting this in context, last September LTCM
had about 60,000 trades on with only 75 counterparties. It is critical to the functioning of
financial markets that there be certainty with respect to how all these transactions would have
been netted in the case of insolvency. The Working Group and the Administration last year
forwarded to Congress specific proposals to enhance close-out netting.
Second, LTCM's near collapse highlighted the interplay between bankruptcy laws in
the Cayman Islands and in the United States. If LTCM had filed for bankruptcy in the
Cayman Islands, where it was organized, there might have been considerable delay because
U.S. courts mIght have stayed the sale of collateral underlying financial contracts. This would
have added to systemic risk. To make such a result less likely, the Working Group
6
recommends adoption of amendments to Section 304 of the Bankruptcy Code included in last
year's bankruptcy proposal, as well as adoption of the model statute of the United Nations
Commission on International Trade Law.
Internationalizing the Working Group's Recommendations. In a world of mobile
capital, the Working Group believes it is important that other countries consider these
recommendations, where relevant. We are working with other industrial countries to
strengthen regulatory standards in their own countries. In addition, the U.S. regulatory
agencies and the Treasury Department will continue to work with their counterparts
internationally to encourage offshore financial centers to adopt and comply with
internationally-agreed upon standards developed by international organizations of regulators or
supervisory authorities.
Tax Policy Issues. The LTCM incident highlights a number of tax issues with respect
to hedge funds, including the tax treatment of total return equity swaps and the use of offshore
financial centers. These issues, however, were beyond the scope of this report and are being
addressed separately by Treasury.
Additional Potential Steps
The Working Group also considered a number of additional potential measures to
constrain leverage. While the Working Group is not currently recommending any of these
measures, the report suggests that they could be given further consideration. The Working
Group will be monitoring and assessing the effectiveness of the measures outlined in the
report. If further evidence emerges that indirect regulation of currently unregulated market
participants is not effective in constraining excessive leverage, the issues that follow could be
given further consideration.
•
Direct Regulation of Hedge Funds. While the Working Group is calling for the public
disclosure of hedge funds' financial statements, we are not currently recommending the
direct regulation of hedge funds.
•
Consolidated Supervision of Broker-Dealers. While the Working Group is calling for
additional reporting and record-keeping concerning the unregulated affiliates of brokerdealers, we are not at this time calling for full consolidated supervision. The key
additional measures that could be considered would be enterprise-wide capital
standards.
•
Direct Regulation of Derivatives Dealers. This will be one of the important issues that
the Working Group will consider in its upcoming study of the over-the-counter
derivatives market.
7
Conclusion
We believe that the Working Group's report contains a thoughtful, well-balanced set of
recommendations to help promote private market discipline and address the potential risks of
excessive leverage. Some of the recommendations require legislative support. We look
forward to working with the Congress on these important matters.
In closing, I would like to add that the Secretary of the Treasury wishes to extend his
appreciation to all the members of the Working Group, and their staffs, for their close
cooperation and hard work as we compiled the report and recommendations.
I would be pleased to answer any questions that this committee may have.
-30-
8
~UBLIC
DEBT NEWS
epartment of the Treasury. Bureau of the Public Debt • Washington. DC 20239
Contact: Peter Hollenbach
EMBARGOED FOR RELEASE AT 3 :00 PM
May 6, 1999
(202) 691-3502
PUBLIC DEBT ANNOUNCES ACTnnTY FOR
SECURITIES IN THE STRIPS PROGRAM FOR APRIL 1999
The Bureau of the Public Debt announced activity figures for the month of April 1999, of securities
within the Separate Trading of Registered Interest and Principal of Securities program (STRIPS).
Dollar Amo,unts in Thousands
Principal Outstanding
(Eligible Securities)
$1,726,816,675
Held in UnstrippedForm
$1,504,037,367
Held in Stripped Fonn
$222,779,308
Reconstituted in April
$10,239,625
The accompanying table gives a breakdown of STRIPS activity by individual loan description. The
balances in this table are subject to audit and subsequent revision. These monthly figures are included
in Table VI of the Monthly Statement of the Public Debt, entitled "Holdings of Treasury Securities in
Stripped Fonn."
The STRIPS data along with the new Monthly Statement ofthe Public Debt, is available on Public
Debt's Intemethomepage at: www.publicdebt.treas.go~ A wide range of information about the
public debt and Treasury securities is also available on the homepage.
000
RR-3138
bttthl/www .DDbUcdebt.trea~",tov
TABt£ V - HOLDINGS 01' m~URY Sl!CURmu IN SmlPPED fORM. ~PAII. 30. 1_
~
STfIIP
L.o8II DMcnpllan
Prindpal Amounl OuIsIBIIdIng In ThouaandB
aAaturIty Dar.
CUSIP
Talal
OUIBlanding .
Portion Held In
Unslripped F1lIm
R9COO8IiIuIBd
Thil Month
Ponon Held U1
Slripped Form
TrMlury Booda:
CUSfP:
If\Iereet
Fl••:
1111 !iI04
OS/,sms
9128100M7
008
cR6
CU9
II -SIll
12
1().3{4
9-318
1112803 ABiI
DNS
11-314
OPO
OS4
\1·114
012
~7/8
OV7
DW5
~1I4
912800M7
912803Ml
ACI
A£3
AFO
7·114
AH8
7-112
8-314
~
8-718
0!V15117
08115117
051151'8
11115118
02115119
(1).518
OX3
OYI
cze
ADS
AGB
AJ2
AU
08115105
02115106
11115f14
02I15f15
0&'15f15
11(15115
Q2J15118
05115116
11115116
EA2
eeo
~1/8
AMS
AN3
ECS
9
&-7/8
APII
AQ6
ED6
6-115
AA4
Oel15119
AS2
02I1a120
.,12
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EH7
~4
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6-31.
A1J7
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AW3
7·7/8
EJ3
a.lm
£)(0
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8
7·1/4
7-5/&
7.1/8
6-1/4
7·112
7-5(8
6-718
ru
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EN4
EPIl
EQ7
ES3
ET,
EVa
~1
AY9
J:lI,
BAD
BB8
BC6
804
BE2
BFO
BG7
RHIi
EW4
a
00
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EZ7
6-314
6-1f.i!
&-518
FAI
8-3111
8l.8
FE3
6-1/8
5-1/2
FFO
. &-114
FG6
S-"4
8M4
BP7
BY4
BW2
FBa
SJl
8K8
06115120
10. 1~e.e8J
~1 .4HI .1l()6
02115121
05115121
08115121
11115121
08115122
11115/22
02115123
08115123
11/15124
02115125
08115125
02I1512fl
0&'15/2l!
1111 !IJ26
02/15/27
08115.'27
11/15127
0811!!1'28
111161'l8
02/15/29
11.113.373
l',1I58,BeII
12,169.482
32,798,3U
10.3S2,7go
.10.699,626
18.374.361
22.9011,0-44
11.'611.662
11.725,170
12,602.007
12,1104,916
10,893.818
11,493,177
10.456:071
10,73'.756
22,518,539
11,7711.201
10.947.052
11.360.351
05115120
Tolal TrM!IIuty BondS ..........................
Tn!8IIury InIIa!lon· lndeKed Noles:
CUSIP :
Series : Inl.rest ~al. :
9128273A8
J
;"518
2MS
A
3-3/8
31'7
A
4Y5
A
3·M!
;"7111
9121120 8ZlI
BVe
C19
O~
8,301,806
4,260.758
9,269,713
4,755,918
8,005,584
12,867.799
7,1'19,916
8,899,1159
7,288,854
18,823,551
18,884.448
18,194,169
14.016,8S8
11,708.839
9,032 ,870
19,25O,79a
20,213,832
10.228,8118
07l1!W2
01115107
011'15108
01/1!W9
To!alln~Blion-lnde)(Bd Noles...............
4,090,606
2.022,808
8,049,713
4.U7.980
2 ,837,684
10,791 .799
tl.87tl.966
4.389.459
7.144.454
18.006 .751
17,751 .088
9.790,969
10,612 .058
3.223,839
2.496 .470
7,572.398
4,211,200
2238. 150
3.220,000
20& .800
14.000
31200
7 .113B
0
2Q6,800
347.520
3.168.000
1.876.DOO
272.9M
2.510.400
122.400
756.600
1.113.360
8.403,200
3,204 ,800
5.4&4,800
tl.536,'OQ
11.67'8,400
19,257,002
gS5,~
7,268 ,468
2.970,400
. 7.356.640
2.602,2~
6,485.488
10,26&.117:'1
6.1112.188
',585,882
12.700,2111
8,1111.190
3,149,226
11 .318,361
19.060,884
3,197,342
2.6lI!I,170
8.248.727
12.221 ,416
7,729,818
7,78&.377
7 ,072.071
14 . 05S,1~0
&46,400
5,046,720
2 .577,GOO
20.098,175
1."' .600
7.550.-400
7.056.000
3,848,160
6,272,:J20
11.032 ,000
••358,280
U3,500
n.ooo
225.600
0
0
98.800
370.660
267.200
152.000
104.400
1.910.400
1n,200
418 .800
100.000
635.880
70.400
241.G20
246.080
874.675
173.600
67,200
113,GOO
188.288
82,240
190,400
177,280
253.100
J.1U,OOO
3,108,800
3,384,000
339,200
138,000
10.182.95&
"2,800
20,7'5,7:'19
11.757,001
11 .350.351
1,772,800
19,200
2.400
0
"3.600
89,600
0
0
0
514.732,405
350,26:1,""
164.488.061
8.979.343
17.2n.1l3e
16.:'160.556
17.117.352
8.557,969
17.272.938
17.117.352
8.557.969
0
0
0
0
0
0
0
59.308.815
59.308.815
0
0
17.094,558
7,355 .502
17.09~.5~
7.355,502
0
0
0
0
24 .%0,060
24 .450,060
0
0
10,9".852
1e . 360.5~
\12,800
0
TIU$UT)' InllGtion· lndeX1ld Bonds:
CUSIP :
Iolerast Rate:
912810 F05
912810 FHa
3-5/8
3·7/8
Talallnl\4llon· lrodelCOd Bonds ....... .......
912803 1m2
CF8
CW1S128
CW15/29
Corpus
STRIP
LOIIn OeectlP'!on
Principe) Amount Outstanding in TMusands
FleconBfilUled
Maturity Dahl
CUSJP
Tata!
Ponion Hold In
POr1lon H"ld in
OutelAlnding
Unslripped Form
S1rlllDAtI F,,""
Thill MOI'IIt'I
Tr"B8UFy NotBa~
CUSIP:
912621 XN7
5arioo: 1rIt.1'II81 Rata:
91~AS6
B
XW7
c
g..118
6
31-13
AI<
3Ke
Al
3P6
AM
3Rl
3U4
VN6
AN
Y
5-314
5-5.18
7-718
$-5.18
s.t;>18
5-318
A
8-112
AV9
02115100
10,67:'1.0~
~\V6
Z
$-ln
CR8
02I29lOO
o:if.l1l00
04J3a/00
05.116100
05;'31/00
06l3OlOO
07131/00
08115100
08131100
17,776,12S
17,200.376
1S,633.aS5
10,4116,230
16,560,032
14,939,057
18,663,295
II,OeO,I'l<l1l
20,028,533
111,268,508
20,624,986
11,519,682
16,036,086
20,157,588
1!1,474,m
111.7n,278
11,312,802
15,367.153
19,58M30
21,605,352
21,034,801
12,398,083
12,873.752
12,339,186
24,226,102
11,714,397
23,859,015
12,eoe,814
11,737,284
12,120,580
12.052,433
13,100,640
23,562,69 1
13,870,364
14,172,892
12,573,248
13,132,243
13,126,719
2B,Ol1.028
VEa
0
AH
CSl
C07
AU1
CGO
CJ4
CM7
4A7
AS
5-112
C'T2
4C3
AC
YW6
B
5-518
8,716
AWl
.G<I
AD
5-112
CZ8
4Ja
4M1
ZES
402
4AO
4T6
ZN5
AE
AF
$.3/8
5-MI
OBO
DOli
C
6-314
AX!;
AG
5-118
1Jof
AJ
4-1t.!
4
6-112
5-3'4
OFI
DGg
CV7
0s/1!'W99
08115/99
09l30t'00
10131/99
1111~9
11130199
lm111l9
01131100
001'30100
4W9
4X7
AK
AI.
42:2
U
4-fJe
4-1t.!
ZX3
3WO
A
7-314
~
S
CPO
5C2
~
O2f2BIOl
lIDO
V
W
S-MI
5
10131100
11115100_.
11/15100
11l30l00
121:31100
01131/01
0015101
02f1 !!.'O1
4-718
SE8
X
5
05J
OT1
ASS
B
~
T
5-518
BSl2
D2S
C
7-711
BB2
0
BCO
F49
GS5
A
3.19
:lL4
M
7·112
7·1n
fI-3/8
5-718
5-314
5-314
s.s.'8
S.112
6-114
5-112
5-112
5-314
5-112
5-318
5-314
5-1/4
4-114
5-718
4-3/4
7·114
7·114
7-71B
7-11Z
6-112
6-112
5-718
5·5/8
OJIJ1101
04I30I01
05115.101
0&11&101
06115101
11115101
05115102
:lM2
3Q3
3S9
3V2
0
X
B
N
P
a
C
J78
A
3Z3
4B5
401
4H2
0
~K5
L83
"N9
4U3
N81
E
F
G
H
B
J
liAB
K
A
!!
pe9
B
aee
AS7
see
T85
U8S
V82
Wa1
X80
c
D
Po,
e
C
D
A
B
Y55
Z62
C
2JO
B
C
0
2US
3Eo
3,xe
4F6
4V1
.ste
e
6·71S
c
7
6-11Z
6·1/4
6-SIB
B-lll!
5·1f.2
$-5113
D
4,31.
D
B
Total Treasury Noles .... ........ .............
OH7
AYJ
CF2
DL8
OM8
OPs
BAA
CX3
10,047,103
10,163,0+4
17,487,287
16,823,947
10,713,960
17,051,198
16,747,060
17,502,026
4,754,303
5.631,619
17,269,687
lG,604,747
5 ,n3 ,gSO
16,86~,598
lB,647,6oo
17,502,0'26
7,189,033
17,nO,125
17,203.578
15,630.1155
4,90:Z,630
16,3211,432
14,68S,057
18,680,0115
6,821,446
20,~3,7~
19,288,508
2O,496,986
6,n9.882
16,036,008
<!O,IS7,S09
19,474,772
19,m,278
7,894,402
15,367,153
19,5116,1l30
21,605,3.52
21,034,601
8,361'1,433
12,873.752
9,159,985
19,807,782
6,184,557
22,073,415
12,nl,8U
II,B76,684
11,919,780
12,052,433
13,100,640
22,278,483
13,626,354
14,172,892
12,573,248
BDa
IIE6
08115102
CC9
09I'30f02
CES
CHB
Bel1
10131102
11130102
lV31t\)2
01131103
02115103
02128/03
03131103
04I30I03
05131103
06I30I'03
08115103
OE4
Oet1~3
19.8~,2e~
OJ3
11115103
02l15Al<1
02/15104
05115104
0811 !IJ04
11/15104
02/15i'06
05115105
08115105
111'15105
18,625,785
12.055,on
17,823,21e
14,440,372
13.346,467
14,373,160
13,Il34,7S4
14,n9,50 4
15,002,580
15.200.920
02115106
15,51~,5B7
0SJ15106
0711S106
10115106
02115107
05.115107
08115107
02115108
111,015,475
22,140.446
12,G75,077
17,823,218
14,374,772
12,435,ZB7
14,373,760
13,606,994
14,7:'19,604
15,002,580
15,205,120
15,509,427
16,015,475
22,740,446
~,45g,e7S
~,459,87S
13,103,678
13,QSB,l86
25,838,803
13,583,412
27,190,961
25,083,12S
13,043,294
13,924,586
25,601'1,603
1 J,SB3,41 ~
27,190,961
2S,OB3,12S
1,128,326,395
1,070,015.048
CKl
CNS
BF3
CS4
CUll
CW6
OA2
Dee
BH9
D07
8.15
BK2
BUl
BMB
BNG
BPl
B09
BR7
BSS
BTJ
aUg
BW6
8X4
CAJ
cae
CVl
O~151OB
O/(O
11/15108
13,1~.243
13,12B,779
27,JIIa,628
19,852.263
le,~4.986
5.292,&00
4,331,625
217,GOO
219,200
5,000,000
185,600
!i9,2oo
0
3.484,000
0
2,800
3,200
5,593,600
253,600
256,000
3,200
4,259,200
4,800
0
28,000
4,740,000
0
0
0
0
3,618,400
0
0
0
0
4,038,650
0
3,179,200
4,418,320
3.:)29,540
1,785,600
35,200
61 ,GOO
200,800
0
0
1,289,208
4<1,000
0
0
0
0
622,400
0
100,800
:280,000
0
65,600
911,200
0
27,760
0
0
~,eoo
4,160
0
0
0
00,31'l<1
33,600
27,200
0
0
<10,000
150,~50
0
0
128,000
0
0
0
122.800
0
0
0
35,200
0
0
0
31,rJ.40
0
0
0
Il,OOO
0
0
0
0
B,ooo
0
0
0
0
60,400
0
9,600
253,200
66,960
113,800
0
0
0
0
0
229,632
0
0
0
0
0
0
0
0
0
0
MOO
0
0
0
0
0
0
0
0
0
0
0
0
0
a
0
0
0
58,310,347
1.260.282
10239,825
222779 soe
1 726,819,675
1,504 037 367
..... ........ .. - . ............
GrBtld Total .... "" .......... , _.-. .-.- ........... .......
Nota, On the ~th workday of esch month Table V will be Bvali8llie after 3,00 p,m, BBSlsm lima en Ihe CommQrtlQ EcOI1omlo Bvllohn Bo"rd ~EBB) and lh~ B~u of tM PubliC
Oebt's ",eb,lle at hltp:llwlwl.pLlbliedebUI'6A4.gov. For more i.,formaliOrl about ~a, <:all (202) 482-1988, The balances in Ihl, lable are $VbIQclIO pudll "nd $\,Jb.QquQt\1 "dlurun",
n E P .\
R T ~! E N T
0 F
THE
T R E .\ SUR Y
NEWS
TREASURY
OFFICE OF PUBLIC AFFAIRS -1500 PENNSYLVANIA A"\.'FNUE. N. W.• WASHINGTON. D.C .• 20220. (202) 622·2960
EMBARGOED UNTIL 2:30 P.M.
CONTACT:
May 6, 1999
Office of Financing
202/69~-3550
TREASURY OFFERS 13-WEEK AND 26-WEEK BILLS
The Treasury will auction two series of Treasury bills totaling
approximately $15.000 million to refund $15,640 million of publicly held
securities maturing May ~3, 1999, and to pay down about $640 million.
In addition to the public holdings, Federal Reserve Banks for their own
accounts hold $7,644 million of the maturing bills, which may be refunded at
the highest discount rate of accepted competitive tenders. Amounts issued to
these accounts will be in addition to the offering amount.
The maturing bills held by the public include $3,223 million held
by Federal Reserve Banks aa agants for foreign and internatiQnal monetary
authorities. Up to $3,000 milliQn Qf these securities may be refunded within
the offering amount; in each of she auctions of 13-week bills and 26-week bills
at the highest discount rate of accepted competitive tenders. AdditiQnal
amounts may be issued in each auction for such accounts to the extent that
the amount of new bids exceeds $3,000 million.
TreasuryDirect customers requested that we reinvest their maturing
holdings of approximately $946 million into the 13-week bill and $722 million
into the 26·week bill.
Tenders for the bills will be received at Federal Reserve Banks and
Branches and at the Bureau of the public Debt, Washington, D.C. This offering
of Treasury securities is governed by the terms and conditions set fQrth in
the uniform Offering Circular for the sale and Issue of Marketable BQok-Entry
Treasury Bills, Notes, and Bonds (31 CFR Part 356, as aJIlended).
Details about each of the new securities are given in the attached offering highlights.
RR-3139
000
Attachment
Fo, press releases, speeches. public schedules a1ld OffiCial biographies, call our Z4-hollr fa:;r; line at (02) 622-2040
HIOHLIGHTS
OF
TREASURY
OFF BRINGS
TO BE XSSUED MAY
13.
OF
BILLS
1999
May 6, 1999
Offering Amount .•.•.••••...••.•....•.... $7,500 million
$7,500 million
Description of Offering:
Term and type of security •••...•.....••• 91-day bill
CUSII? number ..•.••.•••••.••..•.•.•.•..•.
Auction date ......•.•.....••.•.•...•....
IS8ue date •.•••....••••••••.•.•••••••...
Maturity date .••.••..•.••.•••.•..••••.••
Origina1 issue date ••••••.•••.•..•••••••
Currently outstanding ..••••••.......•...
Minimum bid amount and multiples . . . . . . . .
912795 ex 5
May 10, 1999
May 13, 1999
August 12, 1999
February 11, 1999
$11,646 million
$1,000
183-day bill
912795 CD 1
May 10, 1999
May 13, 1999
November 12, 1999
November 12, 1998
$16,254 million
$1,000
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids . . . . . . . . . Accepted in full up to $1,000,000 at the highest discount rate of
accepted competitive bids.
Competitive bids •...•••.•... (1) Must be eHPressed as a discount rate with three decimals in
increments of .005%, e.g., 7.100%, 7.105%.
(2) Net long position for eaoh bidder must be reported when the sum
of the total bid amount, at all discount rates, and the net long
position i. $1 billion or greater.
(3) Net long position must be determined as of one half-hour prior
to the closing time for receipt of competitive tenders.
Maximum Recognized Bid
at a Single Yield ..........• 35% of public offering
MSKimum Award •.•.•...•.•.•..•... 35% of public offering
Receipt of Tandersl
Noncompetitive tenders •..... Prior to 12:00 noon Eastern Daylight Saving time on auction day
Competitive tenders . . . . . . . . . Prior to 1,00 p.m. Eastern Daylight Saving time on auction day
Payment Terms:
By charge to a funds account at a Federal Reserve Bank on issue date, or payment
of full par amount with tender.
Tre4su~Dir6ct customers can use the Pay Direct feature which
authorizes a charge to their account of record at their finanoial institution on issue date.
:?deral financing
WASHINGTON. DC. 20220
bonkNEWS
FEDERAL FINANCING BANK
March 31, 1999
Paula Farrell, Secretary, Federal Financing Bank (FFB) ,
announced the following activity for the month of February 1999.
FFB holdings of obligations issued, sold or guaranteed by
other Federal agencies totaled $43.2 billion on February 28,
1999, posting a decrease of $652.3 million from the level on
January 31, 1998. This net change was the result of decreases in
holdings of agency debt of $200.9 million, in holdings of agency
assets of $410.0 million, and in holdings of agency guaranteed
loans of $41.4 million.
FFB made 84 disbursements during the
month of February, and also executed two refinancings on behalf
of Rural utilities Service-guaranteed borrowers.
FFB received 17
prepayments in February.
Attached to this release are tables presenting FFB February
loan activity and FFB holdings as of February 28, 1998.
RR-3140
Page 2 of 5
FEDERAL FINANCING BANK
FEBRUARY 1999 ACTIVITY
:OWER
DATE
AMOUNT
OF ADVANCE
2/1
2/1
2/1
2/2
2/2
2/2
2/2
2/3
2/3
2/3
2/3
2/4
2/4
2/4
2/4
2/5
2/5
2/5
2/5
2/8
2/8
2/8
2/8
2/9
2/9
2/9
2/10
2/10
2/10
2/11
2/11
2/11
2/11
2/12
2/12
2/12
2/12
2/16
2/16
2/16
2/16
2/17
2/17
2/17
$138,600,000.00
$970,000,000.00
$50,000,000.00
$136,900,000.00
$565,000,000.00
$100,000,000.00
$50,000,000.00
$109,600,000.00
$410,000,000.00
$100,000,000.00
$50,000,000.00
$141,400,000.00
$190,000,000.00
$100,000,000.00
$50,000,000.00
$154,500,000.00
$1,020,000,000.00
$100,000,000.00
$50,000,000.00
$30,400,000.00
$1,450,000,000.00
$100,000,000.00
$50,000,000.00
$95,700,000.00
$1,300,000,000.00
$50,000,000.00
$116,000,000.00
$1,110,000,000.00
$100,000,000.00
$131,100,000.00
$900,000,000.00
$100,000,000.00
$50,000,000.00
$113,700,000.00
$820,000,000.00
$100,000,000.00
$50,000,000.00
$224,900,000.00
$550,000,000.00
$100,000,000.00
$50,000,000.00
$264,100,000.00
$250,000,000.00
$100,000,000.00
FINAL
MATURITY
INTEREST
RATE
CY DEBT
·
POSTAL SERVICE
·· Postal
Postal
· Postal
Postal
·· Postal
· Postal
Postal
·· Postal
Postal
·· Postal
· Postal
·· Postal
Postal
· Postal
·· Postal
Postal
·· Postal
Postal
Postal
·· Postal
·· Postal
Postal
Postal
·· Postal
·· Postal
Postal
Postal
·· Postal
·
·
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
is a Semi-annual rate.
2/2/99
2/2/99
2/2/99
2/3/99
2/3/99
2/3/99
2/3/99
2/4/99
2/4/99
2/4/99
2/4/99
2/5/99
2/5/99
2/5/99
2/5/99
2/8/99
2/8/99
2/8/99
2/8/99
2/9/99
2/9/99
2/9/99
2/9/99
2/10/99
2/10/99
2/10/99
2/11/99
2/11/99
2/11/99
2/12/99
2/12/99
2/12/99
2/12/99
2/16/99
2/16/99
2/16/99
2/16/99
2/17/99
2/17/99
2/17/99
2/17/99
2/18/99
2/18/99
2/18/99
4.657%
4.603%
4.603%
4.657%
4.657%
4.657%
4.657%
4.605%
4.657%
4.657%
4.657%
4.615%
4.605%
4.605%
4.605%
4.624%
4.615%
4.615%
4.615%
4.667%
4.624%
4.624%
4.624%
4.657%
4.667%
4.667%
4.605%
4.657%
4.657%
4.625%
4.605%
4.605%
4.605%
4.665%
4.625%
4.625%
4.625%
4.688%
4.665%
4.665%
4.665%
4.647%
4.688%
4.688%
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
Page 3 of 5
FEDERAL FINANCING BANK
FEBRUARY 1999 ACTIVITY
OWER
FINAL
INTEREST
RATE
DATE
AMOUNT
OF ADVANCE
2/17
2/18
2/18
2/18
2/18
2/19
2/19
2/19
2/19
2/22
2/22
2/22
2/22
2/23
2/23
2/23
2/23
2/24
2/24
2/24
2/25
2/25
2/25
2/25
2/26
2/26
2/26
2/26
$50,000,000.00
$116,800,000.00
$200,000,000.00
$100,000,000.00
$50,000,000.00
$212,300,000.00
$970,000,000.00
$100,000,000.00
$50,000,000.00
$260,200,000.00
$1,340,000,000.00
$100,000,000.00
$50,000,000.00
$54,500,000.00
$1,325,000,000.00
$100,000,000.00
$50,000,000.00
$94,400,000.00
$1,200,000,000.00
$100,000,000.00
$67,600,000.00
$1,000,000,000.00
$100,000,000.00
$50,000,000.00
$263,700,000.00
$1,010,000,000.00
$100,000,000.00
$50,000,000.00
2/18/99
2/19/99
2/19/99
2/19/99
2/19/99
2/22/99
2/22/99
2/22/99
2/22/99
2/23/99
2/23/99
2/23/99
2/23/99
2/24/99
2/24/99
2/24/99
2/24/99
2/25/99
2/25/99
2/25/99
2/26/99
2/26/99
2/26/99
2/26/99
3/1/99
3/1/99
3/1/99
3/1/99
4.688%
4.656%
4.647%
4.647%
4.647%
4.686%
4.656%
4.656%
4.656%
4.771%
4.686%
4.686%
4.686%
4.781%
4.771%
4.771%
4.771%
4.792%
4.781%
4.781%
4.750%
4.792%
4.792%
4.792%
4.789%
4.750%
4.750%
4.750%
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
$1,207.02
$2,340.21
$14,112.00
$818.42
$2,315,260.72
$2,631.35
$2,148.04
$141,769.58
$171,676.85
$365,000.00
4/1/99
1/2/25
7/31/25
4/1/99
11/2/26
1/2/25
1/2/25
4/1/99
7/31/25
7/31/25
4.603%
5.251%
5.351%
4.656%
5.598%
5.604%
5.604%
4.771%
5.584%
5.584%
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
MATURITY
CY DEBT
· POSTAL SERVICE
·
·
·
·
·
·
·
·
·
·
·
·
·
·
·
·
·
·
·
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
tNMENT - GUARANTEED LOANS
:RAL SERVICES ADMINISTRATION
~lee Office Building
Ihis IRS Service Cent.
:y Square Off ice Bldg.
~lee Office Building
, Building
his IRS Service Cent.
his IRS Service Cent.
blee Office Building
Y Services Contract
Y Square Office Bldg.
is a Semi-annual rate.
2/1
2/1
2/2
2/19
2/19
2/19
2/19
2/23
2/23
2/23
Page 4 of 5
FEDERAL FINANCING BANK
FEBRUARY 1999 ACTIVITY
DATE
)WER
~ENT
AMOUNT
OF ADVANCE
FINAL
MATURITY
INTEREST
RATE
- GUARANTEED LOANS
\RTMENT OF EDUCATION
i.
State College
2/17
$295,772.40
~
UTILITIES SERVICE
;ier Energy Elec. #901 2/3
)ciated Electric #906 2/9
;halls Energy Co. #458 2/24
$3,080,404.13
$17,949,798.44
$180,000.00
is a Semi-annual rate:
;C ref inancing
Qtr. is a Quarterly rate.
9/1/26
5.590% S/A
12/31/20
12/31/20
1/2/18
5.123% Qtr.
5.300% Qtr.
5.879% Qtr.
Page 5 of 5
FEDERAL FINANCING BANK HOLDINGS
(in millions)
Program
Net Change
02/1-02/28/99
Fiscal Year
Net Change
10/1/98-02/28/99
February 28, 1999
January 31, 1999
$3,673.7
$3,874.6
($200.9)
($2,022.4)
sub-total*
$3,673.7
$3,874.6
($200.9)
($2,022.4)
Agency Assets:
FmHA-RDIF
FmHA-RHIF
DHHS-HMO
DHHS-Medical Facilities
Rural Utilities Service-CBO
$3,675.0
$9,090.0
$3.1
$7.2
$4,598.9
$3,675.0
$9,500.0
$3.1
$7.2
$4,598.9
$0.0
($410.0)
$0.0
$0.0
$0.0
$0.0
($410.0)
$0.0
$0.0
$0.0
sub-total *
$17,374.2
$17,784.2
($410.0)
($410.0)
$2,736.5
$6.9
$15.2
$1,419.9
$2,447.9
$16.5
$1,138.7
$14,099.7
$217.5
$3.8
$2,770.1
$6.6
$15.2
$1,419.9
$2,452.1
$16.5
$1,138.7
$14,100.9
$220.2
$3.8
($33.7)
$0.3
$0.0
$0.0
($4.2)
$0.0
$0.0
($1.2)
($2.7)
$0.0
($92.6)
$2.3
($15.2)
($71.5)
($25.2)
($1.0)
($86.2)
($66.8)
($15.9)
($0.0)
Agency Debt:
USPS
Government-Guaranteed Lending:
DOD-FMS
DoEd-HBCU+
DHUD-Comrnunity Dev. Block Grant
DHUD-Public Housing Notes
General Services Administration+
001- Virgin Islands
DON-Ship Lease Financing
Rural Utilities Service
SBA-StatelLocal Development Cos.
DOT -Section 511
sub-total*
grand total*
* figures may not total due to rounding
+ does not include capitalized interest
$22,102.6
$22,144.1
---------------
---------------
$43,150.5
$43,802.9
($41.4)
---------------
($652.3)
($372.0)
--------------
($2,804.4)
PUBLIC DEBT NEWS
~partment
of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
IMMEDIATE RELEASE
10, 1999
CONTACT:
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF I3-WEEK BILLS
91-Day Bill
May 13, 1999
August 12, 1999
912795CK5
Term:
Issue Date:
~aturity Date:
:::USIP Number:
High Rate:
4.480%
Investment Rate 1/:
Price:
4.605%
98.868
~ll
noncompetitive and successful competitive bidders were awarded
rities at the high rate.
Tenders at the high discount rate were
tted 29%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Competitive
Noncompetitive
$
26,498,389
1,363,598
$
27,861,987
PUBLIC SUBTOTAL
SUBTOTAL
7,437,770 2/
71,000
27,932,987
7,508,770
3,839,485
3,839,485
Federal Reserve
Foreign Official Add-On
o
o
$
6,074,172
1,363,598
71,000
Foreign Official Refunded
TOTAL
Accepted
Tendered
31,772,472
$
11,348,255
ledian rate
4.475%: 50% of the amount of accepted competitive tenders
endered at or below that rate.
Low rate
4.390%:
5% of the amount
cepted competitive tenders was tendered at or below that rate.
o-Cover Ratio = 27,861,987 / 7,437,770 = 3.75
uivalent coupon-issue yield.
ards to TREASURY DIRECT = $1,042,008,000
R-3141
http://www.publicdebt.treas.gov
PUBLIC DEBT NEWS
partment of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
MMEDIATE RELEASE
0, 1999
CONTACT:
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
183-Day Bill
May l3, 1999
November 12, 1999
9127 95CDI
erm:
ssue Date:
aturity Date:
USIP Number:
4.510%
High Rate:
Investment Rate 1/:
4.694%
Price:
97.707
II noncompetitive and successful competitive bidders were awarded
Lties at the high rate.
Tenders at the high discount rate were
:ed 72%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
'ender Type
Tendered
:ompeti ti ve
loncompetitive
$
22,302,285
1,113,819
$
23,416,104
PUBLIC SUBTOTAL
oreign Official Refunded
SUBTOTAL
ederal Reserve
~reign Official Add-On
)TAL
Accepted
4,862,304 2/
2,650,000
2,650,000
26,066,104
7,512,304
3,805,000
3,805,000
o
$
3,748,485
1,113,819
29,871,104
o
$
11,317,304
iian rate
4.490%: 50% of the amount of accepted competitive tenders
ldered at or below that rate.
Low rate
4.420%:
5% of the amount
~pted competitive tenders was tendered at or below that rate.
-Cover Ratio
= 23,416,104 / 4,862,304 = 4.82
.valent coupon-issue yield.
ds to TREASURY DIRECT = $802,006,000
142
http://www.pu blicdebt.treas.gov
o
EPA R T 1\1 E N T
0 F
THE
T REA SUR Y
NEWS
TREASURY
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
Weekly Release of U.S. Reserve Assets
f"'a.y
11, lfJf)'J
The Treasury Depanment today released U.S. reserve assets data for the \veek CIld1l1g
1\ Lw 7, 1<)<)<).
:\s Indicated
III
this table, U.S. reserw ;lssctS totaled ~7:>,()0<) millIOn as of f\L1\' 7,1 elY), up
from Sn,C)94 nuluon as of ;\pnl)(\, 1000.
U.S. Reserve Assets
(millions of US dollars)
Reserve
Assets
Week Ending
/
Special
Total
1999
Gold
Stock
11
Reserve
Foreign
J/
Drawing
R'19IIts 21
ESF
SOMA
Position in
IMF 2/
Currencies
April 30, 1999
73,694
11,049
9,634
14,981
14,976
23,054
May 7,1999
73,989
11,049
9,685
15,042
15,037
23,177
Gold stock IS valued monthly at $42.2222 per flnc troy ounce. Values shown arc as of t\larch 31. 19(Y) The February 21). 1999
alue was $11,047 million.
/ SOR holdmgs and the reserve posiuon In the IMF arc based on IMf data and revalued ll1 dollar terms at the oftlclal
DR/dollar exchange rate. ConsIstent with current reporting practices, IMF data for ;\pnI3CJ, 1999 arc fll1al. Data for SOH.
olcLngs and the re~e[ye posiuon 1[1 the IMF shown as of Mal' 7, 1. 999 (in italics) reflect prclillllnar\' adJustments by the Trca'ur\' t()
1C
.\pnl 30, 1999 It\lF data.
/ Includes holdll1gs of the Treasury's Exchange Stabllizauon Fund (ESF) and the h:deral Rese[\'C\ System ()pen t--larkct
.ccount (SOlvL-\). These holdings are valucd at current market exclunge ratcs or, where appropnatc. at such uther ratcs :\<; illa\ be
sreed upon bv the pawes
to
the transacuoll".
-3143
.,. press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
PUBLIC DEBT NEWS
~partment
of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
IMMEDIATE RELEASE
11, 1999
CONTACT:
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF S-YEAR NOTES
rest Rate:
2S:
P No:
PS Minimum:
5 1/4%
F-2004
912827SFS
$800,000
High Yield:
Issue Date:
Dated Date:
Maturity Date:
5.367%
Price:
May 17, 1999
May IS, 1999
May IS, 2004
99.493
\11 noncompetitive and successful competitive bidders were awarded
~ities at the high yield.
Tenders at the high yield were
:ted 75%. All tenders at lower yields were accepted in full.
interest of $ 0.28533 per $1,000 must be paid for the period
May IS, 1999 to May 17, 1999.
~ccrued
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Accepted
Tendered
Competitive
Noncompetitive
$
$
2,561,624
1,350,000
2,561,624
1,350,000
Federal Reserve
Foreign Official Inst.
$
29,987,293
14,490,500
510,169
15,000,669 1/
26,075,669
PUBLIC SUBTOTAL
TOTAL
25,565,500
510,169
$
18,912,293
2dian yield
5.348%:
50% of the amount of accepted competitive tenders
2ndered at or below that rate.
Low yield
5.279%:
5% of the amount
:epted competitive tenders was tendered at or below that rate.
)-Cover Ratio
=
26,075,669 / 15,000,669 = 1.74
lrds to TREASURY DIRECT = $305,692,000
4
http://www.publicdebt.treas.gov
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
~
I
Office of Financing
202-691-3550
CONTACT:
IMMEDIATE RELEASE
12, 1999
RESULTS OF TREASURY'S AUCTION OF 10-YEPR NOTES
Issue Date:
Dated Date:
Maturity Date:
:erest Rate:
5 1/2%
~les:
B-2009
;IP No:
9128275G3
(IPS Minimum: $400,000
High Yield:
5.510%
Price:
May 17, 1999
May 15, 1999
2009
May 1
r
~:J,
99.923
All noncompetitive and successful competitive bidders were awarded
:urities at the high yield.
Tenders at the high yield were
.otted 59%. All tenders at lower yields were accepted in full.
Accrued interest of $ 0.29891 per $1,000 must be paid for the period
)m May 15, 1999 to May 17, 1999.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Competitive
Noncompetitive
$
19,350,300
135,359
$
2,045,00C
750,000
2,045,000
750,000
Federal Reserve
Foreign Official Inst.
$
22,280,659
11,868,000
135,359
12,003,3591
19,485,659
PUBLIC SUBTOTAL
TOTAL
Accepted
Tendered
Tender Type
$
1';,798,35':
Median yield
5.470%:
50% of the amount of accepted competitIve tenders
tendered at or below that rate.
Low yield
5.420%:
55 of the amount
accepted competitive tenders was tendered at or below that race
-to-Cover Ratio = 19,485,659 / 12,003,359 = 1.62
Awards to TREASURY DIRECT = $48,932,000
3145
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DEPARTMENT
OF
THE
lREASURY1~~~
TREASURY
NEWS
_ _ _ _ _ _ _ _~'_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _~_ _ _ _
H~_ _~~
_
_ _ _ _w~_~~~~~
It>
omCE OF PUBLIC A}<'FAlRS ·1500 PENNSYLVANlAAVENUE, N.W.
WASHINGTON, D.C. '" 20220" (202) 622-296G
EMBARGO.:D UNTIL 10:00 A.M. EDT
Text as Prepared for Delivery
May 13, 1999
TREASURY UNDER SI!:CRETARY (ENFORC~:MENT)
JAMES E. JOHNSON
SENATE COMMITTEE ON FINANCE
Thank you Mr. Chairman, Senator Moynihan, and members of the Committee. 1l is an
honor for me to be here today in support or the United States Customs Service and Customs'
etTorts to carry out its intricate, dual responsibilities or facilitating international trade and pursuing
aggressive enforcement of the law
With me today is Raymond W KeIly, Commissioner ofthe U. S. Customs Service, and
Nancy S. Killefer, the Assistant Secretary for Management and Chief Financial Ot1icer of the
Department of the Treasury [ask the Chairman's consent that my written statement be entered in
full into the ot1lcial record of these proceedings.
Introduction
As each year passes, the world becomes a more complex and a more dangerous place.
The danger to law enforcement personnel is brought home to all of us this week as we mark
Police Week and honor those who have sacrificed their lives in service to our Nation. Customs'
vital place within this law enforcement community and in the service it provides to the country
makes this an important hearing. We thank the Committee for its continuing interest in, and
support for the US. Customs Service.
This is a unique moment in Customs' long and proud history It faces daunting challenges
hased upon a mission that, on the one hand, requires the facilitation oflegitimate commerce and
travel while, on the other, requires the greatest vigilance in countering attempts to smuggle
narcotics and other contrahand into our country
For our nation on the whole, the falling of trade and other barriers has had the positive
effect of increasing the now of legitimate goods and honest travelers across borders. It also,
however, has created more demands on Customs, which constantly must guard against drug
traffickers who might seek to hide their illicit products in ostensibly legitimate cargo. For
For jJress releases, sj}eechl's, puhlic schedules and official hio,t.,l'raphies, mil ollr 24-lwHr.fa}( lirw at (2()2) 622-2()40
Customs, this has meant a heightening of the challenges it faces as either the first welcome to the
honest traveler or the first line of defense against the dishonest.
Customs is meeting these trade and enf()rcement challenges in large part through the
dedication and professionalism of its people. It also, however, is moving into a better position to
respond to challenges hecause of its willingness to adopt changes that will make an already strong
agency that much stronger.
One of its most powerful agents of change is its Commissioner. Through his entire
professional career and, most notahly for purposes of this hearing, as Under Secretary for
Enforcement and Commissioner of Customs, Raymond Kelly has had a unique capability of
evaluating an organization, reinforcing those elements proven to be constructive, and overhauling
those in need of repair. His ability to make change work for an organization has always led to a
rnore productive workforce, more accountahle management, and better service to the public.
In the case of Customs, the Commissioner is pursuing his agenda for change through
development of a detailed action plan that he actually began developing while serving as Under
Secretary. The action plan includes tangihle goals for improvements in the organization's
stnlcture, managcment, and operations.
My remarks today will focus mainly on the Department's role, particularly that ofthc
Otlice of Enforccment, in providing support to Commissioner Kelly and Customs as they pursue
the action plan and perform Customs' mission in an environment of constrained budgets and
increasing demand for services
The Role of the Oflice of Enforcement
Our support of Customs and its mission comes in a variety of forms, two of which are
policy guidance and operational ovcrsight By enhancing hoth, we help ensure that Customs
performs its mission as safely, professionally, and effectively as possihle.
Policy Oversight
The Oflice of EnforceIllent is actively involved in the development of Customs-related
programs such as Operations Ilardline, Gateway, and Brass Ring, as well as the Border
Coordination Initiative These programs will bettcr ensure that Customs has the tools it needs
and deserves to combat narcotics tratlicking.
In addition, Enforcement works with Customs in the development and maintenance of
vital public-private partnerships to enhance trade, revenue collection, and industry compliance,
most notahly through the Commercial Operations Advisory Committee (COAC) This advisory
committee was estahlished several years ago at the initiative of this Committee. It provides
Treasury, and the Customs Service, with the perspectives and advice of the private sector groups
2
affected by Customs' operations Over the years, COAC has been highly influential on issues
such as development of an automated export reporting system, and streamlining of Customs
procedures.
Committee members also have assisted us in organizing efforts within the trade
community to keep drugs out of commercial shipments. Committee members were leaders in
creating the Business Anti-Smuggling Coalition and the Border Carrier Initiative, both of which
have effectively involved members of the international trade community in self-policing efforts.
Additionally, Customs has sought to leverage private sector resources to assist us in
meeting our goals. For example, at the Federal Express hub in Memphis, Tennessee, Customs is
able to use on-site resources to assist in clearing packages entering and leaving the United States.
Our support of Customs extends to the international arena, where we work to obtain
cooperation of other governments on issues vital to Customs, including counter-narcotics
cooperation and the harmonization of Customs procedures. We also are creating a single
International Trade Data System for the collection, usc, and dissemination of information on
international trade. One of our most important efforts is working with Customs to modernize its
existing automated commercial system through the development of a new Automated Commercial
Environment (ACE), which will be critical to meeting trade processing needs of the future.
We also provide policy guidance to Customs and all of the Treasury bureaus on
operational issues Policies created through such guidance include the Usc of Force Policy,
Guidelines for Sensitive Undercover Operations, and General Guidelines on the Use of
Cooperating Individuals and Confidential Infi.mllallts. Consistent policies allow the various law
enforcement agencies to work more effectively and safely together on task fc)rces.
In addition, to strengthen policy coordination among Customs, other bureaus, and the
Department, such mechanisms as the Treasury Enforcement Council, the Treasury Terrorism
Advisory Group, and the Financial Crime Steering Committee and Working Group have been
established at the Departmental level The Otllce of Enfc)rcernent also promotes coordination
with other agencies through representation of Customs and other bureaus at interagency meetings
involving Justice, the National Security Council, ONDep, and the Department of State.
Office of Professional Responsibility
To further enhance day-to-day operational oversight, we created the Ottice of Professional
Responsibility (OPR) within the Office of Enforcement. OPR is structured to have a Senior
Oversight Advisor responsible for direct oversight of each enforcement bureau and office. In
addition, OPR will have advisors who deal exclusively with crosscLltting issues, sLlch as internal
affairs, inspection, training, and EEO.
3
While relatively recent in origin, OPR already has focused a great deal on the Customs
Service in an efrort to SliPPOli and improve the agency's pursuit of its mission. Immediately upon
creation ofOPR, it was tasked with performing a top-to-bottom, year-long review of the Customs
Office ofInternal Atfairs and its processes. The report was released to the Congress in February
1999. The recommendations in OPR's report, most of which have already been implemented hy
Commissioner Kelly, will heIp dramatically improve Customs' internal afrairs capability.
Through OPR and the constant attention of senior policy makers, the OffIce of
Enforcement will ensure that the type of fOCliS brought to the Internal Affairs review will continue
as Customs seeks to improve all of its operations.
Strntegic Planning Process
Treasury is committed to using the strategic planning process to accomplish our goals and
guide budget formulation and resource allocation. The Secretary, Deputy Secretary and the
Under Secretary f()r Enforcement were personally involved in the development of Treasury's FY
1997-2002 Strategic Plan.
Working closely with the OUlce of Management and Treasury's law enf()rcernent bureaus,
the OtTice of Enf()rcement evaluated the missions and unique characteristics of the bureaus and
formulated broad poli~y goals f()r the Depaliment's law enforcement mission. These policy goals
were discussed with enforcement hureau heads in two planning off-sites chaired hy the Secretary
in June 1997. Based on the Secretary's guidance, Enf()fcement established priorities for Customs
at that time to 1) prevent drugs from entering the country~ and 2) ensure the highest percentage
of compliance to tariff and trade laws. Customs, as well as the other bureaus, then developed
strategic plans which were reviewed, refined, and approved by the Depaliment.
The strategic plans provide direction t()r the budget formulation process and lay the
foundation for performance planning. Beginning in FY 1997, Treasury dell ned peri()fJnance goals
for each budget activity and integrated into our budget justification the proposed performance
plan for the budget year, and the final performance plan for the current year Thus, budget
justification documents request resources under each budget activity and are linked to their
respective peri()I"mance goals and supporting performance measures.
In addition, En/()rcell1cnt is also working to coordinate law enforcement measures with
other agencies. During I ()l)X, the Otllces of Enforcement and Management jointly created the
Law Enforcement Performance Measures Working Group to formalize the intra-agency
coordination of law enforcelllent measures While there is much to he done in this area, Customs
worked with the Department of Agriculture and the Immigration and Naturalization Service to
develop the interagency goal of clearing international air passengers in :10 minutes or less, while
improving enforcement and regulatory processing.
4
As the Committee is aware, the performance measurement process throughout the
government is continuing to evolve. However, we are making a concerted effort to measure and
assess bureau performance in a proactive manner that is linked to resource allocation. Equally
important, we are striving to assure the presentation of key measures that reflect program results
rather than the traditional output oriented or workload measures. We share the Committee's goal
of ensuring that we have the right measures and incorporating them in our budget process.
As the performance measurement system evolves, we continue to assess how accurately
the measures in question reflect organizational effectiveness. Currently, the measures judge
success only as meeting a precise numeric goal, without reference to how close a bureau comes to
achieving that goal.
Thus, in FY I 99X, Treasury law enforcement achieved approximately 63 percent of its 115
performance targets. For its pal1, the Customs Service met approximately 46 percent of its 48
performance targets for FY 1998 If one includes those measures where the Treasury law
enforcement bureaus' performance was at least 90 percent, 83 percent of the measures were met,
and for Customs in pal1icular, their performance was at 79 percent. We are reviewing these
results to determine how we can work with Customs to improve its overall performance. As part
of this review, we are looking to determine whether the measures set were appropriate and that
the measures accurately rctlect program results. To this end, Enforcement has worked with
Customs to refine its targets for FY 200() As this process continues, we expect to make further
improvements in future presentations.
As the amount and quality of performance data grows more robust, Treasury will continue
to formulate its budget proposals based on concerns about gaps in performance. In many cases,
demand-driven workload may be challenging the capacity to achieve acceptable results. Despite a
tremendous increase in its responsibilities, Customs is making the best possible effort to achieve
its goals. Automation is critical to Customs' ability to enhance its etliciency and continue to meet
its goals. That is the principal reason the ACE initiative is so vital. Other cases may also justify
resource enhancements for sensihle investments in technology that improve productivity while
also improving quality (eg., non-intrusive inspection equipment for ports and border crossings)
We are committed to working closely with the Committee in making these assessments
Conclusion
Tn summary, the Treasury Department is proud - and I am personally proud - of the
contributions that the U. S Customs Service has made and continues to make to this Nation.
Treasury and Customs have defined goals and ohjectives to ensure excellence in protecting our
borders, defeating financial crimes, and facilitating international commerce and passenger service.
Increasingly realistic strategies and goals, effective law enforcement and compliance, and a
commitment to work in partnership with the regulated commercial community toward
modernization, will enable Customs to make great strides in meeting current challenges and to
begin preparations for the daunting challenges facing us in the 21" century.
-10-
5
NEWS
TREASURY
OFFlCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W. • WASHINGTON, D.C. .. 20220 .. (202) 622-2960
EMBARGOED FOR RELEASE UNTIL lOa
May 13, 1999
111
FDT
TRF.ASURY SECRETARY ROBERT E. RUBIN
REMARKS TO NEW YORK llNIVERSITY COMMENCF.MENT
NI~:W YORK, NY
Chairman Lipton and Members of the l30ard of Trustees; President Oliva,
distinguished fellow hO\lorees; deans and administrators; faculty; honored guests; and
graduates of the class of 1999 -- their friends and families
Thank you for this honor.
President Franklin Delano Roosevelt once gave the following advice to speakers.
He said l3e sincere; be brief be seated Today, I will try to be all three
You graduate today in a world starkly ditlerent, in many ways, fi·om the one in
which I graduated. H's t~\r more interconnected Itdl-lIlnation moves dramatically faster
The decision cycle is vastly shorter. Economies and people around the world are more
closely linked than ever before Decisions made in one capital can be felt across the globe.
Tn the complex world of today, decision making has become even more dimwit, hut the
fundamentals of decision making have remained the same. And, one lesson 1 can draw
from my life is that ctTective decision making is the key to almost everything YOll will do
When I arrived at college, 1 had never givcn llluch thought to how L made
decisions. College began changing that What first struck me was the skeptical
atmosphere. Our professors' words weren't seen as ul1qLlestiDl1ed truths, but as stal1ing
points f()r criticism and thought In my soplwtl1ore year, I tDDk Philosophy I fl-Dm a
wonderful, elderly professor namcd Raphael Demos His whole point was to show that
every asscI1ion ultimately rested 011 a basic principle that could 110t be proven It could
only he assllmed or believed That conclusion, together with what I learned in law school,
fundamentally shaped the way ('ve made decisions ever since
;\s I
think back over the years, I have bcen guided by four principles for decision
making.
RR-3147
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
First, the only ccrtainty is that there is no ccrtainty Second, every dccision, as a
consequcnce, is a matter of weighing probabilities Third, despite uncel1ainty we must
decide and we must act And lastly, we need to judge decisions not only on the rcsults,
but on how they were madc.
First, uncertainty
When Illy Cather was in college, he too had signed up fc)r a course in philosophy
with a renowned professor On the first day of class, the professor debated the question
of whether you could prove that the table at the front of the room existed. My father is
very bright and very pragmatic. lIe went to the front of the room, pounded on the table
with his hand, decided it was there -- and promptly dropped the course.
My view is quite the opposite I believe that there are no absolutcs
Ifthcre are no absolutes then all decisions become matters of judging the
probability of different outcomcs and the costs and benefits of each. Then, on that basis,
you can make a good decision.
The busincss I was in for 26 years was all about nlaking decisions in exactly this
way
I remcmber once, many ycars ago, when a seclIlitics trader at another firm told me
he had purchased a largc block of stock. f Ie did this becallse he was sure ~- absolutely
certain -- a particular set of evcnts would occur. I lookcd, and I agreed that there werc no
evident roadblocks He, with his absolute belief: took a very, very large position I, highly
optimistic but recognizing ullcel1ainty, took a large position Something totally
unexpected happened. The projected events did not occur I caused Illy finn to lose a lot
of money, but not more than it could absorb lie lost an amount way beyond reason -and his job.
A healthy respect for llncertainty and focus on plObability clrives you never to be
satisfied with your conclusions. It keeps you moving f()[\varcl to seek out more
information, to qllestion conventional thinking and to continually refine yom judgments
And understanding that diflcrence between certainty and likelihood can Illake all the
difTerencc It might even save your job
Third, being dccisive in t he f~lce of unccrtainty In the end, all decisions arc based
on imperfect or incomplete inf(lIl11ation L3ut decisions Illllst be Illade -- and on a timely
basis ~~ whether in school, on the tradin!', tluor, or in the White Iiouse
I remeIllber nnc night at TreaslllY, a group (Jt'LlS were in the Depllty Secretary's
Office, deciding whether or not the U S sholllcltake the vcry significant step or moving to
shore up the valuc of another nation's currency It was, to say the least, a very
2
complicated situation. As we talked, new inforIllation became available and new
considerations were raised The discussion could have gone on indefinitely But we
didn't have that luxury markets wait for no one And, so, as the clocked ticked down and
the Asian markets were ready to open, we made the best decision in light of what we
knew at the time. The circulllstances for decision making may never be ideal. But you
must decide nonetheless.
Fourth, and finally, judging decisions. Decisions tend to be judged solely on the
results they produce But 1 believe the right test should focus heavily on the quality of the
decision making itself
It's not that results don't matter. They do. But judging solely on results is a
serious deterrent to taking the risks that may be necessary to making the right decision.
Simply put, the way decisions arc evaluated afTects the way decisions are made. I believe
the public would be better served, and their elected otlicials and others in Washington
would be able to do a more effective job, ifjudgmcnts were based on the quality of
decision making instead of focusing solely on outcomes
Time and again during my tenure as Treasury Secrctary and when I was on Wall
Street, I have faced dimcult decisions 13ut the lesson is always the same good decision
making is the key to good olltcomes Reject absolute answers and recognize uncertainty
Weigh the probabilities Don't let uncertainty paralyze you. And evaluate decisiolls not
just on the results, but on how they are made
You've just completed an illlportant milestone in developing your ability to deal
effectively with the complex choices ortlle world in which you will live and work By
continuing to build on this foundation throughout your life, you will be well prepared for
the great opportunities and challenges of the new cent lIry
Congratulations and good luck
-30-
OFFICE OF PUBLIC AFFAIR.S -1500 PENNSYLVANIA. AVENUE, N.w.• WASRlNGTON, D.C .• 20220. {lOll 612-2960
aGAllGOED UNTIL 2:30 P.M.
CONTACT:
lay 13, 1999
Office of Financing
202/691-3550
'l'REAStJRY OFFERS 13-WEJ!:K AND 26-WEEK BILLS
The
~asur,y
will auction two series of Treasury bills totaling
$15,000 ~llion to refund $15,576 =illion of publicly held
acurities maturing Hay 20, 1999, and to pay down about $576 million.
~rozimately
In addi~ion to the public holdings, Federal Reserve Banks for their own
:counts hold $7,967 million of the maturing bills, which may be refunded at
~ highest discount rate of accepted competitive tenders.
Amounts issued to
Lese accoll1lts will be in addition to the offering amount.
~e
maturing bills beld b.y the public include $1,978 mi11ion held b,y
daral Reserve BaAks as agents for foreign and international monetary autborias, which may be refunded. within the offering amount at the highest: discount
ce of accepted competitive tenders. Additional amounts may be issued for
~ accounts if the aggregate amount of ~ew bids exceeds the aggregate amount
maturing bills.
~easur.yDirect customers ~equested that we reinvest their maturing
.dings of approximately $940 million into the 13-week bill and $748
.lion iDto the 26-week bill.
Tenders for the bills wi~l be received at Federal Reserve Banks and
a.ches and at the Bureau of the Public Debt, Wash.ington, D.C. This offering
rreasur,y securities is. governed by the terms and conditions set forth in
Onifor.m Offering Circular for the Sale and ~ssue of Marketable Book-Entry
lSur,y Bills, Notes, and Bonds (31 CFR Part 356, as amended).
D8~ai1s about each of the new securities are given in
high1ights.
~Q
attached offer-
rJress release" spnches, public schedules and official biographies, call our 24-hour flU. lift. at (202) 622-2040
TO
DB
XBa~
- . Y ao.
:::1...9'511
May
Offering Amount ••••••••••••••••••••••••• $7,500 million
Desoription of Offering:
~.rm and type of eecurity ••••••••••••••• 91-day bill
CUSIP nwnher •.••••••••••• , .•••••••••.••• 912795 CA 1
Auction date •.•••.•••••••••••••••••••••• laay 17, 1999
Isaue date •••••.•••••••••••••••••••••••• May 20, 1999
Maturity date ••••••.•.•••••••••••••••••• August 19,1999
Original issue dat •••••.•••••••••••••••• August 20, 1998
Currently outstanding ••••••••••••••••••• $26,919 million
Minimum bid amount and multiples •••••••• $1,OOO
1.3.
1.9'!O
$7,500 million
182-day bill
912795 c:v 1
May 17, 1999
May 20, 1999
Nov.rnber 18, 1999
May 20, 1999
$1,000
The following rules apply to all securities mentioned above:
Submission of Bidsl
Noncompetitive bids .•.•••••• Aocepted in full up to $1,000,000 at the highest discount rate of
aocepted competitive bids.
Competitive bids •.•••••••••• (1) Must be expr.ssed as a discount rate with three decimals in
incr.ments of .005%, e.g., 7.100%, 7.105%.
(2) Net long position for each bidder must be reported when the 8W
of the total bid amount, at all disoount rates, and the net 101
position is $1 billion or greater.
(3) Net long position must be determined as of one half-hour prior
to the olosing tLme for reoeipt of competitive tenders.
Maximum Recognized Bid
at a Single yi.ld .•.•••.•••. 35% of publio offering
Maximum Award .•••••.•••.•••••.•. 35% of public offering
Receipt of ~.nder.:
Noncompetitive tenders •••••• Prior to 12=00 noon Eastern Daylight Saving time on auotion day
competitive tenders ••.•••••• Prior to 1:00 p ••• Eastern Daylight Saving time on auction d~
payment ~ermsl By charge to a funds account at & Federal Reserve Sank on ie.ue date l or payment
of full par amount with tender.
TreaBu~irect customers can use the p&y Direct feature which
authorizes a oharge to their acoount of record at their financial institution on issue date.
3' 99 (THU) 21: 24
P.
'(1202 5140 tlUT
e~
~~
May 14,1999
The Honorable Trent Lett
Maj ority Leader
United States Senate
Washington, D.C. 2.0510
Dear Sa1ator Lort:
We arc writing ~on~eming the Senate's d.eliberations on l~lative proposals to close the gun
show loophole, and specifically the amendment proposed yesterda.y by Senatori Hatch and Craig.
Not only will it tail to close thB loophole, but it will. pose aigcifieam additional problems for law
enforcement and public safety.
The am.eo.dtnent will allow a 6i~ant number affirearms to be sold at gun shows without Brady
bac\cground checks and without records that would permit the tracing of criIn.e guns. It will
~ate a category of persons who would still be able to sell guns in volume at gun shows without
ba.ckgroun.d checks (the "specia.llicensec"), In addition, a second category of persons, "special
registrants," would be aut.horiz;ed as intermediaries to conduct background checks but would not
be required, as licensed dealers are. to assi5t law enforcement in tracing flreanns if those fire2lIlTl.9
were useci in a crime. Further, by creating these two new categories, both of which would have
access to the National Instant Criminal Background Check. System ("NICS''), the amendment
greatly enlarges the number of pergons who .....m learn about the existence ofvelY sensitive
'Personal information in the system and increasell the risk that this infol"lDlltion could be e.bused,
The amendment "'ould wo seriously impede the efFectiven~a of the NICS. It would reduce-
from three business da.ys to just 24 hours .. the period of time tha11aw enforcement has to ensure
that firearm! sold. a.t gun. shows ate not being sold to felolli JUld other prohibIted persons. Our
experience with the NICS shows that more than 20'Ya of the checb cannot be ~cmplctcd instantly,
and aome can take a number of. OAy:; to complete.
The amendment also would undenni1le public safely in. at least two other respects. :First, it would
pennit felons and other prohibited persons to redeem. firearms from pavmbrokers without
background checla. This 11 a step backward from the Brady .Act whi~h requires checks for all
pawnshop redemptions. Second, it would undermine State controls on the sales offircanns
within their borders by allowing licensees to sell fireanns in States other than where they are
licensed and established to be in full compliance with State and local law,.
RR-3150
· 13' 99 (T HU) 2~ ;-li
P. 002
In contrut to the Hatch-Craig Amendment, the amendm.cnt J)lopcsed by Senator Lawenhers)
whigh we strongly support, wouJd actu.a1ly close the gun show loophole by requiring back8round
checks and crime gun tracing .records for aU sale, at SUll ahowa.
~.-'
llnbmRubin
Secretary of the Treasury
co:
The Honorable Onin G. Hatch
Chalrman. Commit~ on tbe Judiciary
The Honorable Patrick 1. Leahy
Ranking Member, Committee on the Judiciary
JlUlez lleno
Attorney General
DEPARTMENT
OF
THE
TREASURY
..........II..................~~J78~9~
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
OFFICE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W.· WASHINGTON. D.C.· 20220· (202) 622-2960
FEDERAL FINANCING BANK
April 30, 1999
Paula Farrell, Secretary, Federal Financing Bank (FFB),
announced the following activity for the month of March 1999.
FFB holdings of obligations issued, sold or guaranteed by
other Federal agencies totaled $41.5 billion on March 31, 1999,
posting a decrease of $1,697.0 million from the level on
February 28, 1999. This net change was the result of decreases
in holdings of agency debt of $1,180.3 million, in holdings of
agency assets of $375.0 million, and in holdings of agency
guaranteed loans of $141.7 million. FFB made 96 disbursements
during the month of March and also executed 76 maturity
extensions on behalf of Rural utilities Service-guaranteed
borrowers.
FFB received 17 prepayments in March.
Attached to this release are tables presenting FFB March
loan activity and FFB holdings as of March 31, 1999.
RR-3151
Page 2 of 7
FEDERAL FINANCING BANK
MARCH 1999 ACTIVITY
OWER
DATE
AMOUNT
OF ADVANCE
3/1
3/1
3/1
3/1
3/2
3/2
3/2
3/2
3/3
3/3
3/3
3/4
3/4
3/5
3/5
3/5
3/5
3/8
3/8
3/8
3/8
3/9
3/9
3/9
3/10
3/10
3/10
3/11
3/11
3/11
3/11
3/12
3/12
3/12
3/12
3/15
3/15
3/15
3/16
3/16
3/16
3/16
3/17
3/17
$71,800,000.00
$750,000,000.00
$100,000,000.00
$50,000,000.00
$86,100,000.00
$450,000,000.00
$100,000,000.00
$50,000,000.00
$161,500,000.00
$265,000,000.00
$75,000,000.00
$168,400,000.00
$125,000,000.00
$89,700,000.00
$900,000,000.00
$100,000,000.00
$50,000,000.00
$63,200,000.00
$1,230,000,000.00
$100,000,000.00
$50,000,000.00
$33,100,000.00
$1,070,000,000.00
$100,000,000.00
$99,000,000.00
$950,000,000.00
$50,000,000.00
$121,700,000.00
$720,000,000.00
$100,000,000.00
$50,000,000.00
$80,300,000.00
$630,000,000.00
$100,000,000.00
$50,000,000.00
$123,300,000.00
$495,000,000.00
$100,000,000.00
$115,500,000.00
$170,000,000.00
$100,000,000.00
$50,000,000.00
$137,100,000.00
$100,000,000.00
FINAL
MATURITY
INTEREST
RATE
CY DEBT
· POSTAL SERVICE
·
·
·
·
·
·
·
·
·
·
,
,
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
is a semi-annual rate.
3/2/99
3/2/99
3/2/99
3/2/99
3/3/99
3/3/99
3/3/99
3/3/99
3/4/99
3/4/99
3/4/99
3/5/99
3/5/99
3/8/99
3/8/99
3/8/99
3/8/99
3/9/99
3/9/99
3/9/99
3/9/99
3/10/99
3/10/99
3/10/99
3/11/99
3/11/99
3/11/99
3/12/99
3/12/99
3/12/99
3/12/99
3/15/99
3/15/99
3/15/99
3/15/99
3/16/99
3/16/99
3/16/99
3/17/99
3/17/99
3/17/99
3/17/99
3/18/99
3/18/99
4.836%
4.789%
4.789%
4.789%
4.784%
4.836%
4.836%
4.836%
4.742%
4.784%
4.784%
4.742%
4.742%
4.750%
4.742%
4.742%
4.742%
4.763%
4.750%
4.750%
4.750%
4.721%
4.763%
4.763%
4.721%
4.721%
4.721%
4.742%
4.721%
4.721%
4.721%
4.719%
4.742%
4.742%
4.742%
4.732%
4.719%
4.719%
4.680%
4.732%
4.732%
4.732%
4.659%
4.680%
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
Page 3 of 7
FEDERAL FINANCING BANK
MARCH 1999 ACTIVITY
)WER
FINAL
MATURITY
INTEREST
RATE
DATE
AMOUNT
OF ADVANCE
3/17
3/18
3/19
3/19
3/19
3/19
3/22
3/22
3/22
3/22
3/23
3/23
3/23
3/23
3/24
3/24
3/24
3/25
3/25
3/25
3/25
3/26
3/26
3/26
3/26
3/29
3/29
3/29
3/29
3/30
3/30
3/31
3/31
$50,000,000.00
$120,100,000.00
$88,200,000.00
$750,000,000.00
$100,000,000.00
$50,000,000.00
$80,100,000.00
$50,000,000.00
$100,000,000.00
$1,100,000,000.00
$96,900,000.00
$870,000,000.00
$100,000,000.00
$50,000,000.00
$152,000,000.00
$820,000,000.00
$50,000,000.00
$120,000,000.00
$620,000,000.00
$100,000,000.00
$50,000,000.00
$158,500,000.00
$530,000,000.00
$100,000,000.00
$50,000,000.00
$80,100,000.00
$460,000,000.00
$100,000,000.00
$50,000,000.00
$79,200,000.00
$375,000,000.00
$168,400,000.00
$75,000,000.00
3/18/99
3/19/99
3/22/99
3/22/99
3/22/99
3/22/99
3/23/99
3/23/99
3/23/99
3/23/99
3/24/99
3/24/99
3/24/99
3/24/99
3/25/99
3/25/99
3/25/99
3/26/99
3/26/99
3/26/99
3/26/99
3/29/99
3/29/99
3/29/99
3/29/99
3/30/99
3/30/99
3/30/99
3/30/99
3/31/99
3/31/99
4/1/99
4/1/99
4.680%
4.638%
4.636%
4.638%
4.638%
4.638%
4.649%
4.636%
4.636%
4.636%
4.628%
4.649%
4.649%
4.649%
4.628%
4.628%
4.628%
4.638%
4.628%
4.628%
4.628%
4.636%
4.638%
4.638%
4.638%
4.638%
4.636%
4.636%
4.636%
4.607%
4.638%
4.617%
4.607%
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
$80,700.00
$60,430.04
$54,871.30
$1,024,188.87
$115,765.00
4/1/99
7/31/25
7/31/25
11/2/26
7/1/25
4.763%
5.685%
5.685%
5.740%
5.743%
S/A
S/A
S/A
S/A
S/A
:Y DEBT
POSTAL SERVICE
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
lMENT - GUARANTEED LOANS
~L
SERVICES ADMINISTRATION
)lee Office Building
, Services Contract
, Services Contract
Building
Headquarters
s a Semi-annual rate.
3/9
3/19
3/19
3/22
3/22
Page 4 of 7
FEDERAL FINANCING BANK
MARCH 1999 ACTIVITY
~TMENT
AMOUNT
DATE
OF ADVANCE
3/1
3/15
3/16
$173,035.25
$277,952.40
$66,497.20
3/1
3/8
3/8
3/12
3/15
3/22
3/22
3/25
3/25
3/26
3/29
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
$500,000.00
$805,000.00
$773,000.00
$535,000.00
$1,000,000.00
$1,704,000.00
$725,000.00
$4,362,000.00
$1,500,000.00
$310,000.00
$1,000,000.00
$3,416,273.29
$4,880,999.53
$891,770.74
$2,728,751.67
$3,977,043.83
$2,511,969.44
$3,525,061.27
$1,565,683.55
$386,986.13
$892,607.08
$1,165,468.27
$776,128.56
$446,232.16
$834,267.27
$999,261.03
$322,230.52
$233,862.21
$398,640.48
$233,636.79
$167,394.25
$145,833.53
$79,898.15
$120,733.54
$38,859.31
$1,276,960.53
$386,192.10
$198,373.44
$256,624.20
FINAL
MATURITY
INTEREST
RATE
OF EDUCATION
lune Cookman
.. State College
.. State College
9/1/27
9/1/26
9/1/26
5.781% S/A
5.738% S/A
5.714% S/A
12/31/08
1/3/33
12/31/18
12/31/31
1/3/33
1/2/29
10/2/28
1/3/17
1/3/33
1/2/18
3/31/06
9/30/99
9/30/99
6/30/99
6/30/99
6/30/99
9/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
5.377%
5.753%
5.705%
5.713%
5.670%
5.691%
5.641%
5.497%
5.674%
5.980%
5.426%
4.600%
4.600%
4.482%
4.482%
4.482%
4.600%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
L UTILITIES SERVICE
011 Elec. #488
.eye Tri-County Elec.
h Miss. Elec. #421
tal Electric #460
state E.M.C. #503
Wal Elec. #514
ge County Elec. #466
land Tele. #502
hez Trace Elec. #487
halls Energy Co. #458
er Elec. #485
gheny Electric #255
gheny Electric #255
gheny Electric #908
gheny Electric #908
gheny Electric #908
gheny Electric #908
:>s Electric #917
:>s Electric #917
:>s Electric #917
:>s Electric #917
)S Electric #917
)S Electric #917
)S Electric #917
)S Electric #917
)S Electric #917
)S Electric #917
)S Electric #917
)S Electric #917
)S Electric #917
)S Electric #917
)S Electric #917
IS Electric #917
IS Electric #917
IS Electric #917
IS Electric #917
IS Electric #917
'S Electric #917
S Electric #917
s a Semi-annual rate: Qtr. is a Quarterly rate.
rity extension or interest rate reset
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Page 5 of 7
FEDERAL FINANCING BANK
MARCH 1999 ACTIVITY
OWER
DATE
AMOUNT
FINAL
OF ADVANCE
MATURITY
$963,901.34
$2,887,281.16
$1,729,114.41
$1,036,257.64
$625,667.13
$965,974.27
$524,795.69
$1,514,261.82
$1,824,491.61
$443,904.54
$1,191,000.94
$1,547,500.88
$2,544,169.87
$2,723,254.90
$1,445,346.33
$327,845.32
$1,061,297.50
$5,095,663.78
$5,029,023.78
$3,347,036.78
$3,462,678.98
$6,134,436.09
$5,389,257.26
$1,443,223.14
$2,334,695.76
$6,919,537.75
$3,524,024.15
$7,182,148.08
$1,813,144.40
$6,656,156.93
$16,500,192.62
$17,070,284.41
$15,645,568.63
$2,741,851.90
$1,332,326.77
$9,124,077.71
$9,580,388.32
$837,004.66
$10,044,055.02
$3,247,511.64
$2,736,416.69
$3,248,507.87
$3,458,369.92
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
4/2/01
4/2/01
6/30/00
1/2/24
1/2/24
1/2/18
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
4/2/01
4/2/01
6/30/99
12/31/12
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
INTEREST
RATE
RNMENT - GUARANTEED LOANS
~L
UTILITIES SERVICE
Electric #917
Electric #917
Electric #917
Electric #917
Electric #917
Electric #917
Electric #917
~os Electric #917
~os Electric #917
~os Electric #917
~os Electric #917
:os Electric #917
:os Electric #917
:os Electric #917
:os Electric #437
;os Electric #437
'. Power Assoc. #130
Power Assoc. #156
~rs Telephone #399
gia Trans. Corp. #446
gia Trans. Corp. #446
gia Trans. Corp. #446
Horizon Elec. #473
Horizon Elec. #473
Horizon Elec. #473
Horizon Elec. #473
Horizon Elec. #473
Horizon Elec. #473
Horizon Elec. #473
~west Iowa Power #907
thorpe Power #445
thorpe Power #445
thorpe Power #445
1 Miss. Elec. #090
fa River Elec. #472
~iguel Electric #919
~iguel Electric #919
~d Power Assoc. #911
~d Power Assoc. #911
~d Power Assoc. #911
~d Power Assoc. #911
!d Power Assoc. #911
!d Power Assoc. #911
zos
zos
zos
z:os
z:os
z:os
z:os
I.
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
3/31
is a Quarterly rate.
rity extension or interest rate reset
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.607%
4.607%
5.056%
5.058%
4.890%
5.752%
5.752%
5.462%
4.607%
4.607%
4.607%
4.607%
4.607%
4.607%
4.607%
4.482%
5.061%
5.061%
4.482%
5.336%
4.607%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
4.482%
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
.Qtr.
Page 6 of 7
FEDERAL FINANCING BANK
MARCH 1999 ACTIVITY
DATE
)WER
AMOUNT
OF ADVANCE
FINAL
MATURITY
INTEREST
RATE
rnMENT - GUARANTEED LOANS
~L
UTILITIES SERVICE
:ed
:ed
:ed
'.ed
.ed
Power
Power
Power
Power
Power
Assoc.
Assoc.
Assoc.
Assoc.
Assoc.
#911
#911
#911
#911
#911
3/31
3/31
3/31
3/31
3/31
$3,833,212.37
$1,074,898.64
$818,063.53
$496,083.75
$1,029,185.69
is a Quarterly rate.
urity extension or interest rate reset
6/30/99
6/30/99
6/30/99
6/30/99
6/30/99
4.482%
4.482%
4.482%
4.482%
4.482%
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Page 7 of7
FEDERAL FINANCING BANK HOLDINGS
(in millions)
Program
Agency Debt:
USPS
Net Change
03/1-03/31/99
Fiscal Year
Net Change
10/1/98-03/31/99
March 31, 1999
February 28, 1999
$2,493.4
$3,673.7
($1,180.3)
($3,202.7)
--
sub-total*
$2,493.4
$3,673.7
($1,180.3)
($3,202.7)
Agency Assets:
FmHA-RDIF
FmHA-RHIF
DHHS-HMO
DHHS-Medical Facilities
Rural Utilities Service-CBO
$3,675.0
$8,715.0
$3.1
$7.2
$4,598.9
$3,675.0
$9,090.0
$3.1
$7.2
$4,598.9
$0.0
($375.0)
$0.0
$0.0
$0.0
$0.0
($785.0)
$0.0
$0.0
$0.0
$16,999.2
$17,374.2
($375.0)
($785.0)
$2,721.2
$7.4
$15.2
$1,419.9
$2,445.0
$16.5
$1,138.7
$13,979.8
$213.5
$3.8
$2,736.5
$6.9
$15.2
$1,419.9
$2,447.9
$16.5
$1,138.7
$14,099.7
$217.5
$3.8
($15.3)
$0.5
$0.0
$0.0
($2.9)
$0.0
$0.0
($119.9)
($4.0)
($0.0)
($107.9)
$2.8
($15.2)
($71.5)
($28.1)
($1.0)
($86.2)
($186.7)
($19.9)
($0.1)
sub-total*
Government -Guaranteed Lending:
DOD-FMS
DoEd-HBCU+
DHUD-Community Dev. Block Grant
DHUD-Public Housing Notes
General Services Administration+
DOI-Virgin Islands
DON-Ship Lease Financing
Rural Utilities Service
SBA-StatelLocal Development Cos.
DOT -Section 511
sub-total*
grand total *
* figures may not total due to rounding
+ does not include capitalized interest
$21,961.0
$22,102.6
---------------
---------------
$41,453.6
$43,150.5
($141.7)
---------------
($1,697.0)
($513.7)
---------------
($4,501.4)
D EPA R T M
E~N
T
0 F
THE
T REA SUR Y
NEWS
fIREASURY
OFFICE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622-2960
EMBARGOED UNTIL 10:30 A.M. EDT
Text as Prepared for Delivery
May 17, 1999
TREASURY SECRETARY ROBERT E. RUBIN
REMARKS TO THE UNIVERSITY OF PENNSYLVANIA COMMENCEMENT
PHILADELPHIA, PA
Chairman Vagelos and the Board of Trustees. President Rodin. Provost
Barchi. Deans. Faculty. Honored guests. Graduating students of the Class of 1999 -their families and friends.
Thank you for this honor.
In approaching this commencement address, I'm mindful of an observation
made by this university's founder, Ben Franklin. He said: "Here comes the orator
with his flood of words and his drop of wisdom. I promise not to flood you with
words. Whether I leave you with a drop of wisdom is for you to judge.
tt
You graduate today in a world starkly different, in many ways, from the one in
which I graduated. It's far more interconnected. Information moves dramatically
faster. The decision cycle is vastly shorter. Economies and people around the world
are more closely linked than ever before. Decisions made in one capital can be felt
across the globe.
Business today is conducted largely without borders. When I first went to Wall
Street, more than 32 years ago, finance, for example, was focused on the U.S.
markets. We sold U.S. stocks and bonds to our clients and raised money for them in
U.S. capital markets. Few overseas markets mattered. Even the biggest U.S.
companies had but a limited overseas presence. Now, Fortune 500 firms are
headquartered in the U.S. but are truly global in nature.
When I first joined an investment bank, I had to get a partner's signature to
make an overseas call. Today traders live on global trading wires, and capital markets
are integrated worldwide.
RR-3152
"or press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
Global markets and technology have brought us together as never before. Pick
up a newspaper and you'll find exchange rates for the Thai Baht and Korean Won -currencies few people worried about when I began my career. Countries that were
economically irrelevant to us 25 or 30 years ago, today provide great opportunities for
American businesses and consumers. But, as demonstrated during the past two years,
these same nations can also give rise to financial instability that can threaten economies
around the world, no matter how strong.
Last year, for example, Russia's failed economic policy actions shook global
market confidence -- and other countries felt the impact. A Latin American finance
minister explained this dilemma to me last year. How, he asked, do I explain to my
people why the value of our currency is shrinking and our interest rates are rising, all
because the Russian parliament failed to raise taxes last week. This may sound
unusual, but its true.
This interdependence isn't just in economics. Today we must deal with
immense problems in other areas that begin in one nation but affect many others.
Many of these are problems that no single nation can solve: Environmental problems,
such as destruction of the rain forest, that can damage the atmosphere of the entire
globe, or acid rain. Health problems, such as the startling incidence of HIV in the SubSaharan Africa population, that can spread so readily in an era of jet planes. And
terrorism, nourished by despair in one country, with its consequences felt around the
world.
Whether we meet these challenges of interdependence, and of the tension that
exists between the sovereignty of nations and the need to work together to solve
problems that have no borders, will shape the world you live in.
In the face of these realities, there are those who believe we should look inward
and withdraw from the world. I believe the whole history of the twentieth century
shows that this will not work. We would follow this advice at our peril. The world
does not end at our shores -- it begins there.
In the complex world of today, decision making has become ever more difficult,
but the fundamentals of decision making have remained the same. And, one lesson I
can draw from my life is that effective decision making is the key to almost everything
you will do.
When I arrived at college, I had never given much thought to how I made
decisions. College began changing that. What first struck me was the skeptical
atmosphere. Our professors' words weren't seen as unquestioned truths, but as starting
points for criticism and thought. In my sophomor~ year, I took Philosophy I from a
wonderful, elderly professor named Raphael Demos. His whole point was to show that
every assertion ultimately rested on a basic principle that could not be proven. It could
2
only be assumed or believed. That conclusion, together with what I learned in law
school, fundamentally shaped the way I've made decisions ever since.
As I think back over the years, I have been guided by four principles for
decision making.
First, the only certainty is that there is no certainty. Second, every decision, as
a consequence, is a matter of weighing probabilities. Third, despite uncertainty we
must decide and we must act. And lastly, we need to judge decisions not only on the
results, but on how they were made.
First, uncertainty.
When my father was in college, he too had signed up for a course in philosophy
with a renowned professor. On the first day of class, the professor debated the
question of whether you could prove that the table at the front of the room existed. My
father is very bright and very pragmatic. He went to the front of the room, pounded
on the table with his hand, decided it was there -- and promptly dropped the course.
My view is quite the opposite. I believe that there are no absolutes.
If there are no absolutes then all decisions become matters of judging the
probability of different outcomes, and the costs and benefits of each. Then, on that
basis, you can make a good decision.
The business I was in for 26 years was all about making decisions in exactly this
way.
I remember once, many years ago, when a securities trader at another firm told
me he had purchased a large block of stock. He did this because he was sure -absolutely certain -- a particular set of events would occur. I looked, and I agreed that
there were no evident roadblocks. He, with his absolute belief, took a very, very large
position. I, highly optimistic but recognizing uncertainty, took a large position.
Something totally unexpected happened. The projected events did not occur. I caused
my firm to lose a lot of money, but not more than it could absorb. He lost an amount
way beyond reason -- and his job.
A healthy respect for uncertainty, and focus on probability, drives you never to
be satisfied with your conclusions. It keeps you moving forward to seek out more
information, to question conventional thinking and to continually refine your
judgments. And understanding that difference between certainty and likelihood can
make all the difference. It might even save your job.
3
Third, being decisive in the face of uncertainty. In the end, all decisions are
based on imperfect or incomplete information. But decisions must be made -- and on a
timely basis -- whether in school, on the trading floor, or in the White House.
I remember one night at Treasury, a group of us were in the Deputy Secretary's
Office, deciding whether or not the U.S. should take the very significant step of
moving to shore up the value of another nation's currency. It was, to say the least, a
very complicated situation. As we talked, new information became available and new
considerations were raised. The discussion could have gone on indefinitely. But we
didn't have that luxury: markets wait for no one. And, so, as the clocked ticked down
and the Asian markets were ready to open, we made the best decision in light of what
we knew at the time. The circumstances for decision making may never be ideal. But
you must decide nonetheless.
Fourth, and finally, judging decisions. Decisions tend to be judged solely on
the results they produce. But I believe the right test should focus heavily on the quality
of the decision making itself.
Two examples illustrate my point.
In 1995, the United States put together a financial support program to help
Mexico's economy, which was then in crisis. Mexico stabilized and U.S. taxpayers
even made money on the deal. Some said that the Mexico program was a good decision
because it worked.
In contrast, last year, the U.S. supported an International Monetary Fund
program designed to strengthen the Russian economy. The program was not successful
and we were criticized on the grounds the program did not succeed.
I believe that the Mexican decision was right, not only because it worked, but
also because of how we made the decision. And I believe the Russian decision was
also right. The stakes were high, and the risk was worth taking.
It's not that results don't matter. They do. But judging solely on results is a
serious deterrent to taking the risks that may be necessary to making the right decision.
Simply put, the way decisions are evaluated, affects the way decisions are made. I
believe the public would be better served, and their elected officials and others in
Washington would be able to do a more effective job, if judgments were based on the
quality of decision making instead of focusing solely on outcomes.
Time and again during my tenure as Treasury Secretary and when I was on
Wall Street, I have faced difficult decisions. But the lessons is always the same: good
decision making is the key to good outcomes. Reject absolute answers and recognize
4
uncertainty. Weigh the probabilities. Don't let uncertainty paralyze you. And evaluate
decisions not just on the results, but on how they are made.
The other thing I'd like to leave with you is that you will be entering a world of
vastly increased interdependence -- one in which your lives will be enormously affected
by decisions made outside of our borders. We must recognize this reality and reject the
voices of withdrawal to face the challenges of interdependence. Then, we can realize
the immense potential of the modern era, for our economy and our society.
You've just completed an important milestone in developing your ability to deal
effectively with the complex choices of the world in which you will live and work. By
continuing to build on this foundation throughout your life, you will be well prepared
for the great opportunities and challenges of the new century.
Congratulations and good luck.
-30-
PUBLIC DEBT NEWS
)epartment of the Treasury • Bureau of the Public Debt· Washington, DC 20239
MEDIA ADVISORY
May 17, 1999
Contact:
Dale Vanderheyden
(202)691-3510
John Longbrake
(202)622-2960
u.s. TREASURER TO HONOR STUDENT WINNERS OF SAVINGS BONDS
NATIONAL POSTER CONTEST AT TREASURY DEPARTMENT CEREMONY
Mary Ellen Withrow, Treasurer of the United States, will honor three outstanding students
who are the national award winners of the 8th Annual U.S. Savings Bonds poster contest on
Thursday, May 20th at 1 :30 p.m. in the Cash Room of the Treasury Department, 1500
Pennsylvania Ave .. NW. , Washington, D.C.
Names of the National Winners will be announced on May 20.
First Place: from Rio Piedras, Puerto Rico
Second Place: from Tulsa, Oklahoma
Third Place: from Encino, California
The contest, for fourth through sixth graders, demonstrates Treasury's continued interest in
encouraging America's children to learn more about the importance of savings and to develop
an interest in the country s economic affairs. The winning posters were selected from 52
entries from the first place winners in each of the 50 states, the District of Columbia, and
Puerto Rico. More than 20,000 elementary school students entered posters with the theme:
I
"U.S. Savings Bonds--Creating a New Century of Savings."
PHOTO EDITORS/TV PRODUCERS: CAMERAS MUST BE IN PLACE BY 1:00 P\1.
PHOTO OPPORTUNITIES AVAILABLE WITH WINNERS A1\D TREASURER
WITHROW IMMEDIATELY FOLLOWING CEREMONY.
Press without Treasury or White House credentials must provide full name, news organization.
date of birth, and Social Security number to Treasury Public Affairs (202) 622-2960 by no
later than 12:00 p.m. Thursday, May 20.
000
RR-3153
http://www.publicdcbt.trcas.gov
PUBLIC DEBT NEWS
'epartment of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
IMMEDIATE RELEASE
17, 1999
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
May 20, 1999
August 19, 1999
912795CA7
Term:
Issue Date:
Maturity Date:
CUSIP Number:
4.570%
High Rate:
Price:
4.700%
Investment Rate 1/:
98.845
All noncompetitive and successful competitive bidders were awarded
lrities at the high rate. Tenders at the high discount rate were
)tted 13%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
Competitive
Noncompetitive
$
21,842,886
1,347,662
7,446,048 2/
54,292
54,292
23,244,840
7,500,340
4,076,564
15,708
4,076,564
15,708
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
6,098,386
347,662
1,
23,190,548
PUBLIC SUBTOTAL
TOTAL
$
27,337,112
$
~edian
11,592,612
rate
4.550%: 50% of the amount of accepted competitive tenders
tendered at or below that rate. Low rate
4.450%:
5% of the amount
:cepted competitive tenders was tendered at or below that rate.
:o-Cover Ratio
=
23,190,548 / 7,446,048
=
3.11
~ivalent coupon-issue yield.
vards to TREASURY DIRECT = $1,026,764,000
http://www.publicdebt.treas.gov
PUBLIC DEBT NEWS
lepartment of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
IMMEDIATE RELEASE
17,1999
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
May 20, 1999
November 18, 1999
912795CVl
Term:
Issue Date:
Maturity Date:
CUSIP Nwnber:
4.630%
High Rate:
Investment Rate 1/:
4.821%
Price:
97.659
All noncompetitive and successful competitive bidders were awarded
rities at the high rate. Tenders at the high discount rate were
.tted 39%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
Competitive
Noncompetitive
$
$
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
4,640,844
1,086,526
5,727,370 2/
21,341,620
PUBLIC SUBTOTAL
TOTAL
20,255,094
1,086,526
1,773,708
1,773,708
23,115,328
7,501,078
3,890,000
511,292
3,890,000
511, 292
27,516,620
$
11,902,370
!edian rate
4.595%: 50% of the amount of accepted competitive tenders
:endered at or below that rate. Low rate
4.500%:
5% of the amount
:cepted competi ti ve tenders was tendered at or below that rate.
o-Cover Ratio
=
21,341,620 / 5,727,370
=
3.73
uivalent coupon-issue yield.
ards to TREASURY DIRECT = $810,921,000
http://www.publicdebt.treas.gov
-3155
D EPA R T l\tl E N T
0 F
THE
T REA SUR Y
~~178~q~. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
............................
OmCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
EMBARGOED UNTIL 3:00 PM EDT
Text as Prepared for Delivery
May 18, 1999
TREASURY UNDER SECRETARY FOR DOMESTIC FINANCE
GARY GENSLER
TESTIMONY BEFORE THE HOUSE SUBCOMMITTEE ON
RISK MANAGEMENT, RESEARCH, AND SPECIALTY CROPS
Chairman Ewing, Ranking Member Condit, and Members of the Committee, it is an
honor to appear before you today to discuss issues involving the reauthorization of the
Commodity Futures Trading Commission ("CFTC") and the regulation of derivatives. These
topics are of considerable importance to both the agricultural and financial communities.
The U.S. derivatives markets perform a critical role in our economy. The innovations
and advances in this market also have helped ensure the global leadership of our financial
markets and institutions. The dramatic development of this market, however, has occurred on
the basis of complex and fragile legal and legislative underpinnings.
At the request of members of Congress, the President's Working Group on Financial
Markets is preparing a study of the over-the-counter ("OTC") derivatives market. It is
examining what changes, regulatory or legislative, may be appropriate to reduce systemic risk,
to eliminate legal uncertainty, to curtail regulatory arbitrage, and to address the potential use
of derivatives for fraud or manipulation. The Working Group agencies have started drafting
the derivatives report and we hope to complete it later this year.
In order to meet current and future demands of the U. S. and global financial markets,
Treasury believes that the Commodity Exchange Act ("CEA") needs to be modernized. We
look forward to working with Congress in order to resolve important legal certainty issues
related to the CEA.
RR - 3156
press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
OTe derivatives directly and indirectly support higher investment and growth in living
standards in the United States and around the world. Derivatives facilitate domestic and
international commerce and support a more efficient allocation of capital across the economy.
They can help improve the functioning of financial markets by potentially raising liquidity and
narrowing the bid-asked spreads in the underlying cash markets. Derivatives can also present
challenges, however, in the area of risk management. In addition, market participants can
assume extensive leverage through derivatives, as we saw in the case of Long-Term Capital
Management.
The OTC derivatives market is a vast, global industry. According to the BIS, the
market had reached a notional value of around $70 trillion in June, 1998. The dramatic
growth of the market in recent years is testament not merely to the dynamism of modem
financial markets, but to the numerous benefits that derivatives provide for American
businesses.
Derivatives can help companies of all sizes, and in all industries, to hedge and manage
risk that already exists, by transferring that risk to others who are more willing and able to
bear such risk. For example, wheat farmers can effectively protect against price fluctuations
of their crop during the growing season by entering into futures or forward contracts.
Second, derivatives markets provide pricing information relevant to the underlying
markets. This helps the underlying markets to become more efficient.
Third, derivatives markets can help to increase the liquidity of the underlying markets.
Government securities dealers use futures contracts on Treasury securities to manage their
risks, and these futures markets enhance the liquidity of the government securities market and
lower the spread between bid and offer prices.
Fourth, derivatives contracts can also be used to lower financing costs. For example, a
firm may want to lock in an interest rate for a long period of time. Rather than issuing fixedrate long-term debt directly into the market, the firm may find that it is cheaper to borrow
using variable rate debt and a swap to effectively fix the interest cost.
On the other hand, derivatives can also present certain challenges and issues, which the
Working Group will study.
First, the complexity of some derivative instruments leads to issues of appropriateness
and risk management for customers and counterparties. There have clearly been some lapses
in recent years. How serious a problem this is and whether and how the government should be
involved are questions being studied by the President's Working Group on Financial Markets.
2
Second, the fast-evolving derivatives markets have created new challenges for risk
management. All financial market participants need effective systems to monitor and manage
market risk, credit risk, and counterparty relations for derivative products. In addition, firms
face liquidity risk, operating risk, and the risk that legal uncertainty could impel a counterparty
to repudiate a contract. As evidenced in last year's global financial crisis, enhanced credit risk
management is of particular importance for financial institutions entering into derivatives
transactions with other financial institutions.
Third, derivatives can allow market participants to assume substantial leverage. The
amount of cash or collateral that needs to be put up on entering into a derivatives contract is
often relatively small in comparison to the amount of risk being assumed.
Fourth and finally, questions have also been raised about the potential for systemic risk
associated with derivatives. The Working Group is studying whether the features of
derivatives trading pose special risks to the financial system.
CFTC Reauthorization Issues
Treasury believes that Congress should modernize the CEA, in order to clarify the
status
of legitimate products and markets. Troublesome questions have been raised about the legality
of certain portions of the OTC derivatives market. Derivatives contracts are based on a certain
understanding of the law; however, if this interpretation is wrong, then these contracts become
unenforceable. The current legal uncertainty may also impede certain initiatives, such as the
development of clearinghouses, which can reduce systemic risk. The Working Group is
examining the overall regulatory structure, including what sort of regulation for OTC
derivatives markets may be appropriate, and by whom.
The statute that is now the Commodity Exchange Act was originally enacted in the
1920s to establish a basis for the federal regulation of the agricultural futures markets. At that
time, regulators' primary concern was the potential for manipulation of agricultural
commodities that are in finite supply, such as wheat and corn. For the most part, the CEA has
served these markets well.
The current confusion and uncertainty concerning the scope of the CEA has roots in the
1974 legislation that created the CFTC. That legislation significantly broadened the CEA by
amending the definition of "commodity," so that the term is essentially open-ended. However,
the legislation left the term "futures contract" undefined. As a consequence, to take an
example, interest rates are now a "commodity" for purposes of the CEA, but it is unclear what
types of off-exchange transactions tied to interest rates are futures contracts. Because it is
possible to interpret the CEA, after the substantial amendments made in 1974, in a very broad
manner, jurisdictional and interpretive disputes have occurred among interested parties, which
include both federal regulators and private industry groups. These disputes have been
3
accentuated by provisions of the CEA that give the CFTC "exclusive jurisdiction" over
transactions governed by the statute.
Moreover, significant changes have occurred in derivatives markets over the past 25
years, creating new legal and jurisdictional issues that were not foreseen in 1974. Financial
derivatives now far surpass agricultural contracts in notional value. Bilaterally negotiated
contracts on the OTC markets now dwarf trading on the exchanges. Additionally, electronic
trading systems have been introduced, and clearing and netting systems have been improved.
There have been good-faith efforts to resolve some of these disputes, such as the ShadJohnson Accord, which was enacted into law in 1982, and the CFTC's exemptive statement,
published in 1993 in accordance with the Futures Trading Practices Act of 1992.
Several key issues related to legal certainty are still unresolved, however. The
Working Group will address these issues in its study of the OTC derivatives market.
First, the modification of the Treasury Amendment by Congress is needed, in order to
clarify that certain markets are excluded from the CEA. Enacted at the request of the Treasury
Department in 1974, the Treasury Amendment currently excludes from the coverage of the
CEA all transactions in foreign currency, government securities, and certain other instruments,
unless the transactions involve a sale for future delivery conducted on a "board of trade." This
exclusion prevents duplicative regulation of markets that are vital to international trade and the
financing of government operations, thereby strengthening the U.S. economy and lowering the
cost of government borrowing. Unfortunately, the Treasury Amendment has been the subject
of a spate of litigation in recent years, and the courts have succeeded in resolving only some of
the issues presented.
In order to clarify the status of legitimate markets under the Treasury Amendment, we
believe that Congress should clarify that the term "board of trade," as used in the Treasury
Amendment, means an organized exchange. In addition, Treasury has in the past suggested
that Congress should provide the CFTC with anti-fraud authority over foreign currency
"bucket shops" that prey on unsophisticated retail investors.
Second, the CFTC's Swap Exemption, which provides the legal basis for much of the
OTC derivatives market, has been only partially successful in alleviating legal uncertainty.
The Swap Exemption reflects the implicit consensus that has existed for the past ten years:
swap transactions should not be regulated under the CEA, whether or not a plausible legal
argument could be made that any of these transactions are potentially covered by the CEA. It
is our view, and that of both the Federal Reserve and the SEC, that swaps are not futures
under the CEA, and that the rigidity of the CEA is not well suited to regulation of the
institutional swaps market. In light of these considerations, Congress should amend the CEA
to clarify the legal status of swap agreements.
4
A conclusion that the CEA is not suited to regulation of swap transactions does not
necessarily imply a conclusion that such transactions should be unregulated, however. The
Working Group is wrestling with many of the questions raised by the CFTC in its Concept
Release, to determine what sort of regulation for these markets may be appropriate. The
Working Group is also examining the issues surrounding the development of electronic trading
systems and clearinghouses for swaps. These innovations have the potential to enhance market
liquidity and reduce systemic risk, but some would argue that they blur the lines between
swaps and futures markets.
Third, the Working Group is considering a special set of legal certainty questions faced
by swaps that involve securities governed by the federal securities laws. The CFTC lacks the
legal authority to exempt most futures based on securities from the CEA. Therefore, the
market for swaps based on non-exempt securities is based on a conclusion that these
instruments are not futures contracts. Statements in the CFTC's Concept Release cast doubt
on this conclusion. Treasury believes that a more permanent legislative clarification of the
status of these instruments is necessary.
The derivatives market has grown and evolved without resolving these CEA
jurisdictional issues, but this arrangement is fragile. Markets operate best in an environment
of legal certainty. Market participants must be able to ascertain readily the regulatory
requirements that apply to them and have confidence in the enforceability of their own
obligations and those of their counterparties.
The Working Group's Derivatives Study
The President's Working Group on Financial Markets is also addressing, as part of its
report on derivatives, a number of other topics related to derivatives markets. Many of these
topics were raised by the CFTC in its Concept Release.
•
Market manipulation. The Working Group is studying whether regulation is
appropriate to deter any potential manipulation that may exist in the OTC derivatives
market.
•
Fraud and customer protection. The Working Group will examine whether there is a
need for specialized anti-fraud or customer protection rules in certain markets, or for
certain market participants.
Regulatory parity. Some valid questions have been raised concerning parity among
market participants. For example, is it appropriate to make the current regulatory
distinctions between on- and off-exchange trading, or between cash and derivatives
markets?
•
Systemic risk. The Working Group is examining how the derivatives markets may
5
affect financial stability, and whether supervisory or regulatory policies can reduce the
potential for systemic risk.
•
International Harmonization. The Working Group is examining how best to achieve
international harmonization of regulation of OTC derivatives.
We caution, however, that the Working Group may not be able to reach a consensus on
all of the very complex jurisdictional and regulatory issues that will be addressed by the study.
Whether or not the agencies are able to reach a consensus on a set of recommendations, we
will endeavor to provide a comprehensive assessment of the issues to aid Congress in its
efforts to design a workable structure for the oversight of the financial markets going forward.
We appreciate the concerns that have been raised about the need for a level playing
field among derivatives markets participants. The Working Group will need to consider
important issues regarding the regulation of exchange-traded derivatives and OTC derivatives.
There are important differences, however, between exchange-traded derivatives and OTC
derivatives that may justify different regulatory approaches. For example, we believe that
special aspects of the institutional markets for instruments covered by the Treasury
Amendment should continue to be excluded from the CEA.
We look forward to working with this Committee, and with other members of Congress
and interested parties as we work to resolve these issues in a way that safeguards America's
position in this fast-developing global market.
I would be happy to respond to any questions the Committee may have. Thank you.
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6
'DEPARTMENT
OF
THE
TREASURY
NEWS
TREASURY
~/78fq~. . . . . . . . . . . . . . . . . . . . . . . . . . . ..
............................
OrnCE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
Weekly Release of U.S. Reserve Assets
May
18, 1999
The Treasury Department today released U.S. rescnT asscts data for the wCl'k l'ndll1g
May 14, 1999.
As indicated in this table, U,S. reserve aSSl'ts totaled S72,3::)() million as of l\fa\· 14, 1999,
down from $72,940 million as of May 7, 1999.
u.s. Reserve Assets
(millions of US dollars)
1999
Total
Reserve
~lue
Foreign
Currencies
Reserve
3/
Assets
Gold
Stock 11
Drawing
R'19 ht s 2/
ESF
SOMA
IMF
May 7, 1999
72,940
11,049
9,883
15,042
15,037
21,929
May 14, 1999
72,330
11,049
9.820
14,839
14,835
21,789
Week Ending
I
Special
Position in
2/
Gold srock is valued monthly at $42.2222 per fine ao\' ounce. \' alues shown are as of March 31, 1999. The Februan 28, 1999
was $11,047 million.
I SDR holdl11gs and the reserve position in the HvIP are based on lr.lF data and revalued in dollar terms at the official
)Rj dollar exchange rate. Consistent with current reporung practices, IMP data for May 7, 1999 are final. Data for SDR holdings
ld the reserve position
1999 IMF data.
111
the IMF shown as of May 14, 1999 (in Hailcs) reflect prclimmary adjusunenrs by the Treasury
to
the r.1a\'
Includes holdings of the Treasury's Exchange Stabilizauon Fund (ESF) and the Federal Reser\'C's System Open Market
:count (SO~1A). These holdings are valued at current market exchange rates or, where appropnatc, at such other rates as may be
I
reed upon by the parties to the transactions.
R-3151
rpress releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
.u
S
G0vernm~nl PrIntIng
O!'!(,-=- .
~gB·
.:: 19-5: j
DEPARTMENT
'IREASURY
OF
THE
TREASURY
NEWS
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASIllNGTON, D.C .• 20220. (202) 622-2960
EMBARGOED UNTIL 2:30 p.m. EDT
Remarks as Prepared for Delivery
May 19,1999
TREASURY SECRETARY ROBERT E. RUBIN TESTIMONY BEFORE THE
SEN ATE APPROPRIATIONS FOREIGN OPERATIONS SUBCOMMITTEE
Mr. Chairman, Senator Leahy, I appreciate the opportunity to testifY today about the
Administration's FY 2000 budget request for Treasury's international programs. Last year, the
leadership of this Committee was critical in approving the increase in our quota to the
International Monetary Fund and our participation in the NAB, and that, in turn, was critical to
dealing with the financial instability abroad, an effort that was so important to our own economy.
This year, continued support of Treasury's international programs, which are central to the
ongoing response to the financial crisis and to the overall effort to foster a healthy global
economy, will promote the economic well-being of American workers, farmers and businesses.
Our FY2000 request for these programs totals $1.523 billion, an increase of less than one
percent from FY 1999. Our investment in these programs supports the international financial
institutions -- the World Bank, the International Monetary Fund and the regional development
banks -- in helping to restore financial stability where needed, in promoting long term sustainable
growth in developing countries, and in working with developing countries committed to economic
reform to reduce unsustainable levels of debt
With respect to the financial crisis, the International Monetary Fund, in close collaboration
with the World Bank and the regional development banks, has developed new programs to bolster
needed structural and policy reforms in the countries experiencing crisis, while at the same time
helping protect the most vulnerable
I believe that, on balance, the IFIs have made sensible judgments in confronting the
enormously complex and, in many ways, unprecedented issues posed by the financial crisis, and
have adjusted their judgments when appropriate At the same time, we can gain from a serious
study of these activities, especially with respect to the reform of the international financial
architecture.
In those countries that have taken ownership of reform, for example, Korea and Thailand,
there has been considerable progress toward a return to stability Korea, which had less than $4
RR-3158
r
press releases, speeches, public schedules and official biographies, call our 24~our fax line at (202) 622-2040
billion in usable reserves when the crisis came to a head in December of 1997, now has more than
$55 billion Short-term interest rates, which were as high as 35 percent at the end of 1997, now
are at 5 percent
But despite this progress, much remains to be done The problems that gave rise to the
crisis took a long time to develop, and they will take time to work through.
Here at home, while the most likely scenario remains solid growth and low inflation -subject to the usual ups and downs -- certain sectors have been impacted by the crisis, some
because of increased imports, and others because of decreased exports. Moreover, problems in
the global economy do constitute a risk to our overall economic well being. That is why we have
been enormously focused on the effort to restore stability and growth to troubled parts of the
world, and the IFIs are at the center of this effort
In addition to their role in responding to the global financial situation, the lFIs have played
an important role in other crises over the last year For example, the World Bank and the
InterAmerican Development Bank have provided $212 million to nations in Central America
following Hurricane Mitch, and $600 million to nations affected by EI Nino. And the IFls are
helping the nations of the Balkans deal with the immediate and longer-term consequences of the
recent crisis there.
Now, let me make several observations with respect to why the IFIs are at the center of
our efforts to promote growth in the developing and transitional countries, growth enormously in
our interest as these countries in recent yeas have purchased over 40 percent of our exports, as
well as being at the center of our work to deal with the financial crisis
First, they internationalize the burden In 1998, $14 billion in U S appropriations gave us
great influence with respect to $571 billion in total MOB lending.
Second, our FY 2000 request for the IFls is about 5 5 percent below last year's
appropriation, with both years having included funds to pay arrears. On-going U. S. financial
commitments to MOBs have been negotiated down by $700 million dollars per annum, or more
than one-third since the mid-1990s, \vithout a reduction in our influence. The United States has
been a leader in shaping policies in the MOBs and most of our key developmental objectives are
now broadly shared by other members
Third, because they are multilateral, these institutions have the ability to induce recipient
countries to accept conditions that no assisting nation could obtain on its own
Fourth, each institution has expertise special to itself to shape effective reform programs
.
The United States, in concert with the international community, has worked forcefully
with these institutions to reform their operations, reduce overhead, become more open, do more
to prevent corruption. promote the private sector, and become more sensitive to environmental
concerns, core labor standards and human rights Under the leadership of Jim Wolfensohn, the
2
World Bank has taken significant steps to improve operations. The United States and the
international community are also looking very closely at the role of these institutions in the future
international architecture.
Mr. Chairman, let me now comment briefly on long term growth promotion in the
developing world.
The IFIs have been instrumental in helping countries throughout the developing world
embrace market-based economic systems and become more fully integrated into the global
economy. As a result, even taking into account the adverse impacts of the recent crisis, the last
few decades have witnessed substantial improvements in living standards in most of the
developing world. Infant mortality rates fell by nearly 50 percent from the early 1970s to the
mid-1990s and life expectancy has risen by four months on average each year since 1970. Adult
literacy has risen from 46 to 70 percent. As they have grown, these nations have turned into new
markets for U.S. goods and services. In 1997, before the recent crisis, the developing world
absorbed somewhat over 40 percent of U. S. exports.
As an example of the IFI role, IDA is the world's largest lender of concessional resources
for projects in areas such as health, primary education, nutrition, safe drinking water, and proper
sanitation. For every dollar the U.S contributes, IDA lends about 8.5 dollars for programs that
promote higher standards of living and foster stability.
Mr. Chairman, the IFIs have also greatly increased their involvement in combating
corruption, which in addition to being a social and political issue, is also a critical economic issue,
and an impediment to growth in many developing countries. IMF Managing Director Camdessus
has been outspoken in his condemnation of corruption, and the IMF is increasingly giving explicit
consideration to weakness in governance and to corruption in all its country programs. And
under President Wolfensohn's leadership, the World Bank has become highly engaged in the fight
against corruption. The Bank has developed new methodologies and techniques for analysis of
the nature and extent of corruption in specific countries. Eleven countries have adopted this
approach to help understand their corruption problems and to formulate targeted anti-corruption
programs.
Mr. Chairman, even with the efforts of the lFIs, the vast economic and human potential of
the developing world has barely been tapped Just last summer, for example, I visited Africa, a
continent with enormous potential and enormous challenges and still largely left behind in the
global economy Clearly, in Africa, and elsewhere, the need for -- and the importance of -- the
IFls helping to bring developing nations into the economic mainstream has not abated
However , Mr. Chairman, brin~int!. these countries into the economic mainstream often
requires us to review the debt burden that they have accumulated over the years The President
has proposed a major debt reduction initiative to help promote the integration of the poorest
countries into the world economy. It includes components providing for deeper or accelerated
debt reduction and inclusion of additional countries into existing debt reduction programs, both
multilateral and bilateral. Our policy tries to strike an economically sensible balance between
~
~
3
competing considerations with respect to debt reduction. On the one hand, many developing
countries are simply overwhelmed by unsustainable debt burdens On the other hand, if the
private sector does not believe that a country has a culture of credit in which there is a
commitment to repaying debt, private sector capital probably won't flow to that country, and
private sector capital is an absolute requisite for economic growth over time In addition, if
borrowers feel they are not going to have to pay back debt, it may result in unsound borrowing,
which will then lead to future problems Two additional points: Firstly, debt reduction is unlikely
to have lasting benefit if not accompanied by meaningful economic reform, so that the resources
freed up by debt reduction are used for good purpose. Secondly, our approach is designed to
support substantial reductions in debt service payments and total debt burdens to levels consistent
with what these countries can reasonably be expected to afford.
In line with this analysis, our budget request includes $120 million for debt programs,
broken out as follows $20 million for the traditional Paris Club mechanism, including reduction
of U S. debt under the initiative for the Heavily Indebted Poor Countries (HIPC) which was
launched by the World Bank and the IMF in September 1996 to reduce debts to sustainable levels
for those poor countries prepared to pursue economic and social policy reforms; $50 million for a
contribution to the HIPC Trust Fund, which will be used to support reduction of debt owed to
multilateral institutions; and $50 million to finance Debt Relief for tropical rainforest countries, as
called for under the Tropical Forest Conservation Act of 1998.
In addition, we are requesting authorization to support IMF gold sales in order to provide
additional support for HIPC countries. This proposal has received considerable attention
However, we believe it is reasonable for the IMF to use income derived from investments
resulting from the sale of a small portion of gold reserves. The principal amount of the profits
from such a sale would remain part of the IMF's resources.
Before concluding, let me note that, with the leadership of this Committee, we have made
great progress in clearing our arrears to the Multilateral Development Banks If the FY2000
request is fully funded, our arrears will be reduced to $141 9 million Delays in paying U.S.
commitments on internationally negotiated agreements come at a high price in terms of our
influence and effectiveness with the institutions and their members. We want to continue working
closely with this Committee and the Congress to fully meet US financial commitments.
Mr. Chairman, Senator Leahy, let me conclude by reiterating that our strong support for
the international financial institutions -- as well as the United Nations -- strongly promotes
America's economic well being and national security interests This Committee is central to
providing that support, and we look fOf\vard to continuing our good working relationship as we
deal with this budget request
-30-
4
· DEPARTMENT
OF
THE.
TREASURY
.
.
,
NEWS
TREASURY
omCE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C.. 20220. (202) 622·2960
FOR IMMEDIATE RELEASE
May 19,1999
Contact: John Longbrake
(202) 622-2960
TREASURY SECRETARY ROBERT E. RUBIN STATEMENT
ON THE DEPARTURE OF EDW ARD S. KNIGHT
Ed has served with distinction as the top legal official at the Treasury Department. In the
beginning of my tenure as Treasury Secretary, Ed played a crucial role in the negotiations that
resulted in the successful Mexican financial assistance program. In 1996, his legal advice helped
this country avoid defaulting on its obligations during the debate with Congress about extending
the debt limit. He also represented Treasury ably on the National Commission on Restructuring
the IRS and was critically involved in designing the support package for Brazil last year.
Treasury is faced on a daily basis with many legal challenges that are critical to the success
of the department, and Ed and his legal team met those challenges with great success. I appreciate
his service to the department and wish him the best ofluck in his future endeavors.
-30RR-3159
>r press
releases, speeches, puhlic schedules aud official hiographies, call Ollr 24-hollrfax line at (202) 622·2(}10
.NAsa~
IJarenc OI11,u
"h~d;"lAm9$
Press Release
Market Oroup
National Association of Sccuriticx:; Oco.iors,
1735 K Strcot, NW
Washington, DC 20006·1500
(rI(:.
For Release:
Media Contact:
Wednesday, May 19, 1999
Andrew MacMillan
(202) 728-8340
Scott Peterson
(202) 728-8955
Edward S. Knight to Join NASD
Treasury'.ft Genertll Counsel to he NASD's Chief Legal Officer
Washington, D.C.-The National Association of Securities Dealers, Inc. (NASDtti'l)
today announced that Edward S. Knig.hl. 48, currently General Counsel of the 1rnited States
Department of the Treasury, has been named
,L"
Executive Vice President and Chief Legal
Officer (CLO) of the NASD family of companies. effective July 5, 1999.
Knight's responsibilities will include providing legul counsel to senior management and
overseeing the quality of legal services across the organization. He will be a member of the
NASD's Office of the Chainnan. As CLO, Mr. Knight will work closely with the general
counsels ofthe NASD, The Nasdaq Stock Markct~ and NASD Regulation®.
"We are extremely pleased that Ed is bringing his vast national and international legal
experience to the NASD family of companies," said Frank G. Zarb, Chairman and CEO of the
NASD. "The impressive breadth of his experience and expertise across so many different
agencies of the federal government and internationally will mean that our members, issuers, and
the investing public will he well protected and advised by his counsel."
Knight has served as General Counsel of the Treasury Department since September 1994.
In that capacity, he has provided lcgaJ ami policy advice to the SeLTetary of the
Trea~ury
and
other top Department officials. He hus overseen 2,200 attorney::; providing legal service to all of
the Department's offices and bureaus, including the IntcrMl Revenue Service, Customs, Secret
Sel'Vice, Public Debt. Alcohol, Tobacco and Firearms, the Office of thc Comptroller of the
Cmn,-ncy, the Office of Thrift Supervision, the hnancial Management Service, the U.S. Mint,
and the Bureau of Engraving and Printing.
(more)
2
In the fall of 1998, Mr. Knight was critically involved in the provIsIOn of bilateral
financial assistance Ii'om the United Stales lo the government of Brazil through the Rank for
International Settlements. Tn July 1998, Knight led the legal team that successfully privatized the
U.S. Enrichment Corporation-the largest privatization in U.S. history. In May 1996, he was
appointed by President Clinton to the National Commission on Restructuring the 1nternal
Revenue Service. He has testified before Congress on numerous occasions.
Prior to joining the Treasury Department, Knight was a partner with the law firm of Akin,
Gump, Strauss, Hauer and Feld in its Washint,rton, D.C., office.
Rom in AmarilJo, Texas, on January 20, 1951, Knight received his B.A. in Latin
American Studies, with honors, from the University of Texas at Austin ,Uld his J.D. from the
University of Texas School of Law in 1976.
The NASD is the largest securities-industry, self-regulatory organization in the United
States and parent organization or NASD Regulation, Inc., and The Nasdaq-Arnex Market
GrOUpSM.
Through its regulatory subsidiary, the NASD develops rules and regulations, provides
a di$pute resolution forum, and conducts regulatory reviews of member activities for the
protection and benefit of investors. Through the Nasdaq-Amex Market Group, the NASD
operates The Nasdaq Stock Market and the American Stock Exchange (Amex<io). The NASD also
ovcrsce$ the nation's 5,600 brokerage firms and more than half a million registered brokers.
Consumers can conlaL1. the NASD to obtain the disciplinary and work histories, as well as other
$elected background information, of member Ilrms and individual brokers or to get information
on how to lodge a complaint.
.For more information about the NASI) and its subsidiaries, please visit the following
Web sites: http://www.nasd.com; http://www.nasdaq-amex.com; http://www.nasdr.com; or the
Nasdaq-AmcxNewSfOomSM at http://www.nasdaq-amexncws.com.
# # #
D E P ,\ R T i\l E N T
0 F
T II E
T REA SUR Y
NEWS
TREASURY
OFFICE OF PUBLIC A}'FAIRS e1500 PENNSYLVANIA AVENUE, N.W. e WASHINGTON, D.C.e 20220 e (20Z) 622.2960
EKBARGOED UNTLL 2:30 P.M.
May 19, 19~9
CONTACT:
Office of Financing
202/691-3550
TREASURY TO AUCTION $15,000 MILLION OF 2-YEAR NOTES
The Treasury will auction $15,000 million of 2-year notea to refund
$27,858 million of publicly held securities maturing May 31, 1999, and
to pay down about $12,858 million.
In addition to the pub1ic holdings, Federal Reserve Banks hold $3,056
million of the maturing securities for their own accounts, which may be
refunded by issuing an additional amount of the new security.
The maturing securities held by the public include $3,053 million held
by Federal Reserve Banks as agents for foreign and international monetary
authorities. Amounts bid for these accounts by Federal Reserve Banks ,will
be added to the offering.
TreasuryDirect customers requested that we reinvest their maturing
holdings of approximately $670 million into the 2-year note.
The auction will be conducted in the single-price auction format.
All competitive and noncompe~itive awards will be at the highest yield of
accepted competitive tenders.
The notes being offered today are eligible for the STRIPS program.
Tanders will be rHceived at Federal Reserve Banks
This
J9curities is governed by the terms and conditions set
)ffering Circular for the Sale and Issue of Marketable
lilla, Notes, and Bonds (3~ CPR Part 356, as amended).
:he Bureau of the Public Debe, Washington, D. C.
and Branches and at
offering of Treasury
forth in the unifo~
Book-Entry Treasury
Details about the new security are given in the attached offering
ighlights.
000
ttacbment
\-3160
or press releases, speeches, public schedules alld official biographies, call our 24-hour fax line at (202) 622-2040
HIGHLIGHTS OF TREASURY OFFERING TO THE PUBLIC OF
2-YEAR NOTES TO BE ISSUED JUNE 1, 1999
May 19, 1999
Offering .Amount ..............•.....•••..•• $15,000 million
Description of Offering:
Term and type of security ........ ··.·.··••
Series . . . . . . . . . . . . . . . . . . . . • . • . • . . . . . . . . . . .
CUSIP number . . . . . . . . . . . . . . . . . . . . ······•··•
Auction date . . . . . . . . . . . . . . . . . . · · · · · · · · · · · ·
Issue date ........••..........• ·.···•····•
Dated date ...........................•.••.
Maturity date . . . . . . . . . . . . . . . . · · . · · · · · · · · · ·
Interest rate . . . . . . . . . . . . . . . . . . . . ·········
2-year notes
Y-2001
912827 5H 1
May 26, 1999
June 1, 1999
May 31, 1999
May 31, 2001
Determined based on the highest
accepted competitive bid
Yield .............••....•..•...•..••...... Determined at auction
Interest payment dates . . . . . . . . . . . . . . . . . . . . November 30 and May 31
Minimum bid amount and multiples . . . . . . . . . . $1,000
Accrued interest payable by investor ....•• Determined at auction
Premium or discount •.....••.•..•..•..•••.• Dete~ned at auction
STRIPS Information:
Minimum amount required ...•........•.••.•. Dete~ned at auction
Corpus CUSIP number •.•••••..•...••..••... 912820 DW 4
Due date (s) and COSIP number (a)
for additional TINT(s) ....•............. Not applicable
Submission of Bids:
Noncompetitive bids:
Accepted in full up to $5,000,000 at the highest
accepted yield.
Competitive bids:
(1) Must be expressed as a yield with three dec~ls, e.g., 7.123%.
(2) Net long position for each bidder must be reported when the sum
of the total bid amount, at all yields, and the net long position
is $2 billion or greater.
(3) Net long pOSition must be determined as of one half-hour prior to
the closing time ~or receipt of competitive tenders.
Max~um
Recognized Bid at a Single yield ...•.. 35% of public offering
Maximum Award ...•.••.••....................... 35% of public offering
Receipt of Tenders:
Noncompetitive tenders:
Prior to 12:00 noon Eastern Daylight Saving
t~e on auction day.
Competitive tenders:
Prior to ~:oo p.m. Eastern Daylight Saving
t~e on auction day.
Payment Terms: By charge to a funds account at a Federal Reservs Bank on
issue date, or payment of full par amount with tender.
TreasuryDirect
customers can use the Pay Direct fe~ture whi.ch authori.zlu. a charge to thai!
account of record at their financial institution on issue date.
D EPA R T 1\1 E N T
TREASURY
0 F
THE
T REA SUR Y
NEWS
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220 • (202) 622·2960
EMBARGOED UNTIL 10 A.M. EDT
Text as Prepared for Delivery
May 20.1999
TREASURY SECRETARY ROBERT E. RUBIN
HOUSE COMMITTEE ON BANKING AND FINANCIAL INSTITUTIONS
Chainnan Leach, Ranking Member LaFalce and Members of the Committee. thank you
for providing this opportunity for me to present the Administration's approach to refonning the
global financial architecture. This is one of the most important issues that we face in the
international arena, as the events of the past two years have demonstrated. It is also one in which
Americans -- workers. businesses and fanners -- have an enormous stake. Just as the origins of
the crisis were complex, so are the challenges we face in trying to reform the system.
Overall, the aim of President Clinton's approach is to build an international financial
system that best promotes global growth, that contributes to a broad-based sharing in the benefits
of that growth, and that is less prone to crisis and better equipped to deal with crises when they
occur. We want to help all countries equip themselves to be able to participate effectively in the
global financial system. This means working with developing countries to identify policies that
can best realize the benefits of global integration while limiting the potential risks, and creating
stronger incentives for them to put these policies in place. It also means acting to induce
creditors and lenders in industrial countries to assess risk more appropriately. so as to help avoid
excesses in capital flows and leverage. Finally, it means equipping the international community
to deal more effectively with those crises that occur.
The international community, with the leadership of the United States. has made
important progress so far. There is now a broad-based consensus on the appropriate framework
for reform, although within that framework there are a number of important issues still to be
resolved. While we have made meaningful progress, much work lies ahead. The international
community'S efforts involve a collection of actions that I believe. over time. \\ill constitute a
powerful program of reform.
RR-3161
'n'"frress releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622·2040
Today I \Hmld like to focus on some of the most important elements of our work. in six
broad categl)[ies:
•
•
•
•
•
•
invol\'ement of the private sector in crisis prevention and management. including reform
of national bankruptcy regimes;
strengthening and reforming the international financial institutions;
impro\'ing transparency and disclosure. including use of standards and best practices:
strengthening macroeconomic policies and financial systems in emerging markets.
including sustainable exchange-rate regimes;
strengthening financial regulation in industrial countries; and
promoting policies that minimize the human cost of crises,
Involvement of the Private Sector in Crisis Prevention and Management, Including BankruptCY
Reform
The role of the private sector in resolving crises is one of the most complex issues we
face today. involving powerful competing considerations. We must not undermine the obligation
of countries to pay their debts in full and on time. To do so could cause a reduction in critical
flows of private-sector trade credits and investment, and increase the potential for contagion. At
the same time. market discipline only works if creditors and investors bear the consequences of
the risks they take. The high yields on many emerging market debts indicate private creditors'
expectations that some of these debts will not be paid in full or on time.
We must strike the right balance between these considerations on a practical case-by-case
basis. When a government's capacity to pay its debts in full and on time may depend on the
provision of official resources. the international community will need always to consider
carefully whether there is a role for the private sector. In some cases it may be appropriate to
seek maintenance of exposure levels or a restructuring or refinancing of debt held by private
creditors. This approach was quite effective in the case of Korea's external bank debt, for
example. by providing the breathing room Korea needed to stabilize its finances and implement
the structural reforms necessary to put its economy back on track. In other -- truly exceptional-cases. negotiations may break down and it may not be possible to avoid a temporary nonnegotiated interruption in some debt payments owed to private creditors.
Additionally. there is no reason why one category of unsecured private creditors should
be regarded as inherently privileged relative to others in a similar position. When both are
materiaL claims of bondholders should not be viewed as necessarily senior to claims of banks.
In addition. there is a gro\\ing consensus in support of a number of ex ante measures that
can help both to reduce the impact of financial shocks and to promote more orderly crisis
resolution. Contingent lines of credit arranged with the private sector -- as established by
.'\rgentina. for example -- may be able to make a contribution in this regard. We also encourage
the broader use of pro\'isions in bond contracts that can facilitate creditor coordination. Through
2
the IFIs and more generally, we also strongly support steps to strengthen national bankruptcy
regimes that can help prevent private debt problems from escalating into broader sovereign
cnses.
Strengthening and Reforming the IFls
The international financial institutions, especially the IMF, will continue to playa central
role in preserving the stability of the global financial system, and in responding effectively to
financial crises when they occur. To accomplish this reliably, their capacities need strengthening
and their policies need reform. We have made significant progress in both areas, and are
committed to a continuing process of reevaluation and reform.
The increase in IMF quotas and the New Arrangements to Borrow, made possible by
legislation passed by Congress last October, provided the international community with muchneeded financial resources at a critically important time. We very much appreciated the
leadership and support of this Committee in that effort, Mr. Chairman. Since then, the IMF has
established a Contingent Credit Line, which enhances its capacity to utilize its resources in a
manner that will help to prevent financial crises. This new capability not only will help protect
countries with good policies against a sudden loss of market confidence, but it is also designed as
an incentive for countries to make sound policy choices to reduce their vulnerability to crisis.
These policies include the adoption of sound debt management practices, efforts to develop
strong bankruptcy and supervisory regimes, and the maintenance of sound macroeconomic
policies and sustainable exchange-rate regimes.
The IMF has also implemented important new reforms to improve the openness of its
own policies and operations. There is now a formal presumption that borrowing countries will
release to the public the Letters of Intent that set forth their program commitments. The
Executive Board has also instituted a pilot program for the release of Article IV staff reports and
adopted a systematic approach to releasing information about major policy changes. While
greater efforts are still needed to make the IMF an even more open institution, these steps, which
occurred as a result of strong advocacy by the United States, represent significant progress.
The terms and conditions ofIMF programs also increasingly reflect the experience of
recent crises and the reform efforts -- led by the United States -- to address a broader spectrum of
policy concerns in programs. Under the IMF's Supplemental Reserve Facility. substantial
interest rate premiums have been a feature of all recent major IMF lending programs. And
program content increasingly reflects our policy objectives: increased trade liberalization. the
elimination of subsidies and directed lending, reductions in military and other unproductive
spending, the promotion of core labor rights and protection of the environment. While more
needs to be done, the improvement so far is real and encouraging and we are continuing our
efforts.
The Multilateral Development Banks (MDBs) have also demonstrated an increased
3
capaclly for crisis response . The World Bank and the Inter-American Development Bank han:
intwduced a ne\\ lending instrument to finance structural reform in countries with exceptional
tillallcill~ Ill'cds. cllablill!.! thcse institutions to pro\"ide emergency assistance more quickly and in
!.!reater a~l1oullts when a ~risis occurs. Work is also underway in the World Bank and other
~dDBs tl) catalyze greater long-term capital flows to emerging markets through use of guarantee
mechanisms.
TransparenC\" and Disclosure. Including Use of Standards and Best Practices
Continuing progress in improving the quality and quantity of data about countries and
markets is essential for markets to function efficiently and with discipline . In fact. one of the
necessary and legitimate roles for governments is to create conditions for the disclosure of
information that. left to themselves, markets would not provide . Steps to improve disclosure and
transparency can also serve as powerful inducements for countries to adopt sound policies that
serve the interests of both the markets and the countries themselves. For example, the IMF has
continued to enhance its Special Data Dissemination Standard by establishing a new
comprehensive format for disclosure of full information on country reserves. and work is
underway on further improvements.
Important progress has been made in the international community in establishing sets of
standards and best practices that can help guide countries' policies and serve as a benchmark for
country performance. We support pulling together these standards into a comprehensive matrix
that includes the fundamentals of sound economic management and financial sector stability.
We also support efforts to monitor and assess country progress in adopting these standards. and
for the results to be made publicly available. The IMF and the World Bank have already begun
to increase their capacity for such monitoring and assessment, and we encourage their continued
efforts and collaboration.
Strengthening Policies and Financial Svstems in Emerging Markets
One of the striking elements of the recent crisis was the extent to which countries
reached for short-term capital and thereby greatly increased their vulnerability to financial
shocks. In order to reduce this risk. we support the development of international guidelines for
sound debt management to discourage disproportionate reliance on short-term capital flows in
L1\'or of more stable long-term debt profiles and the development of domestic debt markets.
Similarly. the short-term foreign currency exposures of the banking system can be a
dangerous source of instability in countries with underdeveloped financial systems and
regulatory regimes . In such cases. countries should adopt limits on such exposures. Overall. the
benefits to a dC\'eloping nation of short-term borrowing -- lower cost of credit and not having to
makc the difficult changes necessary to borrow at longer terms -- are often more than offset by
the benelits of a longer-term deht profile that better insulates the country against the risks of
market instahilitv .
Finally, a country's choice of an exchange-rate regime is of central importance, although
we must always recognize that the key to currency stability is the soundness of underlying
macroeconomic and financial policies. At the core of each recent crisis has been a rigid
exchange rate regime that ultimately proved unsustainable. We believe that the international
community should not provide exceptional, large-scale official finance to countries intervening
heavily to defend an exchange-rate peg, except when the peg is judged sustainable and certain
exceptional conditions have been met, such as a potential systemic threat.
Strengthening Prudential Regulation in Industrial Countries
The recent crises revealed important shortcomings in the way investors and creditors in
industrial countries evaluated and priced the risk of their emerging-market assets. There are a
number of appropriate measures we can take to strengthen prudential oversight of financial
market participants, especially in this central area of risk management.
One important step is the updating of the Basle Capital Accord by making it more
sensitive to the risks of short-term lending and of lending to emerging markets. In addition,
financial market participants need to strengthen their practices of managing credit and market
risk -- and supervisors need to increase their oversight in this area -- in order to dampen
investors' and lenders' tendency to underestimate risks in good times and exaggerate them in bad
times.
This Committee has already examined the recommendations in last month's report by the
President's Working Group on Financial Markets, so I will not discuss them in detail here. The
report's recommended improvements in disclosure and risk-management practices for highlyleveraged institutions would, if implemented, help to constrain excessive leverage in the system
and thus contribute to a reduction in systemic risk.
Finally, the G-7 has already taken a significant step by establishing the Financial Stability
Forum. The Forum will provide a high-level mechanism to improve international cooperation in
the design and practice of financial and regulatory policies. Already, it has been agreed to
establish three working groups that also will include representatives from non-G-7 countries.
Promoting Policies to Minimize the Human Cost of Financial Crises
Generally, an international financial system that faces a lesser threat of crisis, and that is
better equipped to handle crises that occur, is one that will contribute substantially to sharing
more broadly the benefits of growth and open markets. More specifically, additional steps
should be taken to prevent the burden of crises from falling disproportionately on society's most
vulnerable members and to help countries establish in advance policies that make their
economies more resilient if crisis strikes.
There are several conclusions we can draw from the recent crises as they apply to
5
principles and practices of good social policy. They include the importance of:
•
•
•
•
maintaining a tiscal ti"amework designed to protect core social expenditures at
pre-crisis levels. or at least to prevent disproportionate reductions:
designing means-tested programs for the poor and disadvantaged and developing
effective and targeted programs for the most vulnerable:
strengthening anti-corruption measures. especially through fiscal transparency and
accountability: and
adhering to core labor standards.
With our strong support and encouragement. the World Bank has undertaken an eHort to
distill a set of social sector principles with a view to identifying practices and policies to
incorporate into country programs. The MOBs should commit a substantial portion of their
lending resources to the social sector. including assistance to help establish functioning social
safety nets. In fact. since the onset of the crisis. the World Bank and the Asian Development
Bank have agreed to at least double their assistance to the most vulnerable in Asia. In designing
its assistance programs. the IMF also should take into account whether funding is adequate tor
social safety nets and other targeted social programs. even during periods of needed fiscal
consolidation.
Conclusion
Mr. Chairman. our approach to reforming the global financial architecture is based on the
fundamental belief that market-based systems create the best prospects for job creation.
economic growth and rising living standards both in the U.S. and around the world. We also
believe that governments playa necessary role in creating the conditions for markets to produce
the best results. and that we have a responsibility to act accordingly. We believe that the result of
the approach I have outlined will be a more robust global economy that is less susceptible to
instability and crisis. and we will continue our efforts to build an international consensus toward
that end.
Thank you very much. Mr. Chairman. and I will be pleased to respond to the Committee's
questions.
6
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Puhlic Deht • Washington, DC 20239
MEDIA ADVISORY
May 17, 1999
Contact:
Dale Vanderheyden
(202)691-3510
John Longbrake
(202)622-2960
U.S. TREASURER TO HONOR STUDE1\T WIi\~'ERS OF SAVINGS BONDS
NATIO~AL POSTER CONTEST AT TREASURY DEPARTMENT CEREMONY
Mary Ellen Withrow, Treasurer of.
the United
States. will honor three outstandinQ students
.
who are the national award winners of the 8th Annual U.S. Savings Bonds poster contest on
Thursday, May 20th at 1:30 p.m. in the Cash Room of the Treasury Department, 1500
Pennsylvania Ave., NW. , Washington, D.C.
~
l\ames of the National Winners will be announced on May 20.
First Place: from Rio Piedras, Puerto Rico
Second Place: from Tulsa, Oklahoma
Third Place: from Encino, California
The contest. for fourth through sixth graders, demonsIrates Treasury's continued interest in
encouraging America's children to learn more abom the importance of savings and to develop
an interest in the country's economic affairs. The winning posters were selected from 52
entries from the first place winners in each of the 50 sIates. the District of Columbia. and
Puerto Rico. More than 20,000 elementary school students entered posters with the theme:
"U.S. Savings Bonds--Creating a New Century of SaYings."
PHOTO EDITORS/TV PRODUCERS: CAMERAS MUST BE I~ PLACE BY 1:00 P;\I.
PHOTO OPPORTUNITIES AVAILABLE ,"VITH 'Vli\~'ERS A.~D TREASURER
\YITHRO\Y L\IMEDIATELY FOLLO\VING CEREMONY.
Press without Treasury or White House credentials must provide full name. news organizJtion.
date of birth. and Social Security number to Treasury Public Affairs (202) 622-2960 by no
later than 12:00 p.m. Thursday, May 20.
000
RR-3162
http://n "n. p 1I b licde b t.t rcas.goy
-2-
abc, being maJc possible by: the Renaissance \\'ashington D.C. Hotel. Gray Line Tours of
\\a~hington. Pbnet Holl:wood. and the Hard Rock Cafe who donated their services.
000
PA--+ 12
l\IEDIA ARE Il'i'VITED. CAMERAS MUST BE SET UP BY 1:00 P.M. 0[';;
THURSDAY, MAY 20,1999, IN THE U.S. TREASURY DEPARTMENT'S CASH
ROO:\l, 15TH ~'lD PE~'NSYLVANIA AVE., N.W., WASHINGTON, D.C. 20220.
PUBLIC DEBT NEWS
Department of the Treasury· Bureau of the Public Debt· Washington, DC 20239
FOR IMMEDIATE RELEASE
May 20,1999
Contact: Lori DeRose
(202) 691-3502
PUERTO RICO, OKLAHOMA & CALIFORNIASTUDEl\TS WI~
1999 NATIONAL SAVINGS BONDS POSTER CONTEST
Receive Valuable U.S. Savings Bonds A wards
Treasurer of the United States Mary Ellen Withrow will present the three national \vinners in the
8th Annual Savings Bonds Poster Contest with awards during a ceremony at the U.S. Treasury
Department's Cash Room in Washington, D.C., on Thursday, May 20, 1999 at 1:30 p.m. State
Winners \vere selected earlier this year. First place entries from each state, the District of
Columbia, and Puerto Rico then were submitted to a panel of judges for selection of the national
WInners.
The three \vinning posters are the work of two sixth-graders from Puerto Rico and Oklahoma, and a
fourth-grader from California. Their posters, and those of the other 49 first place winners, will be
displayed in more than 70 airports around the country this fall. The posters will be exhibited in
Washington D.C., during June and July at the Capital Childrens' Museum and then at the Bureau of
Engraving and Printing on 14th Street, SW, August through October.
The first place winner, Laura E. Rodriguez, a sixth-grader at Santiago Iglesias Pantin, Rio Piedras.
Puerto Rico, will receive a $5,000 U.S. Savings Bond and her poster will be used to promote the
sale of bonds nationwide in 2000. When asked what she is going to do with her award, Laura said,
"r plan to use the U.S. Savings Bonds I won to help pay for college." Along with Laura's winning
poster will be the slogan: "U. S. Savings Bonds--Creatinga New Century of Savings ."
The second and third place \vinners, Josh Bogart Speer, a sixth-grader at i'.lonte Cassino School.
Tulsa, Oklahoma, and Aaron Yamagata, a fourth-grader who attends the Fine Arts and Music
Academy, Valley Village, California, will receive $2,000 and $ LOOO in sa\lngs bonds,
respectively.
The poster contest began in 1992 as a fun way for students to learn the value of saving. "The poster
contest provides a creative way for children to learn the value of savings with U.S. Sa\'ings Bonds,
as well as the possibility to win a substantial award to invest in their future", said Van Zeek.
Commissioner of the Public Debt. (The Bureau of the Public Debt manages the savings bono
program.)
Sponsor of this year's contest is Metropolitan Life Insurance company, who also chaired the 1999
U.S. Savings Bond Volunteer Committee. The trip to Washington, D.C., for this ye~1[' s \\'inners is
-I11ore-
RR-3164
http://www.pllhl ied cbt. t rC:lS.go\
-'1-
alst.) heinie' mJc..:~ pussihk by: the RcnJissancc Washington D.C. HoteL Gray Line Tours of
\\·ashingtl1n. Pl~nct Hollywood. and the Hard Rock Cafe who donated their services.
000
PA-412
MEDIA ARE L\'-VITED. CAI\1ERAS MUST BE SET UP BY 1:00 P.:\!. ON
THURSDA Y, \1A Y 20, 1999, IN THE U.S. TREASURY DEPARTlV1E::\T'S CASH
ROOM, 15TH A::\D PEl'I'NSYLVANIA AVE., N.W., WASHINGTO~, D.C. 20220.
D E P .\ R T 1'1 E N T
() F
THE
TREASURY (.:.. . . .~. )
T REA SUR Y
NEW S
17Rqc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
OmCE OF PUBtiC AFFAIRS ·1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C." 20220'" (202) 622-2960
For Immediate Release
Text as Prepared for Delivery
May 24, 1999
Small Business Week Luncheon
Secretary Robert Rubin
It is a pleasure to speak with all of you today, and let me welcome you to
Washington. Before I begin, let me congratulate all the small business people we
honor today. Your entrepreneurship, energy and hard work exemplify what is best
about our nation's small businesses, which are so central to our economy.
Today, I would like to discuss the state of our economy for a moment and then
discuss the steps we need to take to foster a strong economy for the future.
The United States continues to enjoy what many consider to be the best
economic conditions in recent memory -- the longest peacetime economic expansion in
our history, a very high rate of job creation, the lowest unemployment rate in decades,
and real increases in income across all income strata. The most likely scenario for the
U.S. economy remains solid growth and low inflation, subject to the usual ups and
downs. The strength of our domestic economy has helped insulate us from the
international financial crisis, now showing some signs of abating. There are, however,
some sectors that were hard hit by the crisis, either from increased imports and
decreased exports, and there is an overall risk to our economy from the imbalance in a
global economy where every major area of the global economy, other than the U.S. is
having slow or even negative growth.
Many factors have contributed to our economic success -- including the private
sector's restoration of competitiveness in a broad array of industries. And in no small
degree, small businesses have been critical to our current strong economic conditions.
Small businesses account for more than half of the nation's GOP and employ more
than 50 percent of the private workforce. But in addition to the role of the private
RR-316~
It press
releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
sector, the key and indispensable factor in our strong economy has been a sound
economic strategy grounded in investing in people for long term productivity, opening
markets abroad and dealing with financial instability abroad, and especially reestablishing and maintaining fiscal responsibility, beginning with the Deficit Reduction
Act of 1993.
Despite this progress, I believe that, in addition to the private sector maintaining
its competitiveness, there are three basic public policy challenges we must meet to
continue our present economic success in the years and decades ahead. All of these
challenges involve difficult choices, and the hard reality is that successful economic
decisions often involve tradeoffs and a recognition that what is good for the great
preponderance of workers, farmers and businesses, and the economy as a whole, and
in many instances may have a negative or dislocating impact on some. When I look
back over the last six and a half years that I have been in government, it seems to me
that the choices that have been the right one for our economy and society have almost
always been difficult politically, and have generally involved tough tradeoffs. It seems
to me that we need to remember that in the years ahead as we will inevitably continue
to face difficult decisions. The key is not to back away from the difficult path because of
the tradeoffs as some have advocated through impediments to technological advance
or closing our trading markets, but rather have programs that help those who are
dislocated successfully re-enter the economy as rapidly as is practical.
Now, to go to the three public policy challenges:
The first challenge is to continue to promote fiscal discipline. It is worth stopping
for a moment to see how far we have come on fiscal discipline, because we do tend to
forget. Between 1980 and 1992, the Federal debt had quadrupled, and in 1992 the
deficit was $290 billion and projected to continue growing. Now, as a result of the
difficult choices made, beginning in 1993, we have moved from an era of budget
deficits, to budget surpluses last year, this year, and projected for a long time to come.
The surpluses, the first since 1968, and that was for just one year, present a truly
historic opportunity to strengthen our economy for the future. The President has
proposed using these surpluses predominantly to promote national savings through
paying down the federal debt, in a program associated with strengthening Social
Security and Medicare, and through a tax incentive to promote savings. An alternative
view would use far more of the surplus for large tax cuts. In essence, the debate is
really over greater emphasis on increasing national savings while strengthening Social
Security and Medicare, versus a large tax cut.
Using the surplus for tax cuts or spending may be easier politically, but in our
view using the surpluses predominantly to promote fiscal responsibility and national
savings is the right path for our future.
Second, we must continue to invest in education and training and similar
productivity enhancing areas, including investment in programs to equip the residents
of the inner cities and other economically distressed areas for a real opportunity to join
the economic mainstream. Providing this opportunity is not simply a social issue or a
moral issue, but an economic issue of great personal importance to each of us, no
matter what our income may be or where we may:reside. Just think of the difference it
would make in terms of higher productivity and reduced social costs if the residents of
these areas had greatly increased opportunity and success in joining the economic
mainstream.
A key aspect of promoting growth in economically distressed areas is to help
foster the creation of small businesses in those areas. At Treasury, we have been
focused on this issue by working to expand access to capital through programs like our
Community Development Financial Institutions Fund and the Community Reinvestment
Act. At the same time, through the just developed BusinessLiNC initiative, we are
working to expand small business access to the networks of information and resources
that larger businesses can offer. Launched last year by the Vice President,
BusinessLlNC, which stands for business learning information, networking and
collaboration, encourages large businesses to develop mutually beneficial relationships
with smaller businesses, especially in economically distressed areas. Larger firms can
reach new markets, and strengthen their supplier base. Smaller firms receive expert
advise, improve market access, strategic planning guidance, and management
development. In essence, this initiative expands on the idea of business mentoring.
The President has also launched a "New Markets" Initiative to spur up to $15
billion in new equity investment in businesses in low and moderate income
communities, including a new tax credit worth 25 percent of the amount invested in
local development funds and new SBA centered sources of capital. We look forward to
working with the Congress to pass this legislation, which already has bi-partisan
support.
The third and final challenge we must meet is to continue to provide leadership in
the global economy. A successful strategy here includes three components: promoting
growth and reform in the developing world and countries transitioning from communism;
dealing with the problems of financial instability and crisis when they occur, and in the
long term, strengthening the architecture of the international financial system; and
finally, opening markets abroad and keeping our markets at home open. Again, all of
these areas are the focus of great debate, and require difficult choices, yet they all are
enormously important to our economic well-being. For example, foreign aid, including
our contribution to the World Bank, which some view as charity, is in fact, a very good
investment in our economic well-being. This helps promote growth and reform in
developing countries, which twenty years ago, were largely irrelevant to us
economically and now absorb over 40 percent of our exports. Yet the effort to achieve
funding for bi-Iateral foreign aid and for the World Bank and its sister multi-international
development banks, is always very difficult. And, of course, the struggles around
opening markets abroad and maintaining open markets here are also always very
difficult. I would like to elaborate on that point for a moment.
There is no doubt in my mind that open markets here and abroad have
contributed greatly to profitability, job growth, and increased standards of living during
the healthy economy of the past 6-112 years. Small businesses across the country
have benefitted enormously as a result of more open markets abroad and an increasing
number of small businesses, including many of you, sell products abroad. And
maintaining our open markets at home, through lower prices for both consumers and
producers, and increased competitiveness promoting greater productivity, have
contributed to lower inflation and lower interest rates and hence, again, more job
growth, higher standards of living, and greater profitability. It is worth noting that
Continental Europe, with its less open markets, has persistent 10-12 percent
unemployment and virtually no new job creation, while the United States, with its
relatively open markets, has 4.3 percent unemployment and six years of vigorous job
creation.
Throughout my tenure as Treasury Secretary, I have been very concerned by the
ongoing pressures to reduce access to our markets, pressures that have only increased
as a consequence of our large and growing trade deficit, which is largely the result of
the economic performance of the rest of the world being weak relative to ours.
In addition to reducing the benefits of open markets I have just cited, restricting
access to our markets would create an even greater than usual risk to our exporters. It
would hamper the recovery in crisis countries that is so important to our exporters and
to our own economic well being, and it could strengthen the voices of protectionism in
industrial and developing countries around the world, which in turn could severely affect
our exports and our economy as a whole.
The adverse effects of imports are concentrated, and the voices of those
adversely affected are strong. The benefits of trade openness are more widely
dispersed -- indeed, those who benefit are often unaware that they are doing so -- and
the result is fewer, fainter voices for open markets. All of us need to work together to
increase the awareness that open markets here and opening markets abroad are
critical to business profitability, job growth and increased standards of living. And at the
same time, we need effective programs to help those who are dislocated by trade to
successfully re-enter the economy.
To conclude, I think the United States is very well positioned for success in the
global economy of the 21 sl century. And I have no doubt that small businesses, which
play such a critical role in our economy, will continue to do so. However, to realize our
potential, we must -- in both the public and private sectors -- meet the challenges that
the greatly changed global economy poses. That will require making tough decisions, in
both the private and the public sectors. If we continue making those decisions, the
decades ahead can be very good for our economy and our country. Thank you very
much.
-.10-
DEI' :\ I~ T l\I E N T
0 Ji'
:r H
I~
,.
n. E A S U l{ Y
,
TREASURY
.
"
,
NEWS
OFFICE OF PUBLIC AfFAIRS. 1500 PKNNSYLVANIA AVENUE. N.W .• WASHlNGTON. D.C .• 20220. (201) 612·2960
EMBARGOED UNTIL 2:30 P.M.
May
CONTACT:
20, 1999
Office of Financing
202/691-3550
TREASURY OFFERS 13-WEEK, 26-WEEK, AND 52-WEEK BILLS
The Treasury ~ll auction three series of Treasury bills totaling
$25,000 million to refund $25,625 million of publicly held
securities maturing May 27, 1999, and to pay down about $625 million.
approx~tely
In addition to the public holdings, Federal Reserve Banks for their own
accounts hold $12,973 million of the maturing bills, which may be refunded at
the highest discount rate of accepted competitive tenders. Amounts issued to
these accounts will be in addition to the offering amount.
Tbe maturing bills held by the public include $4,922 million held
by Federal Reserve Banks as agents for foreign and international monetaxy
authorities, which may be refunded within the offering amount at the highest
discount rate of,accepted competitive tenders. Additional amounts may be
issued for such accounts if the aggregate amount of new bids exceeds the
aggregate amount of maturing 'bills. For purposes of determining such
additional amounts, foreign and international monetary auchoricies are
considered to hold $3,656 million of the original 13- and 26-week issues, and
$1,266 million of the original 52-week issue.
customers requested that we reinvest their maturing
holdings of ~proximately $883 million into the 13-week bill, $679 million
into the 26-week bill, and $597 million into the 52-week bill.
Trea~Direct
Tenders for the bills
~ll
be received at Federal Reserve Banks and
6ranches c.nd at the Bu:.r:-eau of the Public Debt, Washington, D.C. This offering of Treasury securities is governed by che terms and conditions set forth
in the Uniform Offering Circular for the Bale and Issue of Marketable Bookmtry Treasuxy Bills, Notes, and Bonds (31 CFR Part 356, as a.me.nded),
Details about each of the new securities are given in the attached
Iffering highlights.
000
ttachme.nt
R-3166'
or press reuases. speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
DXOHLXDHTB
O~
~~eUfty
TO
BE
ISSUBD MAY
OrPBRX~QB
27,
~r
D~LL&
1999
May :lO,
Offering Amount . . . . . . . . . . . . . . . . . . • • $7,500 million
Description of Offering I
~erm ~nd type of security •••....•.. 91-d~y bill
COSIP number .•..•••....••••••.•.••• 912795 CL 3
Auotion date • . . . . . . . . . . . . . • . . . . . • • • May 24, 1999
IS8Ue ~te ........•...........•.••• May 27, 1999
Maturity d&te •....•.•...•••••.....• August 26, 1999
Oxigin~l issue date ......•••......• February 25, 1999
Currently outstanding . . . . . • . . . . . . . • $11,423 million
Minimum bid ~ount ~ multiples ..• $l,OOO
~e
fo~lowin~
$7,500 million
$10,000 million
183-day bill
912795 CW 9
May 24, 1999
May 2'1, 1999
November 26, 1999
364-day bill
912795 DX 6
May 25, 1999
May 27, 1999
May 25, :;10 00
May 27, 1999
~lay
2'1, 1999
$1,000
"1999
$1,000
rules apply to all securities mentioned above:
Submission of Bidsl
Noncompetitive bids . . . . . . Accepted in full up to $1,000,000 at the hi~hest discount rate of accepted
comp~titive bids.
Competitive bids . . . . . . . . . (1) Muat be eKpressed as a discount rate with three decimals in increments
of .005%, e.g., 7.100%, 7.105%.
(2) Net long position for each bidder must be reported when the awm of the
total bid ~ount, at all discount rates, and the net long position is
$1 billion or greater.
(3) Net long position" must be determined as of one half-hour prior to the
closing time for receipt of competitive tenders.
U&ximum Recognized Bid
at a Single Yield •.....•. 3S% of public offering
Maximum Award .......•.••..•. 35% of publio offering
Receipt of Tenders:
Nonco~petitive tenders ... Prior to 12100 noon Eastern D~light Saving time on auction day
Competitive tenders •••.•. Prior to 1,00 p.m. Eastern D~light Saving ti~ on auction day
Paym9nt Terms . . . . . . . . . . . . . . . By charge to a funds account ~t a Federal Reserve Bank on issue date, or
p~ent of full par ~unt with tender.
Tre48uryDlrect customers can use the
p~ Direct feature which authorizes a charge to their account of record at
their financi~l institution on issue d&te.
DEPARTMENT
lREASURY
OF
THE
TREASURY
NEWS
~~/78~9~. . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
............................
OFFICE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622-2960
For Immediate Release
May 25, 1999
Contact: Public Affairs
(202) 622-2960
TREASURY SECRETARY ROBERT E. RUBIN HOSTS CAREER ACADEMY FORUM
Treasury Secretary Robert E. Rubin and Under Secretary .lames E . .Johnson will be joined by
officials from the Departments of .Iustice and Health and Human Services to host a Career
Academy Forum and Dialogue on Wednesday, May 26 from 8:30 a.m. to 12:30 p.m. in
Treasury's Cash Room at 1500 Pennsylvania Avenue, N.W.
Media without Treasury, White House. State. Defense or Congressional press credentials
planning to attend should contact Treasury's Office of Public Affairs at (202) 622-2960 with the
following information: name, social security number and date of birth. This information may
also be faxed to (202) 622-1999.
RR-3167
.". press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
NEWS
. . . . . . . . . . . . . .~s&q. . . . . . . . . . . . . .. .
OffiCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE. N.W.• WASHINGTON. D.C .• 20220. (202) 622.2960
EMBARGOED UNTIL 10 A. M. EDT
Text as Prepared for Delivery
May 26, 1999
TREASURY UNDER SECRETARY GARY GENSLER
TESTIMONY BEFORE THE HOUSE COMMITTEE ON BANKING
AND FINANCIAL SERVICES
Chairman Leach, Ranking Member La Falce, members of the Committee, it is an
honor to appear before you today. I will speak in support of reauthorization of the
Community Development Financial Institutions (CDFI) Fund and the enactment of the
Program for Investments in Micro-entrepreneurs (PRIME) Act, which authorizes the CDFI
Fund to provide valuable support to micro-enterprise organizations and micro-entrepreneurs. I
am pleased to be here with Ellen Lazar, the Director of the CDFI Fund and Maurice Jones, the
Deputy Director for CDFI Fund Policy and Programs.
I want to thank Representatives Vento and Roukema for introducing the CDFI Fund
Amendments Act, Representative Rush and Chairman Leach for introducing the PRIME Act
and the members of this committee who have co-sponsored the Act. Both bills have received
significant bipartisan support, and the Administration strongly supports their enactment. I
also want to acknowledge the important role of this committee in bringing our attention to the
areas in which the program could be improved.
OVERVIEW OF THE CDFI FUND
The CDFI Fund helps to promote private sector growth in economically distressed
areas. In so doing, it helps to bring low income Americans into the economic mainstream.
CDFIs are specialized financial institutions that meet the needs of underserved communities.
They include credit unions, microenterprise funds, development banks, and equity or loan
funds. Their mission is to provide financial services to those who are typically overlooked by
traditional financial providers. CDFls make financially sound loans, based on local market
RR-3168
rpress releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
<
and customer knowledge, to homeowners, small businesses, and non-profit organizations. In
so doing, CDFIs expand the reach of the private sector marketplace to the underserved
communities. In addition, they demonstrate to traditional lenders that these are viable
markets.
The role of the CDFI Fund is to strengthen and grow these institutions. The Fund
pursues this strategy through a series of programs. The CDFI program provides equity,
loans, grants and technical assistance to CDFIs. The Bank Enterprise Awards (BEA) program
funds financial institutions that increase their lending and other financial services in distressed
communities. The non-monetary Presidential Awards for Excellence in Microenterprise
Development stimulates interest in micro enterprises and highlights best practices in the field.
The Fund's training program will develop curriculum and deliver training to CDFIs to help
them increase their capacity.
These programs are complementary and mutually reinforcing. By working to build the
strength of local financial institutions, these programs respond to the needs of small businesses
in individual communities, and establish local sources of development finance.
So far, the CDFI program has made over 200 awards in excess of $135 million to
CDFIs around the country. The Fund expects to award over $60 million more to CDFIs this
summer. The leveraging of the Fund's investment is powerful. We require these CDFIs to
match our dollars at least one-to-one. CDFIs, in tum, further leverage the Fund's investment
by attracting additional sources of capital, attracting additional deposits, partnering with other
lenders, or co-investing with other equity investors. A survey of the Fund's first year of
awards in 1996 showed that $34 million in federal dollars helped to stimulate $565 million in
community development loans and investments.
Under the Bank Enterprise Awards, banks and thrifts are increasing investments in
CDFIs. The Fund's $58 million in BEA awards have already leveraged $983 million in bank
investments and support, 17 times the Fund's awards.
With important insight and advice gained from the Subcommittee on Government
Oversight of this Committee, Ellen Lazar and her team have undertaken the necessary
improvements to the Fund's financial and program management, reporting systems, internal
controls, operating procedures, and awards monitoring. This year, the Fund received a
positive audit from KPMG Peat Marwick, LLP, and the audit verified that the Fund had
successfully corrected all material weaknesses identified in last year's audit. In sum, the CDFI
Fund has a strong management team in place, with a sound infrastructure. It is wellpositioned to serve low income communities in the years ahead.
THE CDFI FUND'S SUPPORT FOR MICRO-ENTERPRISE
CDFIs are part of the Administration's broader effort to help bring greater capital and
2
investment into America's economically distressed areas. The President's FY2000 budget
provides $125 million for CDFI programs, including $15 million for implementing the PRIME
Act. It also increases funding for the SBA micro loan program and other similar programs
that stimulate micro entrepreneurial activities in communities throughout the nation.
The Fund currently supports micro-enterprise in many ways.
First, as part of the CDFI program, the Fund provides grants, loans and technical
assistance to strengthen the capacity of CDFls, including micro-enterprise organizations whose
primary mission is to provide financial assistance to low income borrowers or in low income
communities.
Second, the Fund plays a leadership role in the micro-enterprise field through the
Presidential Awards for Excellence in Microenterprise Development. The Awards reflect an
on-going commitment by the Administration to advance the role that microenterprise
development plays in enhancing economic opportunities of all Americans, especially those that
lack access to traditional sources of credit such as women, low income people, and minorities.
For example, in 1998, the Northeast Entrepreneur Fund, Inc. of Minnesota received
the Presidential Award for Excellence in Microenterprise Development for providing training
and technical assistance to 2,700 people. They also made $1.2 million in loans to 123
businesses, of which 84 % were owned and operated by low income entrepreneurs from seven
rural counties in Northeastern Minnesota. In fact, over 60 % of businesses they financed were
start-ups, and 85 % of these businesses survived over two years.
Third, the President, by Executive Memorandum, has charged the Fund with the
coordination of micro-enterprise programs across the federal government. The Fund has been
leading that effort along with the Small Business Administration (SBA). We believe these
efforts will help the micro-enterprise field in the years ahead.
THE PRIME ACT
The Microenterprise field in the United States has grown significantly over the past ten
years. However, we believe that there is more that can be done. PRIME is an essential
component of the Administration's broad micro enterprise strategy. Its unique features are that
it funds training for low income entrepreneurs and that it provides targeted assistance to the
most vulnerable and lowest income entrepreneurs. It also complements other microenterprise
efforts like the SBA micro loan program, which we believe Congress should fully fund in
FY2000.
The PRIME Act would authorize the CDFI Fund to support micro-enterprise
development organizations that provide training and technical assistance to microentrepreneurs, complementing the Fund's existing authority to support micro-enterprise
3
organizations whose primary focus is financial assistance. We believe that the PRIME Act
will help maintain and strengthen the capacity of local microenterprise development institutions
to serve impoverished areas. The CDFI Fund has demonstrated strength in building strong
local institutions to develop economically distressed communities.
While capital is critical for a small business to grow, it is not enough. Often, the
difference between success and failure for any business is the availability of sound business
advice, and that is particularly true for low-income micro-entrepreneurs. But such assistance
is hard to find. The PRIME Act will help micro-businesses develop the expertise that they
need to succeed. And these successful small businesses can help low income families increase
their income while improving the local business climate.
CONCLUSION
Mr. Chairman, the Fund's vision is practical and thoughtfully developed. The Fund's
investments are making a difference. Enactment of the CDFI Fund reauthorization would
ensure that the Fund can continue to be a stable and reliable source for local CDFIs to help
grow small businesses, build affordable homes, and strengthen communities in the years
ahead. Furthermore, the enactment of the PRIME Act would bring critical technical assistance
to micro-enterprises and help strengthen the capacity of the field.
Thank you again for your support and we look forward to working with you in
enacting the CDFI Fund's reauthorization, and the PRIME Act.
-30-
4
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
R IMMEDIATE RELEASE
Y 24, 1999
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
May 27, 1999
August 26, 1999
912795CL3
Term:
Issue Date:
Maturity Date:
CUSIP Number:
4.495%'
High Rate:
Investment Rate 1/:
Price:
4.621%'
98.864
All noncompetitive and successful competitive bidders were awarded
:urities at the high rate.
Tenders at the high discount rate were
.otted 56%'.
All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Competitive
Noncompetitive
Accepted
Tendered
Tender Type
$
21,663,536
1,315,006
$
7,198,542 :2
22,978,542
PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
5,883,536
1,315,006
302,259
302,259
23,280,801
7,500,801
3,968,180
18,541
3,968,180
18,541
-----------------
TOTAL
$
27,267,522
$
11,487,522
Median rate
4.480%: 50%' of the amount of accepted competitive tenders
tendered at or below that rate.
Low rate
4.390%:
5% of the amount
ccepted competitive tenders was tendered at or below that rate.
to-Cover Ratio = 22,978,542 / 7,198,542 = 3.19
quivalent coupon-issue yield.
wards to TREASURY DIRECT = $975,132,000
70
http://www.publlcdebt.treas.gov
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
WASHINGTON DC
BUREAU OF THE PUBLIC DEBT
CONTACT:
IMMEDIATE RELEASE
24, 1999
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
183-Day Bill
May 27, 1999
November 26, 1999
912795CW9
Term:
Issue Date:
Maturity Date:
CUSIP Number:
4.570%
High Rate:
Investment Rate 1/:
Price:
4.756%
97.677
All noncompetitive and successful competitive bidders were awarded
lrities at the high rate.
Tenders at the high discount rate were
)tted 93%.
All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
competitive
Noncompetitive
$
20,172,625
1,040,062
$
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
3,395,375
1,040,062
4,435,437 2/
21,212,687
PUBLIC SUBTOTAL
TOTAL
Accepted
Tendered
Tender Type
3,071,171
3,071,171
24,283,858
7,506,608
3,860,000
187,129
3,860,000
187,129
28,330,987
$
11,553,737
vJedian rate
4.560%: 50% of the amount of accepted competitive tenders
:endered at or below that rate.
Low rate
4.470%:
5% of the amount
:cepted competitive tenders was tendered at or below that rate.
:O-Cover Ratio = 21,212,687 / 4,435,437 = 4.78
~ivalent
coupon-issue yield.
lards to TREASURY DIRECT = $743,340,000
71
http://www.pubUcdebl.lreas.gov
D EPA R T 1\1 E N T
0 F
THE
T REA SUR Y
NEWS
~~178~9~. . . . . . . . . . . . . . . . . . . . . . . . . . . ..
..........................
OmCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. _ 20220 - (202) 622-2960
Weekly Release of U.S. Reserve Assets
May 25, 1999
The Treasury Department today released U.S. reserve assets data for the week ending
May21,1999.
As 111dicated in this table, L;.s. reserve assets totaled $71,825 million as of May 21, 1999,
down from $72,301 million as of May 14, 1999.
u.s. Reserve Assets
(millions of US dollars)
1999
Total
Reserve
Special
Foreign
Currencies
Reserve
3/
Assets
Gold
Stock 1/
Drawing
R'19ht s 2/
ESF
SOMA
Position in
IMF 2/
May 14, 1999
72,301
11,049
9,883
14,839
14,835
21,696
May 21,1999
71,825
11,049
9,774
14,711
14,710
21,582
Week Ending
Gold stock IS valued monthly at $42.2222 per fine troy ounce. Values shown are as of March 31, 1999. The February 28,
)99 value was $11,047 million.
I
I
SDR holdings and the reserve posiuon in the IMF are based on IMF data and revalued In dollar terms at the offiCial
)R/ dollar exchange rate. Consistent with current reporting practlces, Ii\fF data for May 14, 1999 are final. Data for SDR
lldings and the reserve position in the IMF shown as of May 21, 1999 (in italics) reflect prel.inunary adjustments by the Treasury
the May 14, 1999 IMF data.
, Includes holdillgs of the Treasury's Exchange Stabilizatlon Fund (ESF) and the Federal Reserve's System Open ~Iarket
:COunt (SOl\L\). These holdings are valued at current market exchange rates or, where appropnate, at such other rates as may be
reed upon by the parties to the transactions.
-3l72
r press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
t1\
OFFICE OF PUBLIC AFFAIRS - 1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C.- 20220 - (202) 622·2960
EMBARGOED UNTIL 2: 30 P _M_
Contact:
May 25, 1999
Office of Financing
202/691-3550
TREASURY TO AUCTION CASH MANAGEMENT BILLS
The Treasury will auction approx~ately $11,000 million of 14-day
Treasury cash management bills to be issued June 1, 1999.
Competitive
Reserve Banks and
maintained on the
(TreasuryDirect).
Debt, Washington,
and noncompetitive tenders will be received
Branches. Tenders will not be accepted for
book-entry records of the Department of the
Tenders will not be received at the Bureau
D.C.
at all Federal
bills to be
Treasury
of the Public
Additional amounts of tbe bills may be issued to Federal Reserve Banks
as agents for foreign and international monetary authorities at tbe higbest
discount rate of accepted competitive tenders.
The auction being announced today will be conducted in tbe single-price
auction format.
All competitive and noncompetitive awards will he at the
highest discount rate of accepted competitive tenders.
This offering of Treasury securities is governed by the terms and conditions set forth in the Uniform Offering Circular for the Sale and Issue of
Marketable Book-Entry Treasury Bills, Notes, and Bonds (31 CFR Part 356, as
amended) •
NOTE:
Competitive bids in cash management bill auctions must be
expressed as a discount rate with two decimals, e.g., 7.10%.
Details about the new security are given in the attached offering
highlights.
The Treasury expects to announce another short-term cash managamsnt
bill on June 1, 1999, at 11:00 a.m. Eastern Daylight Saving time.
000
For press releases, speeches, public schedules and official biographies, call Okr 14-hour fax li1le at (202) 622-2040
HIGHLIGHTS OF TREASURY OFFERING
OF 14-DAY CASH MANAGEMENT BILL
May 25, 1999
Offering Amount . . . . . . . . . . . . . . . . . . . . $11,000 million
Description of Offering:
Term and type of security ..........
CUSIP number . . . . . . . . . . . . . . . . . . . . . . .
Auction date . . . . . . . . . . . . . . . . . . . . . . .
Issue date . . . . . . . . . . . . . . . . . . . . . . . . .
Maturity dat.e . . . . . . . . . . . . . . . . . . . . . .
Original issue dat.e . . . . . . . . . . . . . . . .
Minimum bid amount and multiples ...
SubmissioD of Bids:
Noncompetitive bids
Competitive bids . . . . . . . (1)
(2)
(3)
14-day Cash Management Bill
912795 GV 7
May 27, 1999
June 1, 1999
June 15, 1999
June 1, 1999
$1,000
Accepted in full up to $1,000,000 at
the highest accepted discount rate.
Must be expressed as a discount ra.te with
two decimals, e.g., 7.10\.
Net long position for each bidder must
be reported when the sum of the total bid
amount,' at all discount rates, and the
net long position is $1 billion or
greater.
Net long position must be determined as
of one half-hour prior to the closing
time for receipt of competitive tenders.
Maximum Recognized Bid
at a Single Yield . . . . . . . . . 35\ of public offering
Kax~
Award . . . . . . . . . . . . . . . . 35% of public offering
Receipt of Tenders:
Noncompetitive tendere
Prior to 12:00 noon Eastern Daylight
Saving t~. on auction day
Competitive tenders . . . . . . . . Prior to 1:00 p.m. Eastern Daylight
Saving t~e on auction day
Payment Terms " " "
. . . . . . . . . . By charge to a funds account at a Federal
Reserve Bank on issue date, or payment of
full par amount with tender.
PUBLIC DEBT NEWS
'partment of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
Office of Financing
202-691-3550
CONTACT:
MMEDIATE RELEASE
5, 1999
RESULTS OF TREASURY'S AUCTION OF 52-WEEK BILLS
364 -Day Bill
May 27, 1999
May 25, 2000
91279SDX6
~rm:
3sue Date:
lturi ty Date:
lSIP Number:
4.630%
High Rate:
Investment Rate 1/:
Price:
4.879%
95.319
1 noncompetitive and successful competitive bidders were awarded
ties at the high rate.
Tenders at the high discount rate were
ed 38%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
~nder
mpetitive
ncompetitive
$
20,409,463
996,325
$
1,266,000
1,266,000
22,671,788
10,009,078
5,145,000
134,000
5,145,000
134,000
reign Official Refunded
SUBTOTAL
ieral Reserve
eign Official Add-On
$
7,746,753
996,325
8,743,078 2/
21,405,788
PUBLIC SUBTOTAL
AL
Accepted
Tendered
Type
27,950,788
$
~n rate
15,288,078
4.615%: 50% of the amount of accepted competitive tenders
;red at or below that rate.
Low rate
4.570%:
5% of the amount
ed competitive tenders was tendered at or below that rate.
Iver Ratio = 21,405,788 / 8,743,078
='
2.45
lent coupon-issue yield.
to TREASURY DIRECT =' $708,604,000
http://www.publicdebt.treas.gov
DEPARTMENT
OF
THE
TREASURY
~~178~9~. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
............................
OmCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622·2960
EMBARGOED UNTIL 10:00 am EDT
Text as Prepared for Delivery
May 26, 1999
COMMUNITY DEVEWPMENT FINANCIAL INSTITUTIONS FUND DIRECTOR
ELLEN W. LAZAR
TESTIMONY BEFORE THE HOUSE BANKING COl\1MITTEE
INTRODUCTION
Chairman Leach, Congressman LaFalce and distinguished Members of the Committee, it is a
pleasure to be before you today to represent the Community Development Financial
Institutions Fund (the CDFI Fund or the Fund). I am Ellen Lazar, the Director of the Fund.
Before I begin my testimony, I would like to introduce you to two other key members of the
Fund who are with me today: Paul Gentille, Deputy Director for Management/Chief Financial
Officer of the Fund, and Maurice Jones, Deputy Director for Policy and Programs at the
Fund.
STRONG AND EFFECTIVE MANAGEMENT
Since becoming Director of the Fund in January of 1998, one of my top priorities has been the
implementation of improvements to the Fund's financial and program management, reporting
systems, internal controls, operating procedures, and awards monitoring. I am very pleased to
report to the Committee that over the past 16 months we have made great progress in these
areas. I would also like to acknowledge the role the Committee (particularly the Subcommittee
on General Oversight) has played in helping to strengthen the Fund's organizational capacity.
In the Fund's financial audit for Fiscal Years 1995 through 1997, our independent auditors,
KPMG Peat Marwick, LLP (KPMG), provided an unqualified opinion, affirming that our
financial statements fairly presented the financial position of the Fund as of September 30,
1997, 1996, and 1995. KPMG also confirmed our identification of material weaknesses that
we needed to correct.
RR-3175
press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
., IS GOl/penmAnt Driolian ou cp
1999· 619·559
KPMG recently completed the Fund's fiscal year 1998 audit, and I am pleased to report that
we have again received an unqualified opinion. In addition, KPMG verified that we have
successfully corrected all material weaknesses identified in last year's audit. They have
reported no new material weaknesses for this year's audit.
We are in compliance with the Federal Managers' Financial Integrity Act (FMFIA). Our
system of internal management, accounting and administrative control has been strengthened
and is operating effectively. Our enhanced policies and procedures ensure that our programs
achieve their intended results; our resources continue to be used in a manner that is consistent
with our mission; and our programs and resources are protected from waste, fraud, and
mismanagement.
As evidenced by our auditor's report, the Fund has taken critical steps to strengthen and build
its infrastructure and hire staff. During FY 1998, a Deputy Director for Management/Chief
Financial Officer, Awards Manager and Financial Manager were hired -- critical positions for
ensuring proper internal controls and accountability. In addition, a Deputy Director for Policy
and Programs was appointed and program managers for each program were hired. The Fund's
legal department was substantially increased and additional staff have been hired to help carry
out the Fund's many programs. Our enhanced internal procedures and staff capacity has
helped us to deliver more effectively our award dollars to the institutions selected to receive
awards. For example, with respect to our Core Component CDFI Program, all of our 1996
awardees have received disbursements and 92 percent of our 1997 awardees have received
disbursements. We are currently disbursing the 1998 awards, which were announced in late
September of last year. We anticipate disbursing funds to all 1998 awardees by August of this
year. Our 1999 awards have not yet been determined.
The Fund is committed to managing for results. We have undertaken a rigorous review of the
Fund's five-year strategic plan, goals, and performance measures. I am happy to report that
we have completed this process and have forwarded to you our new strategic plan along with
our 1998 Annual Report. The Fund was established by Congress in 1994 and I would like to
again, acknowledge the strong role this Committee has played as we work to achieve our
mission.
STRENGTHENING COMMUNITIES: PROVIDING ACCESS TO CAPITAL
Overview
The Fund's mission is to promote access to capital and local economic growth by directly
investing in and supporting community development financial institutions (CDFIs) and
expanding banks' and thrifts' lending, investment, and services within underserved markets.
Currently, the CDFI Fund pursues its mission primarily through five initiatives: the CDFI
Program, which includes the Core, Technical Assistance and Intermediary Components; the
2
Bank Enterprise Award (BEA) Program; the Presidential Awards for Excellence in
Microenterprise Development; the Native American Lending Study and Action Plan; and our
Policy and Research Programs. The CDFI Fund also administers a Certification Program for
community development financial institutions.
CDFI Program and Certification
The CDFI Program has three funding components: Core, Intermediary and Technical
Assistance. These three components promote the CDFI Fund's goal, articulated in its strategic
plan, of strengthening the expertise and the financial and organizational capacity of CDFIs to
address the needs of the communities that they serve. CDFIs include community development
banks, community development credit unions, non-profit loan funds, micro-enterprise loan
funds, and community development venture capital funds.
Under each component, the CDFI Fund selects awardees through a rigorous and competitive
evaluation process. The Fund examines, among other things, the applicant's financial
strength, management capacity, programmatic track record and, if applicable, ability to raise
matching funds. The Fund selects awardees that clearly demonstrate private sector market
discipline and the capacity to positively impact underserved communities long after they have
received assistance -from the Fund.
The Core Component builds the financial capacity of CDFIs by providing equity investments,
grants, loans or deposits to enhance the capital base -- the underlying financial strength -- of
these organizations so that they can better address the unmet community development needs of
their target markets. In addition, under the Core Component, the Fund provides technical
assistance grants in conjunction with loans and investments in order to maximize the
community development impact of the Fund's awards. This component leverages additional
private and public sector investments into these CDFls through its one-to-one non-federal
match requirement for financial assistance.
The lntennediary Component allows the Fund to invest in additional CDFls indirectly, through
intermediary organizations that support CDFls. These intermediary entities, which are also
CDFIs, generally provide intensive financial and technical assistance to small and growing
CDFIs, thereby strengthening the industry's financial and institutional capacity. The
Intermediary Component also has a one-to-one non-federal match requirement for financial
assistance.
Since inception, under the Core and Intermediary Components, the Fund has made 135 awards
totaling $ 132 million.
The Technical Assistance (TAJ Component of the CDFI Program is the Fund's newest funding
program. Introduced in 1998, this component builds the capacity of startup, young and small
institutions. The TA Component allows the Fund to direct relatively small amounts of funds
3
to CDFIs that demonstrate significant potential for generating community development impact
but whose institutional capacity needs to be strengthened before they can fully realize this
potential.
In the first T A Component round held in 1998, the Fund awarded $3 million to 70 institutions.
Under the 1998 funding rounds, the Fund awarded a total $54 million to 54 institutions
through its CDFI Program. In 1998 as in all previous years, demand for CDFI Program
funding far exceeded the funding we announced as available. Under the Core and Technical
Assistance Components we announced the availability of approximately $45 million. We
received requests for more than $176 million.
For 1999, with the help of the $95 million appropriated to the Fund for FY 99, we anticipate
that we will make $62 million in awards to 130 institutions under the CDFI Program. In
October, the Fund published the FY 99 Notice of Funds Availability (NOFA) for both the
Core and Intermediary Components, announcing a total of $57.5 million available, $50 million
for the Core Component and $7.5 million for the Intermediary Component. We received 153
Core applications requesting a total of $192 million. We anticipate making approximately 55
Core awards. We r~ceived eight Intermediary applications requesting a total of $16 million.
We anticipate making five Intermediary awards. In January, we published the FY 99 NOFA
for the Technical Assistance Component. With the $5 million available for T A awards, we
anticipate making 75 awards. We received 160 TA applications, requesting a total of $8.3
million.
To date, institutions in 43 states plus Puerto Rico and the District of Columbia have received
CDFI Program awards. To encourage applications from a diverse pool of applicants, the Fund
conducts informational workshops. Among the 19 Core and Intermediary workshops
conducted in 1998, five were located in States that have not had previous Core or Intermediary
Awardees. In March of this year, the Fund held 18 informational workshops on the Technical
Assistance Component around the country, again selecting several regions in which there are
no current awardees.
To further our goal of building the institutional capacity of the CDFI field, we provide
debriefings to applicants that are not selected for an award. Applicants are given valuable
feedback about strengths and weaknesses of their applications as observed by those community
development professionals involved in reviewing their requests for funding. Many of these
applicants use the information gathered from the debriefing to build the strength of their
operations and to improve their performance.
In addition to our CDFI funding programs, the Fund administers a CDFI Certification
Program. CDFI certification increases the credibility of community lending organizations in
the eyes of potential funders and investors. An organization that is certified is better able to
attract private sector investments from local banks, corporations, foundations, and individuals.
4
To date, we have certified a total of 300 organizations in 47 states, plus the District of
Columbia and Puerto Rico. New applications arrive each month.
Bank Enterprise Award Program
The Bank Enterprise Award (BEA) Program is the Fund's primary tool for pursuing its
strategic plan goal of expanding banks' and thrifts' community development lending and
investment activity. By providing incentives to these mainstream financial institutions, the
Fund encourages them to increase their investments in underserved communities. These
financial institutions do this in two ways: by providing loans, investments and services directly
to the communities in need; and indirectly, by investing in local CDFIs or other community
development programs, that then provide financial and development services to the
communities.
The leveraging involved in this program is impressive. To date, 124 banks and thrifts in 30
states have received $58 million in BEA funding. This $58 million actually translates into
investments in underserved communities of $983 million, seventeen times the amount of the
CDFI Fund's investment. The awardees have invested $712 million in direct loans,
investments and .services to the community, and $271 million into CDFIs .
.
The Fund increased its BEA awards in 1998 when it made 79 awards totaling $28 million. In
1996, we made 38 awards totaling $13.1 million; in 1997 we made 54 awards totaling $16.5
million. For the FY 99 funding round, we conducted twelve informational workshops around
the country and received 139 applications. The Fund anticipates selecting approximately 80 of
these institutions to receive awards totaling $25 million.
Presidential Awards for Excellence in Microenterprise Development
The Presidential Awards for Excellence in Microenterprise Development is a non-monetary
program administered by the Fund that recognizes and seeks to bring attention to organizations
that have demonstrated excellence in promoting micro-entrepreneurship. By recognizing
outstanding microenterprise organizations, the Presidential Awards seek to promote best
practices and bring wider public attention to the important role and successes of
microenterprise development especially in enhancing economic opportunities among women,
low-income people and minorities who have historically lacked access to traditional sources of
credit. This program is one of the ways that the Fund is promoting best practices in the
industry.
In February of this year, the President presented awards to six organizations for their work in
the microenterprise industry.
Native American Lending Study and Action Plan
5
Our Native American Lending Study and Action Plan is intended to stimulate private
investment on Indian Reservations and other land held in trust by the United States. The first
step in accomplishing this goal is identifying the barriers to private financing in these areas. In
1998, we launched an action plan that will examine lending and investment practices on Native
American lands, identify lending and investment barriers and their impacts, and make
recommendations for removing them. As part of that plan, we are holding workshops in 13
cities across the country this year. The workshops involve the Native American community,
financial institutions, state agencies and community development organizations. With the
assistance of the participants in these workshops, we anticipate that the study will be completed
in fiscal year 2000.
Policy and Research
The Fund is perhaps the largest single source of capital available to the CDFI industry
nationwide. It has access to data from hundreds of community development financial
institutions nationwide. This includes information about the institutions as well as their target
markets. In addition to baseline data derived from the process of certifying or funding
applicants, the Fund collects longitudinal data on all of its awardees over at least a five-year
period. Our poJi.cy and research goals include: measuring and reporting on the performance
and outcomes of the Fund and its awardees and seeking to advance the CDFI industry as a
whole through involvement in industry-wide research and development efforts.
In 1998 and 1999, we moved forward on the first of these, measuring and reporting on the
performance and outcomes of Fund awardees. As you know, the Fund invests in CDFls to
promote their long-term viability and ability to serve distressed communities. Today, I am
pleased to be able to report some preliminary findings of our efforts thus far with respect to
the accomplishments of our awardees.
PERFORMANCE AND IMPACT
Surveys
Using surveys, the Fund collected performance and outcome data on 30 of our 31 first-round
CDFI Core Component awardees. These awardees were chosen in 1996. We began our
evaluation on only first round awardees because they have had at least a year to absorb the
Fund's investments and put them to work. Our sample of 30 first round awardees includes six
credit unions, 14 loan funds, three community development banks, three venture capital funds,
two microenterprise programs, and two multifaceted CDFIs. Together, they received $34
million in CDFI awards. What has our $34 million helped these institutions to accomplish?
Our preliminary findings demonstrate that these awardees have generated significant
community development over the past three years. For example, they have made $565 million
in community development loans and investments. These loans and investments have helped
6
to create or expand 1,895 microenterprises and 1,148 businesses; create or retain 12,412 jobs;
develop 8,617 units of affordable housing, 98 childcare centers serving 7,168 children, 17
health care facilities serving 32,723 clients and 170 additional community, cultural, human
services and educational facilities. Further, these awardees have provided business training,
credit counseling, homebuyer training and other development services to 10,641 individuals.
Based on our sample, 70 percent of the clients of the average 1996 awardees are low-income
individuals. Sixty percent are minority individuals. Fifty percent are women. Fifty-three
percent live in the inner city. Eleven percent live in rural communities. Thirty-six percent
live in suburban areas.
Since receiving their Fund awards, the 1996 awardees in our sample have strengthened their
capacities to deliver products and services to their target communities. Their total assets have
increased by 122 percent, growing from $473 million in the aggregate before they received
their awards to $1.05 billion in the aggregate in 1998.
Case Studies
In addition to the outcomes surveys, the Fund is conducting in-depth case studies of a sample
of awardees. The c-ase studies include on site evaluations by the Fund to examine the CDFI's
activities within the local economic development context. To date, we have completed the
fieldwork for three case studies. We anticipate undertaking several more case studies in the
coming year. The three on site evaluations that have been completed thus far have been in
Boston, Massachusetts, San Antonio, Texas and Santa Cruz, California. Our initial research
suggests how CDFIs are positively affecting their communities.
In Boston, many of the city's poorer neighborhoods did not benefit from the economic growth
in the 1980s; their conditions actually worsened during that period. Yet these same
neighborhoods have experienced notable improvements in the past 10 years, thanks in no small
part to the work of CDFIs such as the Boston Community Loan Fund and the Local Initiatives
Support Corporation, two CDFI Fund awardees. These CDFIs have been critical behind-thescenes actors. They have provided badly needed financial and technical support to two of the
city's most effective community development corporations (CDCs), enabling the groups to
develop the scale necessary to carry out affordable housing and commercial projects that have
revitalized long-declining communities such as East Boston and Egleston Square. Since the
mid-1980s, the CDFIs have provided over $7.5 million to the CDCs, which in tum have: built
or rehabbed over 800 units of affordable housing; managed an additional 900 apartments and
commercial properties; and operated after-school and other programs for 150 neighborhood
youths. The CDFIs have also played a crucial intermediary role, working with bankers, city
officials, and corporate and foundation leaders to encourage additional targeted investment in
these neighborhoods. A number of bankers view the CDFIs as important partners in their
community development work, crediting the CDFIs with effectively serving organizations and
individuals that the banks cannot afford to serve.
7
All around San Antonio, public and private sector institutions recognize the important work of
ACCION Texas, a CDFI Fund awardee. From the city's Economic Development Office to
local Chambers of Commerce to banks ranging in size from local independent banks to Chase
Manhattan, ACCION is viewed as the source of financial services for a previously neglected -yet significant -- segment of the population: the low- and moderate-income micro
entrepreneurs who live and work in some of the city's poorest neighborhoods. ACCION is
seen as the organization that can get loan capital into the hands of this underserved population
-- and just as important -- get it back. ACCION's 400 clients include plumbers, electricians,
seamstresses, independent taxi drivers, and street vendors. They are primarily Hispanic.
Without ACCION, they would not have access to credit for their businesses. The stories are
by now familiar: these micro entrepreneurs do not have sufficient collateral; they don't have
good business records; or they don't need enough money to make them attractive to a bank.
With ACCION, they are able to get the financial and technical assistance they need to grow
their businesses and to make them more prosperous through better business management.
ACCION's success in San Antonio has led it to begin opening offices around the state, in the
Rio Grande Valley, Houston, Dallas, Austin, and Fort Worth.
In Santa Cruz county in California, the third largest community development credit union in
the nation, the Santa Cruz Community Credit Union (SCCCU), offers a wide range of
financial products and services designed to meet the financial needs of a predominantly rural
low income population. The need is perhaps greatest in Watsonville, where the unemployment
rate is 15.8 percent -- more than three times the national average. Adding to the
unemployment rate are the former-migrant agricultural workers who are settling in the area in
increasing numbers, even though agricultural work remains seasonal. The employment and
income figures highlighted the importance of focusing on the Watsonville population. With
the help of its CDFI Fund award, the Santa Cruz Community Credit Union opened a branch in
Watsonville so that it could ensure credit and banking access for all citizens, especially the
Latino population which had historically distrusted traditional banking enterprises due to
discrimination and neglect.
H.R. 629: Reauthorization
H.R. 629 proposes to extend the appropriations authorization for the CDFI Fund through FY
2003 and enable the Fund to more efficiently and effectively promote economic revitalization,
community development, and community development financial institutions (CDFIs).
The proposal is intended to improve the management of the Fund by clarifying that the
Secretary of the Treasury (Secretary) has supervisory responsibility over the Fund and that the
Treasury Inspector General is the Inspector General of the Fund. In addition, the proposal is
intended to improve the efficiency and effectiveness of four of the Fund's authorized
8
programs: the CDFI Program; the Training Program; the BEA Program; and the Small
Business Capital Enhancement (SBCE) Program.
As previously mentioned, under the CDFI Program, the Fund has authority to provide
technical assistance to CDFIs to enhance their abilities to serve their target markets. H.R. 629
proposes to expand the tools with which the Fund can provide such assistance by authorizing it
to enter into cooperative agreements with these organizations.
Currently, the Fund has authority to operate a training program for CDFIs and other members
of the financial services industry that engage in community development finance activities.
The reauthorization legislation will allow the Fund to administer this training through a
competitive grant program.
Under the BEA Program, the Secretary is authorized to award grants to insured depository
institutions that increase their level of qualified activities in the form of investments, loans,
technical assistance and deposits in both CDFIs and distressed communities. The current
eligibility criteria for determining which communities are distressed appear disadvantageous to
insured depository institutions serving rural communities. The proposal addresses this problem
by authorizing the Fund to promulgate alternative eligibility criteria.
The purpose of the SBCE Program is to promote economic opportunity and growth by
encouraging financial institutions to expand their lending to small businesses. Under the SBCE
Program, the Fund is authorized to enter into funding agreements with States in which it will
match on a quarterly basis up to 50 percent of a State's contributions to a small business loan
loss reserve. The Fund has not been able to implement the SBCE Program, because
implementation is contingent upon a $50 million, no-year appropriation. The proposal would
repeal this requirement. In addition, the proposal would allow CDFIs to participate in the
SBCE Program.
Finally, the reauthorization legislation contains safeguards designed to ensure that the Fund
administers its programs in an effective, proper and thorough manner.
H.R. 413: The PRIME Act
H.R. 413, the Program for Investment in Microentrepreneurs Act of 1999 (the PRIME Act),
was introduced in the House on January 19 of this year by Congressman Bobby Rush. House
Banking Chairman James Leach and Ranking Member John LaFalce are among the bill's
sponsors. Similar legislation was introduced in the Senate on February 10 of this year.
Senator Kennedy introduced the bill. Senators Domenici, Reid, Grassley, Abraham, Robb,
Collins, Boxer, Santorum, Sarbanes and Snowe are also sponsors of the bill.
In his FY 2000 budget, the President requests $15 million to administer a program under the
PRIME Act. Funding for PRIME is one part of the support for domestic microenterprise
9
programs contained in the President's FY 2000 budget. Overall, President Clinton's FY 2000
budget includes a 159 % increase in support for domestic microenterprise programs.
The primary purpose of the PRIME Act is to build the institutional strength of microenterprise
development organizations and programs and other qualified entities and assist these
organizations to effectively meet the training and technical assistance needs of low-income and
disadvantaged entrepreneurs. The proposed program would be a competitive grant program
under which the Fund would provide funds to microenterprise development organizations,
microenterprise development programs, intermediaries or other qualified organizations for the
following purposes: i) to provide training and technical assistance to low-income and
disadvantaged entrepreneurs interested in starting or expanding their businesses; ii) to engage
in capacity building activities in order to enhance their ability to serve low-income and
disadvantaged entrepreneurs; and iii) to engage in research and development activities aimed at
identifying and promoting entrepreneurial training and technical assistance programs that
effectively serve low-income and disadvantaged entrepreneurs.
PRIME would allow the Fund to meet a growing need that it currently cannot address. This is
the need to strengthen organizations that are providing critical training and technical assistance
to the most vulnerable population of entrepreneurs: low-income and disadvantaged
microentrepreneurs. One of the clearest lessons that has emerged from the first decade of
microenterprise development in the United States is that provision of training and technical
assistance is a necessary ingredient for building successful entrepreneurs. In the highly
developed U.S. economy, starting and running a successful business requires a solid
understanding of, among other things, business regulations, tax issues, record keeping, and
marketing. Many of the thousands of people who have started microenterprises to make ends
meet do not have these skills. PRIME would address this issue.
Several agencies within the Federal government currently support microenterprise-related
programs. They include the Small Business Administration (SBA), Department of
Agriculture, Department of Health and Human Services and the Department of Housing and
Urban Development. These programs, which have proven to be very effective, help to
empower individuals who are often left out of the economic mainstream. A sign of how
important these currently existing programs are to this Administration is the Administration's
budget request to significantly increase funds for the SBA' s microenterprise programs.
Except for SBA's Microloan Program, which provides technical assistance funding to lending
and non-lending intermediaries, most federal support for microenterprise-related programs is
in the form of loan capital. PRIME aims to effectively meet the training and technical
assistance needs of low-income entrepreneurs. It is a human capacity development strategy as
opposed to a credit and finance development strategy. It focuses on developing the knowledge
and skills needed to succeed in business, rather than on providing finance. Both strategies are
necessary to assist low-income people to enter the economic mainstream.
10
Also, PRIME is targeted to some of the most vulnerable citizens. While all PRIME funds are
targeted to economically distressed areas and to serve low-income individuals, at least 50
percent of the grants made under the PRIME program must be used to benefit very lowincome individuals, people with incomes of not more than 150 percent of the poverty line.
Further, in order for an organization to qualify for PRIME funds, it must be able to
demonstrate the ability to match any federal PRIME dollars with $0.50 for every dollar.
Should H.R.413 be enacted, the Fund would administer the PRIME Program in a manner
similar to its administration of its existing assistance programs. We would create a competitive
grant program. Under that program, the Fund would seek to provide grants to those qualified
organizations that demonstrate that they are viable institutions that can deliver quality training
and technical assistance services to disadvantage microentrepreneurs for some time to come.
CONCLUSION
Mr. Chairman, Members of the Committee, thank you for giving me the opportunity to
provide you with this information on the Fund's current activities and the proposed legislation
regarding its reauthorization and the PRIME Act. I look forward to working with you on this
legislation. I would be happy to respond to any questions you may have.
-30-
11
T 1\1 E N T
JRY
0 F
THE
T REA SUR Y
NEWS
~/78~9~. . . . . . . . . . . ..
____
-1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622-2960
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186
0 U i'.. P TE R i~blic schedules and official biographies, call our 24-hour fax line at (202) 622-2040
DEPARTl\lENT
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TREASURY
~~178~9~. . . . . . . . . . . . . . . . . . . .. .
......................
OFFICE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
Remarks as Prepared for Delivery
May 26,1999
TREASURY ASSISTANT SECRETARY FOR INTERNATIONAL AFFAIRS
EDWIN M. TRUMAN REMARKS TO THE
AFRICAN DEVELOPMENT BANK AND FUND ANNUAL MEETINGS
CAIRO, EGYPT
President Kabbaj, distinguished Governors of the African Development Bank, and honored
guests, it is an honor to represent the United States at this important occasion. I am especially
pleased to be in this grand city of Cairo which has given much to our past and present and remains a
key to our future hopes of peace and economic prosperity in Africa and globally. I thank the
Egyptian Government and people for a most warm and memorable welcome.
We come together at a time of transition. The world continues to make difficult adjustments
following the end of the Cold War. Political and economic reforms are sweeping through many
regions. In Africa, the emergence of a new generation of leaders and the coming of age of
populations born after the colonial period have led to dramatic transformations of political and
economic arrangements, increasing potential for constructive change.
Sadly, for Africa and for too many others in the world, too much of the change has been
violent. Some 20 percent of Africans live in countries formally at war or disrupted by war. While
some may unwillingly be drawn into conflict to protect their homes or fundamental human rights,
others may have baser motives Military and human expenditures continue to take a terrible toll on
affected populations.
On a brighter note, much of Africa is striving to find a new balance and address its own
problems through peaceful and democratic processes
•
In recent years, civil society has grown stronger and public participation is spreading. Thirty
governments have held elections during the past several years.
•
Within days, we shall applaud peaceful and democratic political transitions in two of Africa's
largest countries, Nigeria and South Africa. Nigeria's recent election adds about 100 million
people to the number of Africans who have gained a voice in their own government.
•
In many countries, economic reform has been underway for over a decade .
.!or press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
(i
While adjustment still has a long way to go to transform most Africans' lives, the record is
clear. Numerous studies at the African Development Bank and the World Bank, as well as by
independent scholars, show that the countries that pursue sound economic and fiscal policies are the
ones that sustain the highest growth rates. Economically and financially, we see increasing evidence
ofthe ability of Africa's reforming economies to hold their own.
The World Bank estimates that in 1998, Africa's growth was down somewhat, to about 3.2
percent -- due in part to the effects of el Nino, disruptions in the global financial system, and the fall
in basic commodity prices associated with the Asian financial crisis. The adverse impact of outside
forces, however, was mitigated in many countries by continuing reform, and a number of countries
demonstrated impressive growth.
Botswana, Cote d'Ivoire, Egypt, Mali, Mauritius, Mozambique, Tunisia, and Uganda have
grown at 5 percent or more annually in the past three years.
Throughout this Annual Meeting we have seen examples of the benefits that accrue to a
country that maintains good macroeconomic policies, and of the costs to a country that does not.
However, good macroeconomic policies in and of themselves are not sufficient to ensure nor sustain
higher living standards for the poor -- in other words, to meet the "primordial challenge" of poverty
reduction. Strong macroeconomic performance provides the foundation for overall economic
growth, but deeper structural reforms are the way to ensure that the benefits of growth are shared
and produce higher living standards for the poor. Two key structural areas that deserve strong
emphasis, areas where the African Development Bank Group and its member countries can make
major contributions, are investment in people and good gOl'emallce.
Investment in People
Many economies are suffering from the consequences of under-investment in their people.
The World Bank has provided a succinct yet powerful logic for investing heavily in people: No
country has ever taken off, economically, ·with a literacy lepcl be loH' fifty percent.
Weak investment in people often reflects poor policy priorities by a government, or weak
public institutions within a country. Some countries are engaged impressively in addressing these
issues. Yet, while we have seen some modest improvements in such social indicators as school
enrollment and immunization rates, problems in health and education still are among the most severe
challenges the Bank and its borrowing members face. The UNDP places African countries in 19 of
the 20 lowest-ranking positions in the world on its index of human development. Fertility, maternal
mortality and child mortality rates in Africa are among the highest in the world. Literacy and
education rates are shockingly low in some countries, especially among girls Moreover, Africa is
suffering a brain drain, as capital and investment continue to shy away from countries which cannot
guarantee a viable work force
2
We should constantly remind ourselves of the basic mandate for the African Development
Bank Group. We want it to focus primarily on issues of poverty reduction, investment in health,
investment in education, and broadly speaking, investment in people - the underlying theme and
common goal of all the Bank Group's activities.
Of central concern is the ravaging effect that the AIDS epidemic is having in Africa. We
must rededicate ourselves to dealing with this multi-dimensional problem, and bring substantial
ingenuity and resources to bear on its solution. Diseases such as AIDS and malaria are not only
enormous human tragedies, but economic tragedies as well.
We must continue to work urgently though bilateral channels and our international
institutions to deal with these pandemic diseases. On AIDS especially, it is important that the IFIs
continue to help governments build capacity to cope with the challenge, while providing guidance to
their own country teams to take it into account in all relevant projects.
What can we as finance officials do about AIDS? I think one thing we can do is to make sure
that governments have the resources they need to take basic steps to contain its spread -- such as
educating the public about its dangers. If we do not at least do this, the future economic and
financial costs, in terms of lost production and health, could be overwhelming and could be upon us
sooner than we may think.
Finally, in discussing choices with respect to investment in people, it is appropriate to
comment on the social consequences of governments engaging in disproportionate military spending.
Every nation has legitimate defense needs. Disproportionate military spending, however, not only is
fiscally and socially disruptive, coming as it most often does at the expense of health and education
priorities; it also is economically damaging. Moreover, it scares off productive investment and trade
when it becomes symbolic of an unstable society. In a world of competition for aid, it is difficult, if
not impossible, to support foreign assistance for countries that put disproportionate emphasis on
military spending relative to investment in their people
Good Governance -- A Foundation
Even if social investment priorities are correct, however, they will have little lasting benefit in
countries where governance is weak and economic decisions are distorted by corruption.
Governance failures and corruption exist everywhere in the world, and impose high economic and
financial costs. Yet until quite recently, corruption was a politically impolite subject to raise in an
international setting.
But raise it we must: the effect of corruption on emerging economies is corrosive because (1)
it diverts resources from the basic tasks of public health and education, and (2) it discourages the
private sector flows on which development depends.
Recently I heard a U. S radio commentator use a colorful phrase that sums up problem rather
starkly: "Corruption is eating some economies alive l " He was speaking of Central Europe at the
time, but his comment could apply to a number of economies in other regions including Africa.
The former head of Hong Kong's anti-corruption agency put it well: "Where corruption is
unchecked, the result is virtually the setting-up of an alternative, illicit form of government ...
officials impose their own illegal rules of conduct on the pUblic."
The question is, who would want to invest in an economy governed along these lines')
Fortunately, the African Development Bank is speaking out against corruption, and many of
the participants in our meetings this week are leading efforts to improve governance in their own
economies. The Bank has a role to play, and we know the key requirements:
•
Clarity in laws and regulations, and fairness in their application and enforcement.
•
Courts that are adequately funded and independent of political pressure.
•
Strong, independent anti-corruption units in member governments.
•
Privatization of state-owned enterprises.
•
Reducing the scope and administrative role of governments.
•
A well-supervised, competitive, financial system that operates on commercial grounds and is not
subject to credit allocations based on personal or political connections
•
And finally, increased disclosure about government operations and decision making -- including
audits of military operations that are reported to the civilian authorities.
Heavily Indebted Poor Countries
As we consider ways to improve Africa's economic performance, we should acknowledge
that excessive indebtedness can be a barrier to public investment and growth. Helping to manage
debt burdens is an area where the African Development Bank's non-regional members and the Bank
itself have their separate roles to play. Each can help strengthen the prospects of a poor, heavily
indebted country that is pursuing sound economic and growth policies
Over the past two decades, the United States and other creditors have written down about
4
$28 billion in debts owed by the world's poorest countries.
In recent years bilateral and multilateral creditors, including this Bank, have combined forces
to address debt under the Heavily Indebted Poor Countries (HIPC) initiative. So far, seven nations - including five African countries -- have qualified for the HIPC program which raises the level of
Paris Club forgiveness to 80 percent of eligible debts and provides substantial IFI debt relief for the
poorest reforming economies.
Despite this progress, the Clinton Administration believes that the current pace of debt
forgiveness is not adequate to achieve our common goals of economic recovery in countries
committed to reform. We see a need for faster and deeper debt reduction, and President Clinton is
committed to press for significant improvements in current programs at the G-7 Summit next month,
even beyond those he announced in March. He has stated our goal clearly:
The more debtor nations take respo1lSibilifyfor purslling sOllnd economic policies, the more
creditor nations must be willing to provide debt relief
At the March 1.6 U. S -Africa Ministerial, President Clinton first outlined his strengthened
debt initiative:
Today, I ask the i11temational community 10 take actions ll'hich could result inforgiving $70
billion . .. Our goal is to ensure that no COlll7l!y commil1ed 10fundamelltal reform is left with a debt
burden that keeps it from meeting its peoples' basic human needs and spurring growth.
Debt relief for reforming economies is a central point in the President's Partnership for
Economic Growth and Opportunity in Africa and in legislation before the U. S. Congress -- the
African Growth and Opportunity Act -- to help implement that partnership This legislation contains
important provisions that will enhance Africa's access to U. S markets, help speed U. S investment,
and broaden trade relations.
President Clinton's Initiatives in debt and economic partnership underscore America's
commitment to Africa by responding to, and building on, economic reforms undertaken by
Governments in Africa.
African Development Bank and Fund
u. S. financial and policy support for the African Development Bank and Fund is based on the
firm expectation that these institutions can effectively and successfully address macroeconomic and
structural issues, including governance and investment in people. The credit for much of the positive
direction of the Bank Group belongs to President Omar Kabbaj, who is leading it in a developmental
and financial renaissance.
5
The GCI-5 capital increase package represents a major advance in the Bank's orientation and
in shareholder cooperation, and we strongly support its ratification Ratification will make it possible
for donor countries to ask their parliaments to authorize funds for both the ADB and ADF
replenishments together. New financing and agreed reforms in both the Bank and the Fund are a
tightly constructed and integrated package which deserves the support of all members.
I have emphasized that our continuing support for the African Development Bank Group is
based on expectations of strong performance, but I want to assure Governors that we will work
closely with others in support of its ambitious mandate. In the spirit of that partnership:
We call upon the Bank Group to implement fully the governance and operational reforms in
the Bank Group Capital Increase and Fund Replenishment
We call upon the Bank to conduct its operations in a manner that will restore the Bank's
triple-A credit rating in the wake of agreement on the $7 billion capital infusion that will restore key
financial ratios.
We urge the Bank to operate in the context of uniform MDB procurement rules and
documents of the very highest standard, and we strongly encourage adoption of the proposal to add
fraud and corruption provisions to procurement rules.
We seek implementation of a strong linkage under AFDF-8 between country performance
and resource allocation, with credits going to countries where they will produce the most poverty
reduction and economic reform.
We commend the work of Vice President Enweze and the staff of the Bank Task Force on
Core Labor Standards whose recommendations, in our view, are among the most forward looking of
any MDB. We support efforts to make these recommendations fully operational.
We call for the Bank's continued leadership and cooperation with other development
agencies We ask that it successfully conclude an MOU with the World Bank. We also congratulate
the Bank on the loint Africa Institute to be established in cooperation with the IMF and the World
Bank.
We applaud the Bank's progressive posture on environmental issues, and we see the need for
even more urgent progress in this area. We also appreciate the forward movement toward greater
transparency, and urge that this trend be continued and strengthened.
Finally, we feel secure in calling for such an ambitious agenda. We are more confident at this
point than at any time in the past that the Bank has the leadership, skills and policy directions it needs
6
to address governance issues, AIDS, containment of military spending, and health and education, at
the same time it addresses broad issues of economic and social development for Africa.
Conclusion
Mr. Chairman, we share your concern that the road ahead presents formidable challenges. We
know that the Bank is working to make broadly based poverty reduction and economic growth a
reality on this continent We know that Africa has broad structural problems and still remains a
highly closed region in many areas. We respect the severity of the challenges Africa confronts in
economic reform, health, education and poverty reduction.
African countries have accomplished a great deal and so, too, has the African Development
Bank Group. I do not believe that Africans will allow their hard-won advances in democracy,
economic liberalization and personal opportunity to be rolled back. We are encouraged that agreed
fundamentals of good governance, investment, and democracy command an increasingly broad and
growing following. This backdrop sustains the United States in our determination to work alongside
you for Africa's growth and development, and for Africa's children.
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7
!BBB9
From: TREASURY PUBLIC AFFAIRS
8-10-99 3:18pm
p. 20 of 52
-
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington. DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
R I~EDIATE RELEASE
Y 26, 1999
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 2-YEAR NOTES
Issue Date:
Dated Date:
Maturity Date:
5 1/4%
Y-2001
.terest Rate:
des:
9128275H1
lSI!? No:
'RII?S Minimum: $800,000
High Yield:
Price:
5.315\
June 01, 1999
May 31, 1999
May 31, 2001
99.878
All noncompetitive and successful competitive bidders ware awarded
l~rities at
j~ted
20%.
the high yield. Tenders at the high yield were
All tenders at lower yields were jccepted in full.
Accrued interest of $ 0.14344 per $1,000 must be paid for the period
:om May 31, 1999 to June 01, 1999.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Tendered
Competitive
Noncompetitive
$
POSLIC SUBTOTAL
TOTAL
$
5.295%:
$
13,577,150
1,436,652
15,013,802 1/
30,268,002
Federal Reserve
Foreign Official Inst.
Median yield
28,831,350
1,436,652
A~cepted
3,055,890
3,055,990
1,800,000
1,800,000
35,l23,892
$
19,869,692
50% of the amount of accepted competitive tenders
Low yield
5.234%:
5% of the amount
tendered at or below that rate.
IS tendered at or below that rate.
E accepted competitive tenders was
~~o-Cover
I
Ratio = 30,268,002 / 15,013,802 • 2.02
Awards to TREASURY DIRECT'" $913,512,000
R-3177
http://www.publicdebt. treas.gov
TOTRL P.01
DEPARTMENT
OF
THE
TREASURY
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omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASlflNGTON, D.C .• 20220. (202) 622-2960
FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
May 27, 1999
TREASURY UNDER SECRETARY (ENFORCEMENT) JAMES E. JOHNSON
HOUSE JUDICIARY SUBCOMMITTEE ON CRIME
Thank you Mr. Chainnan, Representative Scott, and members of the Subcommittee. It is
a privilege to join the Deputy Attorney General as we review the issue of fireanns violence and
legislative proposals that will enhance our ability to reduce it.
Today is a time to mark real progress and innovations in reducing the hann to
communities caused by gun violence. It is also a harrowing time as we continue to witness
violence in our streets and our schools. The violence that still takes place in many cities -- and in
some of our schools -- has shown that we still have a long way to go. We simply must redouble
our efforts to stop the misuse offireanns.
We've learned how to do this. Both enforcement and prevention strategies are vitally
important to making our communities safer. Within this larger context, there are a series of other
issues on which Americans agree: firearms and explosives should not be available to certain
people -- not to felons, not to violent criminals, and not to unsupervised juveniles. Fireanns and
explosives must be bought and sold legally and responsibly. And finally, firearms must be stored
safely and securely by their owners, in order to better prevent violent crime and access to guns by
troubled youth and vulnerable children.
This consensus has greatly expanded in recent weeks. It is reflected by last week's Senate
votes. It is also reflected in the support expressed by Congressional leaders and important
segments of the firearms industry. The consensus provides ample room for agreement on sensible
legislation, and we thank the Chairmen and ranking members for holding this hearing to advance
our discussion of this critical issue.
Our joint statement covers these areas in greater detail. I will briefly highlight a few.
As Treasury Under Secretary, my primary focus with regard to reducing violent crime is
the development and implementation of the fireanns enforcement mission of the Bureau of
Alcohol, Tobacco and Firearms, which is the principal federal agency enforcing the nation's
-
RR-3178
:press releases, speeches, public schedules and official biographies, call our 24~our fax line at (202) 622-2040
firearms laws. ATF has the jurisdiction, expertise, and experience necessary to successfully
investigate armed criminals and gun trafficking crimes. Under the leadership of Director Magaw,
the dedicated men and women of ATF are providing essential and innovative contributions to the
fight against violent crime.
One of ATF' s greatest achievements is its partnership with state and local authorities. As
the Deputy Attorney General has noted, such a partnership, which includes U.S. Attorneys and
state prosecutors, has helped increase the overall number of prosecutions for gun violations over
the last six years. Notable examples of this work, of course, include Richmond's Project Exile
and Boston's Operation Ceasefire, both of which relied in part on the work of the ATF.
We can greatly assist the men and women in law enforcement if we provide them with
tools they need to attack the illegal market in firearms that supplies criminals and juveniles who
cannot legally buy guns from licensed dealers. To build on the success of the Brady law, we must
do more to stop the criminal behind the criminal -- the illegal gun trafficker. Let me give you one
example of the kind of trafficking I'm talking about and what ATF can do.
In Philadelphia, during 1994 and 1995, a straw purchaser and a trafficker conspired to buy
over 50 semiautomatic rifles, boxes of high powered ammunition, and accessories such as
one hundred round drum magazines, high powered scopes and laser sights. Seven rifles some connected to drug activity -- were subsequently recovered by law enforcement, and
one was linked to homicides. ATF traced the majority of the recovered firearms to the
straw purchaser, who had given them to a convicted felon. Together the straw purchaser
and the felon sold AK-47 type rifles to persons suspected of being local drug traffickers.
They sold at least one of the guns to a juvenile. The U.S. Attorney's Office in
Philadelphia secured a conviction of the defendants on all counts, including firearms
trafficking and possession of a firearm in a school zone.
Mr. Chairman, the Youth Gun Crime Enforcement Act of 1999, H.R. 1768, contains
critical new tools for attacking the illegal gun market. It will close the gun show loophole by
requiring background checks and tracing records for all gun show sales. It would restrict
handgun transfers to one a month. It will require licensed dealers to assist law enforcement to
trace used as well as new crime guns. It will increase the penalties on illegal gun traffickers and
make it easier to prosecute straw purchasers. It will also double the size of ATF' s Youth Crime
Gun Interdiction Initiative launched by President Clinton in July 1996.
This program targets gun violations involving youth and juveniles. It assists local law
enforcement in tracing all recovered crime guns, and identifying and arresting illegal gun
traffickers and criminal users of firearms. Mr. Chairman, we are grateful for the strong support
that Congress is providing to this and ATF' s other firearms enforcement programs.
Adoption of these common sense measures will help law enforcement to keep guns out of
the hands of criminals and unsupervised juveniles. We must do more. Eighteen and 19 year olds
are a high crime age group. Indeed, ATF traces more crime guns recovered from 18 and 19 year
olds than any other age group. It makes sense, therefore, to set reasonable limits on gun
possession by young people. We must raise the age of eligibility to possess a handgun from 18 to
21, and prohibit those under 21 from possessing assault rifles or large capacity ammunition
feeding devices.
We must also take steps to protect younger children. We should require that gun safety
locks or storage devices be sold with firearms, and hold adults accountable for reckless storage
resulting in a child causing death or serious bodily injury with a firearm.
Mr. Chairman, over the years I have worked closely with an undercover officer shot by
drug dealers, and I have spoken to parents whose children fell victim to inner-city gun violence,
recently, I visited Columbine High School and saw how a vibrant school was stopped cold by two
murderers who should have never had bombs and never had guns. All victims of violent crime,
and everyone threatened by it, ask all of us to do all we can to prevent more loss. We are
requesting more agents and continuing to develop strategies to enhance our enforcement efforts.
We ask you to support law enforcement and help make our children safer: We urge you to pass
HR 1768.
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[) EPA R T \. E l\: T
0 F
TilE
T REA SUR Y
NEWS
-
OffiCE OF PUBUC AFFAIRS .1500 PENNSYLVANIA AVENUE, N.W.• WASIDNGTON, D.C .• 20220· (202) 622·2960
EMBARGOED UNTIL 2:00 P.M. EDT
Remarks as Prepared for Delivery
May 27,1999
INTER-AMERICAN DEVELOPMENT BANK
ALTERNATE U.S. EXECUTIVE DIRECTOR LAWRENCE HARRINGTON
NOMINATION TO BE
THE INTER-AMERICAN DEVELOPMENT BANK U.S. EXECUTIVE DIRECTOR
SENATE FOREIGN RELATIONS COMMITTEE
Mr. Chainnan, Mr. Ranking Member, and Members of the Committee, it is a great honor to have
my nomination considered by this Committee for the second time in just four years. I certainly want
to thank my fellow Tennesseans, Senator Fred Thompson and Senator Bill Frist for their courtesy
and assistance throughout. I will keep my comments brief and look forward to any questions you
may have.
For the past four years, I have been privileged to serve as the Alternate Executive Director of the
Inter-American Development Bank, the oldest and largest regional multilateral development
institution. During this time, I have seen firsthand the role the Bank plays as a catalyst for
investment and for the role it can play in furthering U.S. policy objectives in the region. For the last
five consecutive years, the Bank has been the region's principal source of multilateral credit for the
economies of Latin America and the Caribbean, playing a pivotal role in efforts to alleviate poverty
and increase productivity, build infrastructure, protect the environment, refonn and restructure
antiquated public institutions, and support the private sector. In 1998, faced with global economic
challenges and catastrophic natural disasters, the Bank responded with record lending of $1 0 billion
and record disbursements on approved loans of $6.6 billion. The Bank's prompt action to coordinate
Hurricane Mitch reconstruction efforts and to promote financial stability demonstrates the
institution's importance to U.S. interests.
Of course, numbers alone do not tell the full story. In the years I have served at the IDB, the
office of the U.S. Director has worked closely with the Treasury Department to help ensure that
the objectives of the 1994 Eighth Replenishment are met and all voice and vote requirements are
complied with. We have strongly supported Bank lending aimed at reducing poverty and
RR-3179
-
Forpress releases, speeches, public schedules and official biographies, call our 24~our fax line at (202) 622-2040
-
increasing the efficiency and effectiveness of social sector lending. With our consistent support.
the Bank adopted a policy on involuntary resettlement that mandates careful safeguards in
projects to avoid impoverishment of affected populations. We have encouraged the Bank to
mainstream practices which protect the environment and conserve the natural resources. As a
member of the Board I have led efforts to ensure that Bank lending for natural disasters requires
countries to put in place plans for prevention and emergency response.
While the last decade brought economic reforms and democracy to the region. many
governments have been plagued by inexperience, inefficiency and corruption. The Bank has
provided significant support for modernization of the state and institutional reforms in such areas
as the judiciary, public administration and local government. In 1998, 20 operations totaling
$1.3 billion were approved in these areas. The IDB chaired the Consultative Group in support of
drug control in Peru and has supported lending for alternative development projects in close
coordination with the U.S. and other donors, clearly a high priority in terms of U.S. policy
interests.
With our strong support the IDB Board adopted amendments to its policy governing procurement
under Bank projects that provide for disclosures, remedies and penalties if corruption is
uncovered in Bank funded procurement of goods and services. In Central America the Bank is
supporting efforts, in close coordination with USAID, to maximize the integrity and transparency
of reconstruction efforts underway in the wake of Hurricane Mitch. On a regional basis, the
Bank has approved a regional grant with the OAS B to promote ratification and full
implementation of the Inter-American Convention Against Corruption. There are other Bank
funded efforts underway to strengthen controllers' offices and combat asset laundering. I have
urged senior Bank officials and my colleagues to openly discuss the effects of corruption on the
economic and social development of the borrowing countries and to address explicitly the
measures needed to combat it.
Of course. economic development in Latin America and the Caribbean does not ultimately
depend on resources from the IDB or any other public source. but from private capital, both
foreign and domestic. Recognition of the primacy of the private sector has led to large-scale
privatization throughout the region. Since 1995 under the Eighth Replenishment. the Bank has
provided $2.8 billion in loans and guarantees to private sector infrastructure projects in support
of privatization programs. The U.S. Director's office carefully scrutinizes each project to ensure
that it is sufficiently catalytic -- that it is mobilizing private sector investment that would
otherwise not materialize and that the Bank's participation serves larger development goals.
Recent agreements among the Governors will permit gradual expansion of this program. and
careful monitoring of these objectives by the U. S. Director will be critical.
The lOB Bank Group includes the Inter-American Investment Corporation (IIC). The lIC is
unique in its mandate to promote private sector development by financing small and medium
sized enterprise (SMEs) in Latin America and the Caribbean. Through direct loans and equity
2
investments in these enterprises, as well as through lending to private local banks, the IIC helps
such enterprises to access the capital necessary to start up, expand, or modernize their operations.
Simultaneously. the IIC transfers "lessons learned" from its own experience to help borrowers
create an appropriate enabling environment for the business community.
The United States has conditioned its participation in a general capital increase on the adoption
of changes in IIC policy actions in a number of areas, including adoption of measures on worker
rights, the environment, an inspection panel function, public disclosure, and evaluation. As a
result. the lIC now has adopted some of the most progressive and rigorous policies on these
issues of any of the multilateral institutions that help finance private sector activities. We have
also pushed for a strategic focus in areas where there is the highest developmental impact. such
as in the economies in Central America damaged by Hurricane Mitch. The U.S. Director of the
Corporation must continue to focus on implementation of these policies.
The U.S. Director of the Bank is also a member of the Donors Committee of the Multilateral
Investment Fund, primarily a grant-making institution with the mission of promoting private
sector growth. With U.S. support the MIF, as it is known, has promoted development of capital
markets and worker training, as well as the legal and regulatory reforms that are an essential
framework for private sector investment. The MIF is an innovative tool for development
because its primary focus is the forging of partnerships between the private sector and civil
society. It is our goal to continue to support innovative MIF projects that not only promote
investment but also strengthen principles of entrepreneurship and non-governmental responses to
challenges facing the region.
The U.S. Director's office also works closely with the U.S. private sector and voluntary
organizations to help them find procurement opportunities or other work on Bank funded
projects. Last year, for the ninth year in a row, the U.S. remained the largest beneficiary of IDB
disbursements of all non-borrowing members. The U.S. Director's office has an extensive
program of outreach to U.S. business.
Of course, as representative of the largest shareholder, the U.S. Director must constantly uphold
the Director's fiduciary duty to the shareholders of the institution, ultimately the U.S. taxpayers.
The financial soundness of the institution is paramount. Under U.S. leadership, the Board of
Governors recently concluded a historic agreement that mobilizes $7.5 billion for the Fund for
Special Operations, the Bank's concessional window -- at no cost to the U.S. taxpayer, which
provides loans to the poorest countries in the region. Prudent financial policies, adherence to a
conservative capital structure and strong support by member countries are key to the Bank's
AAA rating which it has maintained since it was established 40 years ago. The Director must
work to ensure that the Bank's administrative budget is properly managed and that the
institution'S policies governing human resources are up to date, reflecting both equity and the
highest standards of performance in the workplace.
3
Mr. Chairman, distinguished members of the Committee, U.S. leadership in the Inter-American
Development Bank is an essential element of our traditional ties and commitment to the region.
If confim1ed by the Senate, I look forward to continuing to exercise this leadership on behalf of
goals that should guide our relationships in this Hemisphere: sustained commitment to a sound
macroeconomic foundation and regional integration; stronger, more transparent financial systems
with the legal and regulatory underpinnings essential to promote investment; social safety nets
and other protections from economic volatility; and strengthened democracies based on
inclusion, and common values of transparency and prosperity.
Thank you. I look forward to your questions.
-30-
4
D E P .-\ l{ T l\j E N T
0 F
THE
PENNS~LVt\.NIA
I{
E A StiR Y
NEWS
TREASURY
OFFICE OF PUBLIC .... FFAIRS. uoo
T
AVENUE. N.W•• WASHINGTON. D.C •• ZOllO. (202) 622-%960
CONTACT:
lD!BARGOBD 'DN'I'IL 2: 3 0 P. H.
May 27, 1999
Office of Financing
202/69l-3550
TREASURY OPFERS 13-WSEK AND 26-WSEK BILLS
The Treasury will auction two series of Treasury bills totaling
~proximately $15,000 million to refund $15,572 million of publicly held
securities maturing June 3, 1999, and to pay down about $572 million.
addition to the public holdings, Federal Reserve Banks for their own
accounts hold $8,015 million of the maturing bills, which may be refunded at
~e highest discount rate of accepted competitive tenders.
Amounts issued
to these accounts will be in addition to the offering amoWlt.
In
The maturing bills held by the public include $2,437 million held by
Federal Reserve Banks as agent& for foreign and international monetary authorities, which may be refund.ed Within the offering amount at the highest discount
rate of accepted competitive tenders. Add.itional amolmts may be i&sued for
such accounts if the aggregate alDOWlt of new bids exceeds the aggregate amount
of maturing bills.
Treas~irect customers requested that we reinvest their maturing
holdings of approximately $923 million into the 13 -week bill and $734
million in to the 26 -week bill.
Tenders for the bills will be received at Federal Reserve Banks and
Brmches and at the Bur6~U of the Public Debt, Washington, D.C. This offering
~fTre~8ury securities is governed by the terms and conditions set forth in
~heunifor.m Offering Circular for the Sale and Issue of Marketable Book-Entry
r:easury Bills, Notes, and Bonds (31 CPR Part 356, as amended).
~ng
Details about each of the new securities are given in the attached offerhighlights.
000
RR-31S0
-
::,press releases, speeches. public schedules IUl.d ()/ficiIl.I biDgraphits, call our 24-h()ur jllX line III (202) 622-2040
HIOHLIGHTS OF TREASURY OPPBRINGS OP BILLS
TO BE ISSUED JUNB 3. 1999
May 27, 1999
Offering Amount ....••.•••..•..•..•...•• $7,500 million
Description of Offering:
Term and type of security .•.•••.••.•.••
CUSIP number •••....•••.•••.••..••••..•.
Auction date •.•...•••••..•••.••.•..•••.
Issue date ....... ,. .....................
Maturity date .••.•..•.•••...••••....•.•
Original issue date . . . . . . . . . . . . . . . . . . . .
Currently outstanding ••...••••.•.•••..•
Minimum bid amount and multiples •..•.••
91-day bill
912795 eM 1
June 1, 1999
June 3, 199'
September 2, 1999
March 4, 1U9
$11.517 million
$1,000
$7.500' million
182-day bill
912795 ex 7
June 1, 1999
June 3, 1999
December 2, 1999
June 3, 1999
$1.000
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids •...••••. Accepted in full up to $1,000,000 at the highest discount rate of
accepted competitive bids.
Competitive bids ••••.••••..• (1) Must be expressed as a discount rate with three decimals in
increments of .005%, e.g., 7.100\, 7.105\.
(2) Net long position for each bidder must be reported when the sum
of the total bid amount, at all discount rates, and the net long
position is $1 billion or greater.
(3) Net long position must be determined as of one half-hour prior
to the closing time for receipt of competitive tenders.
M"~Lmum
Recognized Bid
at a Single Yield •.•..••••.• 35\ of public offering
Maximum Award ......•.•.•.•.••.. 35% of public offering
Receipt of Tenders I
Noncompetitive tenders ..•••• Prior to 12:00 noon Bastern Daylight Saving time on auction day
Competitive tenders .....•••. Prior to 1:00 p.m. lastern Daylight Saving time on auction day
pa~ent Terms: By charge to a funds accoUnt at a Federal Reserve Bank on issue date, or payment
of full par amount with tender.
TreasuryDlrect customers can use the Pay Direct feature which
authorizes a charge to their account of record at their financial institution on issue date.
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
'OR IMMEDIATE
lay 27/ 1999
RELEASE
CONTACT:
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 14-DAY BILLS
14-Day Bill
June 01, 1999
June 15, 1999
912795GV7
Term:
Issue Date:
Maturi ty Date:
CUSIP Number:
4.73 %
High Rate:
Investment Rate 1/:
4.82 %
Price:
99.816
All noncompetitive and successful competitive bidders were awarded
at the high rate.
Tenders at the high discount rate were
llatted 69%. All tenders at lower rates were accepted in full.
~urities
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
Competitive
Noncompeti ti ve
$
39,755,000
682
$
11,029,000
682
TOTAL
$
39,755,682
$
11,029,682
Median rate
4.70 %: 50% of the amount of accepted competitive tenders
tendered at or below that rate.
Low rate
4.60 %:
5% of the amount
; accepted competitive tenders was tendered at or below that rate .
IS
.d-to-Cover Ratio == 39,755,682/11,029,682
E~ivalent
=
3.60
coupon-issue yield.
http://www.publicdebt.treas.gov
TREASURY
m'neE OF PUBLIC AFF4.IRS .1500 PENNSYLVANIA AV£NUE. N.W .• WASBlNGTON, D.C.e 20220 e (202) 622~2960
~ARGOED
UNTIL
~1:00
A.H.
Contact:
June 1, 1999
Office of Financing
202/691-3550
TREASURY TO AUCTION CASH MANAGEMENT. BILLS
The Treasury will auction approxtmately $20,000 million of 12-day
Treasury cash management bills to be issued June 3, 1999.
Competitive and noncompetitive tenders will be received
Tenders will not be accepted for
maiutained on the book-entry records of the Department of the
(TreasuryDirect). Tenders will not be received at the Bureau
Debt, Washington, D. c.
Reserve Banks and Branches.
at all Federal
bills to be
Treasury
of the Public
Additional amounts of the bills may be issued to Federal Reserve Banks
as agents for foreign and international monetary authorities at the highest
discount rate of accepted competitive tenders.
The auction being announced today will be conducted in the single-price
auction format.
All competitive ~d noncompetitive awards will be at the
highest discount rate of accepted competitive tenders.
This offering of Treasury securities is governed by the terms and conditions set forth in the Uniform Offering Circular for the Sale and Issue of
Marketable Book-Entry Treasury Bills. Not~s, and Bonds (31 CFR Part 356, as
amended) •
NOTE:
Competitive bids in cash management bill auctions must be
expressed as a discount rate with
~
decimals, e.g., 7.10%.
Details about the new security are given in the attached offering
highlights.
000
Attachment
RR-3182
-
For press releases, speeches, public schedules and official biographies, call our U~hour fax line at (202) 612-2040
HIGHLIGHTS OF TREASURY OFFERING
OF 12-DAY CASH MANAGEMENT BILL
June 1, 15199
Offering Amount . . . . . . . . . . . . . . . . • • . . $20,000 million
Description of Offering:
Term and type of security . . . . . . . . . .
CUSIP number . . . . . . . . . . . . . . . . . . . . . • .
Auction date . . . . . . . . . . . . . . . . . . . . . . .
Issue date . . . . . . . . . . . . . . . . . . . . . . . . .
Maturity date .••..........•........
Original issue date .........•..•...
Currently outstanding ...••.......••
Min~ bid amount and multiples •..
Submission of Bids:
Noncompetitive bids
Competitive bids ....•.. (1)
(2)
(3)
12-day Cas b. Management Bill
912795 GV ?
June 2, 1999
J'Wle 3, 1999
June 15,1999
June 1, 1999
$11,030 million
$1,000
Accepted in full up to $1,000,000 at
the highest accepted discount rate.
Must be expressed as a discount rate with
two decimals, e.g., 7.10%.
Net long position for each bidder must
be reported when the sum of the total bid
amount, at all discount rates, and the
net long position is $1 billion or
greater.
Net long position must be determined as
of one half-hour prior to the closing
time for receipt of competitive tenders.
MaxLmum Recognized Bid
at a Single Yield . . . . . . . . . 35% of public offering
Max~
Award . . . . . . . . . . . . . . • . 35% of public offering
Receipt of Tenders:
Noncompetitive tenders
Prior to 12:00 noon Eastern Daylight
Saving time on auction day
Competitive tenders . . . . . . . . Prior to 1:00 p.m. Eastern Daylight
Saving time on auction day
Payment Terms . . . . . . . . . . . . . . . . By charge to a funds account at a Federal
Reserve Bank on issue date, or payment of
full par amount with tender.
· DEPARTMENT
OF
THE
TREASURY
NEWS
TREASURY
. . . . . . . . . . . . . . . . . . . . . . . . . . . .~~(7sfq~. . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C.. 20220. (202) 622-2960
Weekly Release of U.S. Reserve Assets
The Treasury Department toda\' released U.S. reSLrye assets daLl fm tllL' week endIng
t\1a\' 28, 1t)t)t).
:\S l£1dlclted III thIS uble, U.S. reserve assets totaled ~/2, ))/ 111111ion as ()f I\!a\' 2:-), ) <y()<) , up
from S71 ,% /
11111110!1
as of t\1ay 21, 1<)<)<).
u.s. Reserve Assets
(millions of US dollars)
Reserve
Foreign
.V
Assets
Gold
Stock II
Drawing
R"19 ht s 21
ESF
SOMA
Position in
IMF 21
May 21, 1999
71,967
11,049
9,787
14,711
14,710
21,7l0
May 28, 1999
72,137
11,049
9,784
14,799
14,800
21,705
Reserve
Week Ending
11
Special
Total
1999
Currencies
Gold stock is valued monthly at $42.2222 per fmc troy ouncc. Values shown arc as of .\pnl )0, 1i) 'I ') . The :--'!arch ) 1. 1iJ')')
nlue was S11 ,04'1 million.
SDH. holdings and the reserve position m the IMF arc based on IMF data and revalued In dollar term~ at the offiCIal
SDRI dollar exchange rate. ConsIStent with current reporting pracuces, ll\lF data for l\\ay 21, I ()')') arc tina!. Data for SD IZ
21
holdings and the reserve position In the IMF shown as of May 28,1999 (ill \tabes) reflect prcllI11lllary adjustments b\ the TreJ,un (()
the Mal' 21,1999 IMF data,
3/ Includes holdings of the Trcasun.'s Exchange Stabibzauu!1 Fund (ESF) and the Federal ResenT's :-'\'stelll Open \LlIKet
,\ccounr (SOMA). These hold\!1gs are valued at current marKet exchange rates or, where appropnate. at sllch ocher ratl'S as
[11.1'.
be
agreed upon by the parties to the transacuons,
RR-3183
--~------------------------------------------------------------------------------------------
~press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
-
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
JR IMMEDIATE RELEASE
me 0 1 , 19 9 9
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
June 03, 1999
September 02, 1999
912795CMl
Term:
Issue Date:
Maturity Date:
CUSIP Number:
4.620%
High Rate:
Investment Rate 1/:
4.753%
Price:
98.832
All noncompetitive and successful competitive bidders were awarded
curities at the high rate.
Tenders at the high discount rate were
lotted 50%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Competitive
Noncompeti ti ve
PUBLIC SUBTOTAL
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
TOTAL
Tendered
----------------20,474,498
$
1,358,677
----------------21,833,175
108,922
----------------21,942,097
4,074,955
9,578
----------------26,026,630
$
Accepted
----------------6,051,998
$
1,358,677
-----------------
7,410,675 2/
108,922
-----------------
7,519,597
4,074,955
9,578
-----------------
$
11,604,130
Median rate
4.600%: 50% of the amount of accepted competitive tenders
) tendered at or below that rate.
Low rate
4.530%:
5% of the amount
accepted competi ti ve tenders was tendered at or below that rate.
l-to-Cover Ratio
=
21,833,175 / 7,410,675
=
2.95
E~ivalent coupon-issue yield.
Awards to TREASURY DIRECT = $1,010,194,000
-3184
httr,://www.publlcdebt.treas.gov
From: TREASURY PUBLIC AFFAIRS
28889
B-10-99 3:18pm
p. 21 of 52
-
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington. DC 20239
TREASURY SECURITY AOCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
R IftiMEDIATE RELEASE
tie 01, 1999
CONTACT:
Office of Financing
202-691-3550
RESULTS OF TREASURY' 5 AUCTION'OF 26-WEEK BILLS
182-Day Bill
Term:
Issue Date:
Maturity Date :
June 03, 1999
December 02, 1999
CU'SIP Number:
912795CX7
High Rate:
4.750%
Investment Rate l/:
l?rice:
4.947%
97.599
noncompetitive and successful competitive bidders were awarded
at the high rate.
Tenders at the high discount rate were
,otted 43t. All tenders at lower rates were accepted in full.
~l
:~itie5
AMOUNTS TENDERED AND ACCEPTED
Tendered
Tender Type
Competitive
Noncompeti t i ve
$
l.7,515,3.52
1,069,606
Foreign Official Refunded
SUBTOTAL
$
5,179,658 2/
2,327,809
20,912,567
7,507,467
3,940,000
203,091
3,940,000
203,091
:rorei~ Officis.l Ad.d-On
TOTAL
4.735%: 50% of the
4,110,052
1,069,606'
2,327,609
Fedel;al Reserve
rate
A.ccepted
18,584,756
PUBLIC StrBTOTAL
~dian
(in thousands)
$
25,055,658
amount
of
$
11,650,558
accepted competitive tenders
tendered at or belOw that rate. Low rate
4. 630%':
5%' of the amount
IcCepted competitive tendere was tendered at or below that rate.
'to-Cover Ratio ;;" 18,584,758 / 5,179, 6S8
='
:3.59
~quivalent coupon-issue yield.
~'llards to TREASURY DlREC'I' .. $797,729,000
http://www.pubUcdebLtreas.gov
TOTAL P.01
-
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
IMMEDIATE RELEASE
une 02, 1999
'OR
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 12-DAY BILLS
12 -Day Bill
June 03, 1999
June 15, 1999
912795GV7
Term:
Issue Date:
Maturity Date:
CUSIP Number:
4.70 %
High Rate:
Investment Rate 1/:
Price:
4.80 %
99.843
All noncompetitive and successful competitive bidders were awarded
ecurities at the high rate.
Tenders at the high discount rate were
lletted 46%.
All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
Competi ti ve
Noncompeti ti ve
$
64,868,000
1,750
$
20,005,100
1,750
TOTAL
$
64,869,750
$
20,006,850
Median rate
4.68 %: 50% of the amount of accepted competitive tenders
tendered at or below that rate.
Low rate
4.62 %:
5% of the amount
: accepted competitive tenders was tendered at or below that rate.
1S
ld-to-Cover Ratio = 64,869,750 / 20,006,850 = 3.24
/
E~ivalent
coupon-issue yield.
http://www.publicdebt.treas.gov
RR-3186
-
OFFICE OF PUBLIC An'AIRS -1500 PENNSYLVANIA i\VEJl/l.I£. N.W.- WASH1NCTON, D.C.- 20220 _ (202) 622.2Sl60
EMBARGOED 'UNTIL 2: 30 P. M.
J1me 3, 1999
'I'RBAS'ORY OFFERS
CONTACT:
~3-WEEK
Office of Financing
202/691-3550
AND 26-WEEK BILLS
The Treasury will auotion two series of Treasury bills totaling
approximately $15,000 million to refund $16,297 million of publicly held
securities maturing JUne 10, 1999, and to pay down about $1,297 ~llion.
In addition to ~e public holdings, Federal Reserve Banks for their own
accounts hold $7,857 million of the maturing bills, which may be refunded at
the highest discount rate of accepted competitive tenders. Amounts issued to
these accounts will be in addition to the offering amount.
The maturing bills held by the public include $2,712 ~llion held by
Federal Reserve Banks as agents for foreign and international monetary authorities, which may be refunded within the offer~g amount at the highest discount
rate of aceepted competitive tenders. Additional amounts may be issued for
lIuch accounts if the aggregate amount of new bids exceeds the aggregate amount
of maturing bills.
Tre5B~ir6C~
customers requested that we reinvest their maturing
~ldings of approx±mately $893 ~llion into the 13-week bill and $698 million
into the 26-week bill.
Te~ders for the bills will be received at Federal ~e88rve Sanks and
Branches and at the Bureau of the Public J)ebt, Washington, D.C. 'l'his offering
Trea~ securities is governed b,y the te~ and conditioD8 set fo~th in
the 'Onifonl Offering Circular for the SAle and Issue of Marketable Book-Entry
Treasury Bills, Hotes, ;J..2J.d, Bonds (31 en Part 356, as amended).
of
Details about each of the new securities are given in the attached offering highlights.
000
Attachment
RR-3188
-
For press reufUes, speeches, public scheduus and offu:io.l biographies, call our 24-hoUT fax line cu (202) 622·2040
--------------------------------------------------------------------------------------------
RIGHLXGHTS OF TREASURY OFFERXNGS OP BXLLS
TO BB XSSUBD JUNE 10, 1999
June 3, 1999
Offering Amount .•••••••••.•••••••••••••. $7,500 million
$7,500 million
n.scription of Offerin2:
Term and type of s.curity •.•••••.••••••. 91-day bill
CUSIP number •••••••••••••••••••••••••••• 912795 CN 9
AIIction date •••.•••••••••••••••••••••••. June 1, 1999
I.sue date •••••.•••••••••••••••••••..•.• June 10, 1999
M&turi ty date •...••..•.•....•.••••...•.• September 9, 1999
Original issue dat •••••••••••••••••••••• HArch 11, 1999
~rently Qutstanding •••••••••••••••••.• $11,598 million
Mlntmum bid amount and multipl.s ••••.•.. $1,000
l02-day bill
912795 CE 9
June "
1999
June 10, 1999
December 9, 1999
December 10, 1998
$16,369 million
$1,000
The following rules apply to all securities mentioned aboves
SWbmission of Bida:
Noncompetitive bids ••••••••• Accepted in full up to $1,000,000 at the highest discount rate of
accepted oompetitive bids.
C~etit1ve bids ••••.••••••• (1) Must be expressed as a discount rate with three decimals in
incr.ments of .005%, e.g., 1.100%, 1.105%.
(2) Net long position for each bidder must be reported when the sum
of the total bid amount, at all discount rates, and the net long
position is $1 billion or greater.
(3) Net long position must be determined as of one half-hour prior
to the closing time for rec.ipt of competitive tenders.
~imum
Recognized Bid
at a Single Yield ••.•••••••• 35% of public offering
~imum
Award ••••••••••••••••••• 35% of public offering
Reoeipt of Tenders:
Noncompetitive tenders •••.•• Prior to 12:00 noon Eastern Daylight Saving time on auction day
Competitive tender •••••••••• Prior to 1100 p.m. Eastern Daylight Saving time on auction day
Payment Termsl By charge to a fundi aocount at a Federal Reserve Bank on issue date, or payment
of full par amount with tender.
T.re4Bu~jrect customers can use the Pay Direct feature which
a~tborizes a charge to their account of record at their financial institution on issue date.
--------~~--------
PUBLIC DEBT NEWS (.(~I'
m~e=-n~t~o~f;:-t=-:h:-:e~T:;-re-a-s-u-r-Y-'--;:;-B-u-r-ca-u- o-: f- t-:-h-e- :P: :-u~h~l~j-c-=n:-e-h-t-.--\,-.a-s-h-j-n t-o-n-,-D-C--2-02-3-9--\\~/~ -
D-ep-a-r:-t
",,-u_
. 1LIe '0''''
FOR RELEASE AT 3 :00 PM
June 4,1999
Contact: Peter Hollenbach
(202) 691-3510
PUBLIC DEBT ANNOUNCES ACTIVITY FOR
SECURITIES IN THE STRIPS PROGRAM FOR MAY 1999
The Bureau of the Public Debt announced activity figures for the month of May 1999, of securities
within the Separate Trading of Registered Interest and Principal of Securities program (STRIPS).
Dollar Amounts in Thousands
Principal Outstanding
(Eligible Securities)
$1,750,738,523
Held in Unstripped Form
$1,530,702,404
Held in Stripped Form
$220,036,119
Reconstituted in May
$12,547.160
The accompanying table gives a breakdown of STRIPS actiyity by individual loan description. The
balances in this table are subject to audit and subsequent revision. These monthly figures are included
in Table VI of the Monthlv Statement of the Public Debt. entitled "Holdings of Treasury Securities in
Stripped Form."
The Strips Table along with the new Monthly Statement of the Public Debt is available on Public
Debt's Internet homepage at: www.publicdebttreas.gov.Awide range of information about Public
Debt and Treasury Securities is also available on the homepage.
000
RR-3189
http://,,,,,\ . p u hi j cd c b t. t rL':l~.~ (l\
IABlE-~NGS OF TREASURY SECURITIES IN STRIPPED FORM, MAY 31, 1999
Corpus
Loan Descnptlon
Treasury Bonds
CUSIP
912810DM7
008
OR6
DU9
DN5
OPO
OS4
OT2
0V7
OW5
DX3
DYI
OZ8
EA2
EBO
EC8
ED6
EE4
EFI
STRIP
CUSIP
PrinCipal Amount Outstanding In Thousands
Maturity Date
Total
Outstanding
Reconstituted
This Month
Portion Held In
Stnpped Fomn
Interest Rate
11-5/8
12
10-3/4
9-3/8
11-3/4
11-1/4
10-5/8
EG9
EH7
EJ3
EKO
EL8
EM6
EN4
EP9
E07
ES3
ETI
EV6
EW4
EX2
EYO
EZ7
FAI
F89
FE3
FFO
FG8
9-7/8
9-114
7-1/4
7-112
8-3/4
8-7/8
9-1/8
9
8-7/8
8-1/8
8-1/2
8-3/4
8-314
7-718
8-118
8-118
8
7-1/4
7-5/8
7-118
6-114
7-1/2
7-5/8
6-7/8
6
6-314
6-112
6-5/8
6-318
6-118
5-112
5·1/4
5-1/4
912803 AB9
ADS
AG8
AJ2
912800 AA7
912803 AA 1
AC7
AE3
AFO
AH6
AK9
AL7
AM5
AN3
AP8
A06
AR4
AS2
ATO
AU7
AV5
A'N3
AXI
AY9
AZ6
BAO
BB8
BC6
B04
BE2
BF9
BG7
8H5
BJI
BK8
BL6
BM4
BP7
BV4
BW2
11/15/04
05/15/05
08115/05
02115/06
11/15/14
02115/15
08115/15
11115/15
02115/16
05115/16
11/15/16
05115/17
08115117
05115/18
11/15/18
02115119
08115/19
02115120
05115/20
08115/20
02115/21
05115/21
08115/21
11/15121
08115122
11115122
02115/23
08115/23
11115/24
02115125
08115/25
02115/26
08115/26
11115/26
02115/27
08/15/27
11115/27
08/15128
11115/28
02115/29
Total Treasury Bonds"
Treasury Inflation-Indexed Notes'
CUSIP
Series Interest Rate
9128273A8
3-5/8
J
2M3
A
3-3/8
3T7
A
3-518
4Y5
A
3-718
912820 BZ9
BV8
CL9
DN4
07115102
01115107
01/15/08
01115/09
Total inflation-Indexed Notes.
Treasury Inflation-Indexed Bonds
CUSIP.
Interest Rate
912810 F05
3-518
FH6
3-718
Total Inflation-Indexed Bonds
=
Ponlon Held In
Unstrlpped Fonnn
912803 BN2
CF8
04/15/28
04/15/29
8,301,806
4,260,758
9,269,713
4,755,916
6,005,584
12,667,799
7,149,916
6,899,859
7,266,854
18,823,551
18,864,448
18,194,169
14,016,858
8,708,639
9,032,870
19,250,798
20,213,832
10,228,868
10,158,883
21,418,606
11,113,373
11,958,888
12,163,482
32,798.394
10,352,790
10,699,626
18,374,361
22,909,044
11.469,662
11,725,170
12,602,007
12,904,916
10,893,818
1. ,493,177
10,456,071
10,735,756
22,518,539
11,776.201
10,947,052
11,350,346
4,247,406
1,997,608
5,984,913
4,747,980
2,680,784
10,535,319
6,618,716
3,824,659
7,038,854
18,187,551
17,818,288
10135,929
10,432,858
3,291,039
2,707,870
7,485,998
19.274,632
180,800
0
17,600
2,969,763
6250,126
10.238,173
7,026.408
9537,242
13,584,594
8,567,990
3 114,026
11,523,161
18,76a,148
3,285,982
2,784,370
8.483,287
12,202916
7,523.418
7,942,777
6.996.871
10081,356
20.128,139
11,757,001
10.944,652
11,350.346
4,054,400
2,263,150
3,284,800
7,936
3,324,800
2,132,480
531,200
3,075,200
228,000
636,000
1,046,160
8,058,240
3,584,000
5,417,600
6,325,000
11.764,800
939,200
2,720,400
7,189,120
15,168,480
875,200
4,932,480
2,626,240
19.213,800
1,784,800
7,585,600
6,851,200
4,140,896
8,183,680
8,940,800
4,118,720
702,000
3.370.400
3,550,400
3,459,200
654,400
2,390.400
19,200
2.400
0
78.400
283.840
353920
1,277.400
204,000
126.400
500,800
328,800
227,200
204,800
264,960
130,500
104,800
308.400
268,800
203,200
270.400
0
0
0
514,732,400
349579.618
165,152,782
11,488060
17,324,399
16,409,248
17,168,459
8,583.481
li,324.399
t7,168459
8 5a3481
0
0
0
0
0
0
0
0
59,485,587
52.455587
(\
0
17,145,656
7.377,408
17.145.656
7.377.408
0
0
0
0
24,523,064
24523,064
0
0
7,508,468
16409248
0
57,600
470,880
72.000
352,000
107,200
408,800
159,600
858.400
302.400
179.200
306,400
1,268,800
206,720
407,200
389.920
605,920
Loan Oescnptlon
Corpus
STP:P
Pnnclpal Amount Outstanding In Thousands
Reconstltu:e~
Matunty Date
Total
Outstandlnq
CUSIP
This Montn
Portion held In
Stnoped Form
Portion Held In
Unstnpoed Form
I
Treasury Notes
C.JSIP
912827 XWl
3H3
3K6
YES
3P5
3Rl
3U4
YN6
3Y6
4A7
4C3
YV116
4G4
4J8
4M1
ZE5
4Q2
4RO
4T6
ZN5
3M2
4W9
4X7
4Z2
ZX3
3WO
5C2
500
5E8
A85
4E9
B92
025
F49
G55
3J9
3L4
303
3S9
3V2
J78
3Z3
4B5
401
4H2
4K5
L83
4N9
4U3
N81
5A6
P89
5F5
088
R87
SS6
TS5
U83
VS2
W81
XSO
Y55
Z62
2JO
2U5
3ED
3X8
4F6
4Vl
5G3
~ Jlal
~
Interest Rate
8
5-3/4
5-5/8
7-7/8
5-5/8
5-5/8
5-3/8
8-112
5-112
5-112
5-5/8
8-7/8
5-1/2
5-3/8
5-3/8
8-3/4
5-1/8
4-1/2
4
8-1/2
5-3/4
4-5/8
4-5/8
4-1/2
7-3/4
5-3/8
5
4-7/8
5
8
5-5/8
7-7/8
7-1/2
7-112
6-3/8
5-7/8
5-3/4
5-3/4
5-5/8
5-1/2
6-1/4
5-1/2
5-112
5-3/4
5-112
5-3/8
5-3/4
5-1/4
4-1/4
5-7/8
4-3/4
7-1/4
5-1/4
7-1/4
7-7/8
7-112
6-112
6-1/2
5-7/S
5-5/S
6-7/8
7
6-1/2
6-1/4
6-5/8
6-1/8
5-1/2
5-5!8
4-3/4
5-1/2
912820 AT4
CBl
C07
AUI
CGO
CJ4
CM7
AV9
CRS
CT2
CV7
AWl
CZ8
OBO
006
AX5
OF1
OG9
OH7
AY3
CF2
OL8
OM6
OP9
AZO
CPO
DRS
OS3
OTI
BA4
CX3
BB2
BCO
B08
BES
CC9
CE5
CH8
CK1
CN5
BF3
CS4
CU9
CW5
OA2
OC8
BGI
OE4
OJ3
BH9
007
BJ5
OU8
BK21
BLO
BMS ,
BN61
BP1
B09,
BR71
BS5
Bnl
BUO
BW6
BX4
CA3
C08
CYI
OKO,,
OV6i
I
I
Treas-Jry NCles
".
-a, .....
1.,."),
Series
C
AK
AL
0
AM
AN
Y
A
Z
AB
AC
B
AD
AE
AF
C
AG
AH
AJ
0
X
AK
AL
U
A
S
V
W
X
B
T
C
0
A
B
M
N
P
0
C
A
0
E
F
G
H
B
J
K
A
E
B
F
C
0
A
B
C
0
A
B
C
0
B
C
0
B
C
0
E
Te.a
r-..'::'e 0 .... ~,..,e .::.:'" .... ::' ... ~ay c· eac~ rr,Qrth TaDle V
Ce:', 5 .... e~s:e a: r,::: ," ....-...-... 2 ... t;llcdeb: treas gc.
08/15/99
09/30/99
10/31/99
11115/99
11/30/99
12131/99
01131/00
02/15/00
02129/00
03/31/00
04130100
05115100
05/31/00
06130100
07131/00
08115/00
08/31/00
09130100
10/31/00
11115/00
11115/00
11130100
12 131100
01/31/01
02.'15/01
02/15101
02'28/01
03/31/01
04:30/01
05115/01
05i15101
08/15iOI
11/15/01
05/15,02
08115/02
09130102
10/31102
11130/02
12131/02
01131103
02/15/03
02'28/03
03!3 t.03
04130103
05/31103
06;30103
08/15;03
08115.03
11115,03
02'15/04
02 115;04
05,15,04
05,15,04
08,15,04
11115,'04
02'1505
05 1505
OS!1505
11115.05
02:15,06
05!15,06
07115,06
10115,06
02115.07
05'1507
OS 1507
02'15,08
05115,08
11:15.08
05:~
509
I
52,800
0
0
12.000
0
0
0
62,800
0
0
0
171.200
0
0
0
72.960
0
0
0
0
0
0
0
0
105600
0
0
0
0
2,300
0
12,800
246,800
72,640
32,000
0
0
0
0
0
0
0
0
0
0
0
55,200
0
0
0
0
100000
0
0
0
0
0
0
0
0
0
0
0
0
G
C
C
C
10,163,644
17,487,287
16,823,947
10,773,960
17,051,198
16,747,06
17.502.026
10.673,033
17.776.125
17.206,376
15,633,855
10.496,230
16,580,032
14,939,057
18,683,295
11.080,646
20,028,533
19,268,508
20,524,986
11,519,682
16.036,088
20,157,568
19.474,772
19,777,278
11,312,802
15,367,153
19,586,630
21,605352
21,033523
12,398083
12,873,752
12,339,185
24.226, I 02
1 I .714,397
23,859015
12,806,814
11,731,284
12,120,580
12.052.433
13.100.640
23,562,691
13,670,354
14,172,892
12,573,248
13, I 32,243
13,126,779
28011,028
19,852263
18,625,785
12,955,077
17,823223
14,440,372
18,925443
13,346.467
14,373,760
13,S34,754
14,739,504
15002,580
15,209,920
15,513587
16015.475
22,740,446
22.459,675
13,103,678
13,958,186
25,636803
13,583.412
27,190,961
250S3,125
14,794,810
5,383,744
17,269,687
16,604,747
5,753,160
16,865,598
16,647,860
17,502.026
6,931.833
17,776,125
17,203,576
15,630.655
4,902,630
16.326.432
14,671.857
18,680,095
6,713,286
20,023.733
19.268.508
20.496,986
6,708,082
16036,088
20 157,568
19474,772
19777,278
7,780002
15367,153
19586,630
21,605,352
2 I ,033523
8,320,758
12,873,752
9,167.985
19,388,182
8,066.397
22,079,815
12,771.614
1 I .675,684
11,919,780
12,052.433
13,100,640
22,158,563
13,626,354
14,172,892
12 573,248
13 132,243
13,126,779
27,143,828
19852,263
18 524,985
12675,077
17,823,223
14,273,172
18925443
12435267
14373,760
13,806,994
14739504
15002,580
15,205,120
15 509.427
16015475
22740.446
22.459,675
13035,294
13 924,586
25609603
13583412
27 190,961
25 OS3 125
14794810
4,779,900
217,600
219,200
5,020,800
185,600
99,200
0
3.741,200
0
2,800
3,200
5.593,600
253,600
267,200
3,200
4.367.360
4,800
0
28,000
4,811.600
0
0
0
0
3 532,800
0
0
0
0
4,077,325
0
3,171.200
4,837,920
3,648,000
1,779,200
35,200
61.600
200,800
0
0
1,404, I 28
44,000
0
0
0
0
867,200
0
100,800
280,000
0
167,200
0
91 1,200
0
27,760
0
0
4,800
4,160
0
0
0
68384
33,600
27,200
0 ,
0,
O!
1151,997.472
1097 114,135
5488333711
1059 I CO
1 750 73S 523 I
1 sea 702 404
'I
1254716C
-
I
o I!
I
220036119
0
0
=:e a . . ai!acle a':e' 3 :::0 p m eas:ern tlrr.e on the Comme'ce =::nomlc BUlletin 8:)a': lEBB I and me Bureau of the PuOII:
Fe' ~:::;re Ir::'....,a· c .... auo\..o~ EBB cal! (202) 482-1966 The Ca 2 .... ces In thiS taC,e are S..JDJeC: to al,.,C,t and swDsequen! adJL.s:rnerlS
",'1;
-
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT ~ WASHINGTON DC
CONTACT:
JR IMMEDIATE RELEASE
une 07, 1999
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
June 10, 1999
September 09, 1999
912795CN9
Term:
Issue Date:
Maturity Date:
CUSIP Number:
4.510%
High Rate:
Investment Rate 1/:
Price:
4.638%
98.860
All noncompetitive and successful competitive bidders were awarded
!curities at the high rate.
Tenders at the high discount rate were
lotted 35%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
$
competitive
Noncompetitive
27,063,802
1,299;548
267,946
267,946
28,631,296
7,517,546
4,036,780
17,054
4,036,780
17,054
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
5,950,052
1.299,548
7,249,600 2/
28,363,350
PUBLIC SUBTOTAL
TOTAL
$
32,685,130
$
11.571,380
Median rate
4.500%: 50% of the amount of accepted competitive tenders
tendered at or below that rate.
Low rate
4.410%:
5% of the amount
accepted competitive tenders was tendered at or below that rate.
-to-Cover Ratio
=
28,363,350 / 7,249,600
=
3.91
E~ivalent coupon-issue yield.
Awards to TREASURY DIRECT = $976,576,000
RR- 3190
http://www.publicdebt.treas.gov
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
OR IMMEDIATE RELEASE
une 07, 1999
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
June 10, 1999
December 09, 1999
912795CE9
Term:
Issue Date:
Maturity Date:
CUSIP Number:
4.760%
High Rate:
Investment Rate 1/:
Price:
4.958%
97.594
All noncompetitive and successful competitive bidders were awarded
at the high rate.
Tenders at the high discount rate were
lotted 91%. All tenders at lower rates were accepted in full.
~curities
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
-------------~---
$
Competitive
Noncompeti ti ve
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
l
$
$
3,979,200
1,082,279
5,061,479 2/
20,079,479
PUBLIC SUBTOTAL
TOTAL
18,997,200
1,082,279
2,444,054
2,444,054
22,523,533
7,505,533
3,820,000
155,946
3,820,000
155,946
26,499,479
$
11,481,479
Median rate
4.750%: 50% of the amount of accepted competitive tenders
tendered at or below that rate.
Low rate
4.690%:
5% of the amount
accepted competitive tenders was tendered at or below that rate.
l-to-Cover Ratio
=
20,079,479 / 5,061,479
=
3.97
E~ivalent coupon-issue yield.
Awards to TREASURY DIRECT = $765,544,000
R-3191
http://www.publicdebt.treas.gov
DEPARTMENT
OF
THE
TREASURY
NEWS
FOR IMMEDIATE RELEASE
June 8, 1999
Contact: Dan Israel
(202) 622-2960
TREASURY NAMES MORE FRONTS OF COLOMBIAN DRUG CARTELS
The Treasury Department on Monday added 41 businesses and eight individuals to its list
of Specially Designated Narcotics Traffickers (SDNTs), a list designated for economic sanctions
against Colombian drug cartels.
Treasury's Office of Foreign Assets Control (OF AC) has determined that these 49 new
SDNTs are acting as fronts for the Cali and North Coast cartels. Among the notable drug cartel
owned or controlled businesses on the list is the America soccer team, determined to be owned or
controlled by Cali cartel leader Miguel Rodriguez Orejuela and other named SDNTs Other
named drug cartel owned or controlled businesses include several pharmaceutical and drug
companies, a radio broadcasting company, as well as investment, construction and real estate
firms
"Today's action sends a clear message that we will not allow corporate sleight-of-hand to
enable the cartels to profit by using the U S financial system and by engaging in American
business transactions," said James E Johnson, Treasury Under Secretary for Enforcement "This
list of companies shows the extent to which narcotics traffickers' illicit proceeds have infiltrated
various commercial sectors as the traffickers attempt to legitimize their drug profits"
This action is part of the ongoing interagency etfort of the Treasury, Justice and State
Departments to carry out President Clinton's Executive Order 12978, signed on October 21,
1995, which applies economic sanctions against the Colombian drug cartels. With the addition of
names released today, a total of 496 businesses and individuals whose assets are blocked under
the 1995 Executive Order are also prohibited from American financial and business dealings.
The list of SDNTs includes the four Cali cartel drug kingpins named in the Executive
Order, North Coast narcotics trafficker Julio Cesar Nasser David, and 491 other SDNTs that have
been determined to be owned or controlled by, or to act for or on behalf of, persons designated in
or pursuant to the Order.
RR-3192
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Nine of the newly designated companies are successors or "transformers," using new
company names to firms previously designated as SDNTs because they were owned or controlled
by the kingpins or agents of the cartels. A total of 27 transformer companies have been named as
SDNTs to date. The U.S. Government will continue to identify businesses owned or controlled
by drug cartels and expand the SDNT list to include additional Colombian drug trafficking
organizations.
The list of businesses and individuals named by Treasury today as SDNTs is attached and
available at www.ustreas.gov/ofac. The list will be published in the Federal Register at a later
date.
-30-
ENTITIES:
1.
ADMACOOP,
(a.k.a. COOPERATIVA MULTIACTIVA DE ADMINISTRACION Y MANEJO
ADMACOOP) ,
Calle 12B No. 28-58, Bogota, Colombia;
Carrera 28A No. 14-29, Bogota, Colombia;
NIT # 830030933-6 (Colombia)
ALKALA ASOCIADOS S. A. ,
(f.k.a. INVHERESA S.A.),
Calle 1A No. 62A-130, Cali, Colombia;
Calle 1A No. 62A-120, Cali, Colombia;
Avenida 2N No. 7N-55 of. 501, Cali, Colombia;
Calle 70N No. 14-31, Cali, Colombia;
NIT # 800108121-0 (Colombia)
2•
BONOMERCAD S. A. ,
(f.k.a. DECACOOP S.A.),
Transversal 29 No. 39-92, Bogota, Colombia;
NIT # 830018919-3 (Colombia)
3•
4.
C.N.A. PUBLICIDAD LTDA.,
Calle 74 No. 53-30, Barranquilla, Colombia;
NIT # 802002664-9 (Colombia)
5.
CAMPO VERDE LTDA.,
Carrera 54 No. 75-97 piso 2, Barranquilla, Colombia;
NIT # 800204479-2 (Colombia)
6.
CLAUDIA PILAR RODRIGUEZ Y CIA. S.C.S.,
Calle 17A No. 28A-43, Bogota, Colombia;
NIT # 830007201-7 (Colombia)
COLOMBIANA DE CERDOS LTDA.,
(a.k.a. COLCERDOS LTDA.),
Km. 3 Via Marsella Parque Industrial, Pereira, Colombia;
Apartado Aereo 3786, Pereira, Colombia;
NIT # 800018928-0 (Colombia)
7•
8.
COMERCIALIZACION Y FINANCIACION DE AUTOMOTORES S.A.,
(a.k.a. COMFIAUTOS S.A.),
Carrera 4 No. 11-33 of. 303, Cali, colombia;
Avenida 2N No. 7N-55 of. 609, Cali, Colombia;
NIT # 800086115-1 (Colombia)
2
9.
COMPANIA ADMINISTRADORA DE VIVIENDA S .A. ,
(f.k.a. INVERSIONES GEMINIS S.A.),
Carrera 40 No. 6-24 of. 402B, Cali, Colombia;
Carrera 41 No. 6-15/35, Cali, Colombia;
NIT # 800032419-1 (Colombia)
10. CONSTRUCCIONES COLOMBO-ANDINAS LTDA.,
Carrera 8 No. 16-79 of. 504, Bogota, Colombia;
Calle 29 No. 36-61, Bogota, Colombia;
NIT # 860505252-8 (Colombia)
11. CONSTRUCTORA EL NOGAL S.A.,
(f.k.a. CONSTRUEXITO S.A., f.k.a. CONE S.A.),
Avenida 2N No. 7N-55 of. 501, Cali, Colombia;
Calle 2A No. 65A-110, apto. 501 B3, Cali, Colombia;
NIT # 800051378-9 (Colombia)
12. CORPORACION DEPORTIVA AMERICA,
(a.k.a. CLUB DEPORTIVO AMERICA),
(a.k.a. CLUB AMERICA DE CALI),
Carrera 56 No. 2-70, Cali, Colombia;
Avenida Guadalupe No. 2-70, Cali, Colombia;
Calle 24N No. 5BN-22, Cali, Colombia;
Calle 13 Carrera 70, Cali, Colombia;
Sede Cascajal, Cali, colombia;
Sede Naranjal, Cali, Colombia;
NIT # 890305773-4 (Colombia)
D' CACHE S .A. ,
Calle 25N No. 3AN-39, Cali, colombia;
NIT # 800149284-8 (Colombia)
13.
14. DECAFARMA S. A. ,
Transversal 29 No. 39-92, Bogota, colombia;
NIT # 800241240-7 (Colombia)
15. DISTRIBUIDORA DE ELEMENTOS PARA LA CONSTRUCCION S.A.,
(a.k.a. D'ELCON S.A.),
Carrera 23D No. 13B-59, Cali, Colombia;
NIT # 800117780-2 (Colombia)
16. FARMAHOGAR,
(a.k.a. FARMAHOGAR COPSERVIR 19),
(a.k.a. DROGUERIA FARMAHOGAR) ,
3
Carrera 7 No. 118-38, Bogota, Colombia;
Avenida 7 No. 118-46, Bogota, Colombia;
NIT # 830011670-3 (Colombia)
17. INDUSTRIAL DE GESTION DE NEGOCIOS E.U.,
Calle 5C No. 41-30, Cali, Colombia;
NIT # 805005946-5 (Colombia)
18. INVERSIONES EL GRAN CRISOL LTDA.,
(f.k.a. W. HERRERA Y CIA. S. EN C.),
Avenida 2N 7N-55 of. 501, Cali, Colombia;
Carrera 24D Oeste No. 6-237, Cali, Colombia;
NIT # 800001330-2 (Colombia)
19. INVERSIONES INTEGRAL LTDA.,
Carrera 4 No. 12-41 of. 1403, 1501 Edificio Seguros Bolivar,
Cali, Colombia;
Apartado Aereo 10077, Cali, Colombia;
NIT # 800092770-9 (Colombia)
20. INVERSIONES MONDRAGON Y CIA. S.C.S.,
(f.k.a. MARIELA DE RODRIGUEZ Y CIA. S. EN C.),
Calle 12 Norte No. 9N-56/58, Cali, Colombia;
NIT # 890328152-1 (Colombia)
21. INVERSIONES NAMOS Y CIA. LTDA.,
Carrera 54 No. 75-107, Barranquilla, colombia;
NIT # 800182475-7 (Colombia)
22. INVERSIONES Y CONSTRUCCIONES ABC S.A.,
(f.k.a. INVERSIONES CAMINO REAL S.A.),
Calle 10 No. 4-47 piso 19, Cali, Colombia;
Calle 12 Norte No. 9N-56/58, Cali, Colombia;
NIT # 890325389-4 (Colombia)
23. K. P. TO JEANS WEAR S. DE H.,
Calle 78 No. 53-70 Local 218, Barranquilla, Colombia;
NIT # 800211718-7 (Colombia)
24. M.O.C. ECHEVERRY HERMANOS LTDA.,
Calle 23AN No. 5AN-21, Cali, Colombia;
NIT # 800038241-5 (Colombia)
4
25. MARIELA MONDRAGON DE R. Y CIA. S. EN C.,
Calle 12 Norte No. 9N-56/58, Cali, Colombia;
Avenida 4 Norte No. 8N-67, Cali, Colombia;
NIT # 800122032-1 (Colombia)
26. MATADERO METROPOLITANO LTDA.,
Km. 3 Via Marsella Parque Industrial, Pereira, colombia;
Carrera 10 No. 34-21 Dosq., Pereira, Colombia;
Apartado Aereo 3786, Pereira, Colombia;
NIT # 891412986-8 (Colombia)
27. MIRALUNA LTDA.,
(f.k.a. EL PASO LTDA.),
Carrera 4 No. 12-41 of. 1403, 1501, Cali, Colombia;
NIT # 890328836-9 (Colombia)
28. PATENTES MARCAS Y REGISTROS S.A.,
(a.k.a. PATMAR S.A.),
Transversal 29 No. 39-92, Bogota, Colombia;
NIT # 830016913-0 (Colombia)
29. PROYECTOS J .A.M. LTDA.,
Carrera 53 No. 74-16, Barranquilla, Colombia;
Carrera 54 No. 72-147, Barranquilla, Colombia;
Calle 77 No. 65-37 L-6, Barranquilla, Colombia;
NIT # 800234529-0 (Colombia)
30. PROYECTOS J.A.M. LTDA. Y CIA. S. EN C.,
Calle 74 No. 53-23 of. 401, Barranquilla, colombia;
Calle 74 No. 53-23 L-503, Barranquilla, Colombia;
Carrera 53 No. 74-16 of. 401, Barranquilla, Colombia;
Carrera 53 No. 74-16, Barranquilla, Colombia;
NIT # 800243483-9 (Colombia)
31. REPARACIONES Y CONSTRUCCIONES LTDA.,
(a.k.a. RECONSTRUYE LTDA.),
Avenida 6N No. 23DN-16 of. 402, Cali, colombia;
NIT # 800053838-4 (Colombia)
32. SAN MATEO S .A. ,
(f.k.a. INVERSIONES BETANIA LTDA.),
(f.k.a. INVERSIONES BETANIA S.A.),
Avenida 2N No. 7N-55 of. 501, Cali, Colombia;
5
Carrera 53 No. 13-55 apt. 102B, Cali, Colombia;
Carrera 3 No. 12-40, Cali, Colombia;
NIT # 890330910-2 (Colombia)
33. SAN VICENTE S.A.,
(f.k.a. INVERSIONES INVERVALLE S.A., f.k.a. INVERVALLE S.A.),
Avenida 2N No. 7N-55 of. 501, Cali, Colombia;
Calle 70N No. 14-31, Cali, Colombia;
Avenida 4 Norte No. 17N-43 L.1, Cali, Colombia;
NIT # 800061212-8 (Colombia)
34. SERVICIOS FARMACEUTICOS SERVIFAR S.A.,
(a.k.a. SERVIFAR S;A.),
Carrera 4 No. 31-96, Cali, Colombia;
NIT # 805003968-8 (Colombia)
35.
Calle
Calle
Calle
Calle
Calle
NIT #
SHARPER S .A. ,
17A No. 28A-43, Bogota,
12B No. 28-58, Bogota,
12B No. 28-70, Bogota,
16 No. 28A-42, Bogota,
16 No. 28A-57, Bogota,
830026833-2 (Colombia)
Colombia;
Colombia;
Colombia;
Colombia;
Colombia;
36. SOCIEDAD COMERCIAL Y DEPORTIVA LTDA.,
Carrera 34 Diag. 29-86 Estadio Pascual Guerrero, Cali, Colombia;
Carrera 34 Diag. 29-05, Cali, Colombia;
Carrera 34 Diagonal 29 Estadio, Cali, Colombia;
NIT # 800141329-4 (Colombia)
SONAR F. M. S. A. ,
(f.k.a. RADIO UNIDAS FM S.A., COLOR STEREO S.A., COLOR'S S.A.),
Calle 15 Norte No. 6N-34 piso 15 Edificio Alcazar, Cali,
Colombia;
Calle 19N No. 2N-29 piso 10 Sur, Cali, Colombia;
NIT # 800163602-5 (Colombia)
37 •
38. SONAR F.M. E.U. DIETER MURRLE,
(a.k.a. PRISMA STEREO 89.S F.M.; a.k.a. FIESTA STEREO 91.S F.M.),
Calle 15 Norte No. 6N-34 of. 1003, Cali, colombia;
Calle 43A No. 1-29 Urb. Sta. Maria del Palmar, Palmira, Colombia;
NIT # 805006273-1 (Colombia)
6
39. TITOS BOLO CLUB,
Carrera 51B No. 94-110, Barranquilla, Colombia;
NIT # 890108148-6 (Colombia)
40. URBANIZACIONES Y CONSTRUCCIONES LTDA. DE CALI,
(f.k.a. URBANIZACIONES Y CONSTRUCCIONES LTDA.),
Carrera 4 No. 12-41 of. 1403, Cali, Colombia;
NIT # 890306569-2 (Colombia)
41. VILLA DE ARTE S. DE H.,
(a.k.a. VILLA D'ARTE),
Carrera 54 No. 74-79, Barranquilla, Colombia;
Aereo Apartado 51881, Barranquilla, Colombia;
NIT # 800125346-2 (Colombia)
INDIVIDUALS:
1.
CARRILLO QUINTERO, Eugenio,
c/o BONOMERCAD S.A., Bogota, Colombia;
c/o DECAFARMA S.A., Bogota, Colombia;
c/o PATENTES MARCAS Y REGISTROS S.A., Bogota, Colombia;
c/o SHARPER S.A., Bogota, colombia;
Cedula No. 73094061 (Colombia) (individual)
2•
CORDOBA VALENCIA, Juan Ramon,
c/o BONOMERCAD S.A., Bogota, Colombia;
c/o PATENTES MARCAS Y REGISTROS S.A., Bogota, Colombia;
c/o SHARPER S.A., Bogota, Colombia;
Cedula No. 19273511 (Colombia) (individual)
3.
CUECA V., Miguel A.,
c/o ADMACOOP, Bogota, Colombia;
c/o FARMACOOP, Bogota, Colombia;
c/o LABORATORIOS KRESSFOR DE COLOMBIA S.A., Bogota, Colombia;
Cedula No. 11386978 (Colombia) (individual)
4.
GUTIERREZ PADILLA, Clara Ines,
c/o ADMACOOP, Bogota, Colombia;
c/o DECAFARMA S.A., Bogota, Colombia;
c/o FARMACOOP, Bogota, Colombia;
Cedula No. 51583831 (Colombia) (individual)
7
5.
GUTIERREZ PARDO, Elvira Patricia,
c/o ADMACOOP, Bogota, Colombia;
c/o BONOMERCAD S.A., Bogota, Colombia;
c/o PATENTES MARCAS Y REGISTROS S.A., Bogota, Colombia;
Cedula No. 39612308 (Colombia)
(individual)
6.
MANJARREZ GRANDE, Jorge,
(a.k.a. MANJARRES GRANDE, Jorge),
c/o GRACADAL S.A., Cali, Colombia;
c/o INTERAMERICANA DE CONSTRUCCIONES S.A., Cali, colombia;
c/o SERVIFAR S.A., Cali, Colombia;
c/o RADIO UNIDAS F.M. S.A., Cali, Colombia;
c/o SONAR F.M. S.A.; Cali, Colombia;
Cedula No. 16632969 (Colombia) (individual)
7.
SOSSA RIOS, Diego Alberto,
(a.k.a. SOSA RIOS, Diego Alberto),
Calle 46 No. 13-56 of. Ill, Bogota, Colombia;
c/o BONOMERCAD S.A., Bogota, Colombia;
c/o DECAFARMA S.A., Bogota, Colombia;
c/o FARMACOOP, Bogota, Colombia;
c/o PENTAPHARMA DE COLOMBIA S.A., Bogota, Colombia;
c/o SHARPER S.A., Bogota, Colombia;
Cedula No. 71665932 (Colombia) (individual)
8.
VEGA, Rosalba,
c/o BONOMERCAD S.A., Bogota, Colombia;
c/o PATENTES MARCAS Y REGISTROS S.A., Bogota, Colombia;
c/o SHARPER S.A., Cali, Colombia;
Cedula No. 21132758 (Colombia) (individual)
DEPARTMENT
OF
THE
TREASURY
NEWS
TREASURY
~~178f9~. . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
............................
OffiCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W .• WASHINGTON, D.C.. 20220. (202) 622.2960
Weekly Release of U.S. Reserve Assets
,]UD'":
e,
1999
The Treasury Department today released U.S. reserve assets data for the week cncling
lune 4, 1999.
As Il1citcated 111 t11lS tablc, U.S. reserve assets totaled $71,697 million as of.l une 4, 1999,
down from $72,122 million as of May 28, 1999.
u.s. Reserve Assets
(millions of US dollars)
1999
Total
Reserve
Special
Reserve
Foreign
Currencies
JI
Assets
Gold
Stock \1
Drawing
R'19ht s 21
ESF
SOMA
IMF21
May 28, 1999
72,122
11,049
9,784
14,799
14,800
21,689
June 4, 1999
71,697
11,049
9,735
14,666
14,668
21,579
Week Ending
.
Position in
1/ Gold stock IS valued monthly at $42.2222 per fine troy ounce. Values shown are as of April 30, 1999. The i\farch 31, 1999
value was $1 1,049 nullion.
2/ SDR holdings and the reserve posltlon In the IMF are based on IMF data and revalued In dollar terms at the offiCIal
SDR/ dollar exchange rate. ConsIstent with current reporting pracTIces, IMF data for May 28, 1999 are final. Data for SDR
holdmgs and the reserve position
In
the IMF shown as of June 4, 1999 (in Italics) reflect preliminary adjustments by the Treasury
to
the Mal' 28, 1999 IiviF data.
3/ Includes holdings of the Treasury's Exchange StabilizaTIon Fund (ESF) and the Federal Reserve's System Open :darket
.1ccount (SOi\L\). These holdings are valued at current market exchange rates or, where appropnate, at such other rates as rna,' be
agreed upon by the parties to the transactions.
RR- 3193
---~---------------------------------------------------------------------------------------Forpress releases, speeches, public schedules and official biographies, call our 24..1zour fax line at (202) 622-2040
---------------~---------------------------------------------------------------------------
DEPARTMENT
OF
THE
TREASURY
NEWS
OffiCE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlDNGTON, D.C. - 20220 - (202) 622-2960
EMBARGOED UNTIL 8:30 p.m. EDT
Remarks as Prepared for Delivery
June 8, 1999
TREASURY SECRETARY ROBERT E. RUBIN
REMARKS TO THE CENTER FOR THE STUDY OF THE PRESIDENCY
Thank you, Don Marron and David Abshire, and all of you involved with the Center for
Study of the Presidency, for this great honor. Let me also say how pleased I am to be honored
with Senator Howard Baker. After six and a half years in government, I have gained a deep
appreciation of the importance of having Congressional leaders in both parties who, when the
partisan skirmishing is done, are willing to work together, to cross party lines and to find common
ground to get things done. Throughollt his career, Howard Baker has exemplified that spirit of
cooperation, and a commitment to making our complex system of government work
By honoring me this evening, you honor the large number of highly capable, hard working
and dedicated public servants --appointed and career -- with whom I have had the privilege to
work over the last six and a half years. I accept this honor on their behalf These people deserve
the support and respect of all of us And I might add, I think that those who denigrate public
service -- as some political leaders have from time to time -- do our country a great disservice
You also honor our President, since anything any of us in his Administration has done on the
major issues has been under his highly active leadership It has been the President who has had to
make and take responsibility for so many politically and substantively tough decisions, including
those that have contributed greatly to the strong economic conditions we have had in our country
over the past six and a half years
During my tenure in the Administration I have gained, I believe, some understanding of
how the Presidency works, just as many of you have from your own days in government. While
there are many requisites for a successful Presidency, I would like to focus on two interrelated
qualities. First, a President must have a clear vision -- a strong sense of what he or she wants to
do -- and coherent strategies consistently followed, for achieving that vision. Second, a President
must then have the willingness to make tough unpopular decisions in the face of strong
opposition
RR-3194
---~------------------------------------------------------------------------------
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Historians will certainly debate the meaning and impact of the Clinton Administration's
policy decisions, as they would for any Administration's decisions
I believe that they will conclude that entering office after twelve years of enormous fiscal
deficits and at a time of economic unease, this President made tough decisions on the economy
with a consistent vision. These include the 1993 deficit reduction program that prevailed by only
one vote in the House and with the Vice President's tie breaker in the Senate, the strenuous effort
to secure passage for the North American Free Trade Agreement, despite broad opposition -including among his political allies; the decision in the face of overwhelming popular opposition to
undertake the Mexican support program during what some have called the first financial crisis of
the 21 5t Century; and the many controversial decisions -- which were sound in my view -- involved
in combating the Asian financial crisis.
Making these decisions was made all the more difficult by the atmosphere in which our
elected officials must govern -- something which seems to me deeply troubling as I think about
my six and a half years in Washington Twenty-four hour reporting, the conversion of policy
issues into personal attacks, the tendency to make thirty-second sound bite judgments, all
discourage decision making that involves risk So, too, do two even more fundamental factors
Major decisions are inherently uncertain, and so necessarily involve probabilistic judgments. But,
decisions are judged solely on the basis of their results, rather than on the quality of the
probabilistic decision making itself Moreover, we are all human, and we all make mistakes. But
Washington has no tolerance for mistakes, and requiring perfection must certainly be the enemy of
good decision making.
How to try to improve all of this is both critically important, and not at all clear --at least
not to me. One way, though, that we can all contribute to creating a better environment for
decision making is to increase understanding among the American people about the opportunities
and risks involved in the major issues facing the nation. For example, as we look forward, I am
particularly concerned with -- as are many of you -- the need to maintain and strengthen America's
leadership role in the world. However, at a time when our economic well being, as well as
national security and other interests, are enormously affected by what happens outside our
borders, the voices urging us to turn inward are growing louder and stronger, both among the
public at large and in official Washington The antidote, it seems to me, is public understanding,
and that, in turn, could produce a better environment for the difficult decisions of the
interdependent world of the new century
If you speak to those who have worked in and out of government for the past twenty or
thirty years, no matter their party allegiance, they often point to a great deterioration in the
conditions that surround policy makers at the highest levels of government Even in the six and a
half years I have been in Washington, the atmosphere is generally thought to have grown worse.
It seems to me that you at the Center for Study for the Presidency, who are intensely focused on
the inner workings of that office, can playa very important bipartisan role in trying to determine
how to change this dynamic and to foster conditions that will help and not hinder Presidents in
making tough decisions. I believe this is critical, for the sake of future Presidents, but much more
importantly, for the citizens they will serve.
Thank you, again, for this honor, and for the opportunity to speak with you this evening.
-30-
TREASURY
-
NEWS
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622-2960
Embargoed until 10 a.m. EDT
Text as Prepared for Delivery
June 10, 1999
TREASURY ASSISTANT SECRETARY EDWIN M. TRUMAN
TESTIl\10NY BEFORE THE HOUSE COMMITTEE ON BANKING
AND FINANCIAL SERVICES
Mr. Chairman, Ranking-Member LaFalce, I am grateful for this opportunity to discuss
recent economic and financial developments in Russia, which I know are of considerable
interest to this Committee as well as to other members of Congress.
There is no question that the United States has enormous economic and national
security interests in what happens in Russia. Economic instability in Russia raises important
concerns for our broader national security, given Russia's pivotal and continuing role with
respect to nuclear security, the battle against terrorism, the stability of Eurasia, and conflict
resolution in global hot spots like the Balkans.
I would like to structure my testimony today around seven points. First, Russia can
point to some reform accomplishments (both political and economic) during the past eight
years and they remain in place. Second, events since August suggest that there is a greater
consensus in Russia on economic objectives than we might reasonably have anticipated.
Third, although all the news over the past eight years and last 10 months about economic
reform in Russia has not been uniformly negative, the plain fact is that Russia continues to
suffer from an inability to implement a consistent, comprehensive and sustained economic
reform agenda. Fourth, criticisms of the West's efforts to help Russia based on the results
achieved and corruption that remains tend to confuse the medicine with the disease. Fifth,
looking ahead, the approach that best serves U.S. and Russia's interests is to continue to
support credible extension of market-oriented economic reform. Sixth, a resolution of
Russia's debt situation is intimately bound up with the issue of Russia's cooperation with the
international financial institutions on an agreed program of economic reform. Seventh, in light
of past shortfalls relative to expectations, Russia and the international community should try to
develop new, innovative ways to promote Russia's transformation to a fully functioning market
economy, incl uding through support of broad based, structural and institutional reforms.
RR-3195
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----------------------------------------------------------------------------------
Turning to my first point, although many observers with reason are disappointed in
progress that has been made in Russia's economic transformation, we should not lose sight of
what has been accomplished over the past eight years, accomplishments that generally remain
in place. Russia has a free press, voters select their political representatives via the ballot box,
Russians trade freely in both goods and information with the rest of the world, and private
property and free enterprise are generally accepted elements of the economic landscape. Well
over half of economic activity is in private hands; by 1997 military spending had fallen in real
terms to one-seventh of its peak Soviet level in 1988, and to two-fifths of its 1992 level; and
the central bank has demonstrated that it has the technical capacity to bring inflation under
control.
Second, it is easy to be discouraged about Russian economic reform and performance
because there is a lot to be discouraged about. However, developments since last August
suggest more of a consensus in Russia on the fundamental economic objectives than might
have been anticipated or feared. Even during a period in which many of the leaders of the
government were identified with the failed policies and structures of the Soviet past, there has
not been a reversion to central planning, directed lending, industrial subsidies, or reliance on
the printing press. Given this experience, it is a reasonable judgement that the probability of
such retrogression in the immediate future has been reduced. Moreover, going forward, the
continued presence in the new government of reformist elements is reassuring, and the
commitment by the current and previous governments to reforms agreed with the IMF and
World Bank appears to demonstrate that support for core economic and financial reforms is
more firmly entrenched in Russia than some may have thought was the case.
Nevertheless, and this is my third point, the root problem in Russian economic reform
since the dissolution of the Soviet Union has been the inability to translate promising intentions
with respect to reform into reasonable reality. This problem unfortunately remains today, and
it has been stressed in previous testimony by Administration officials. A bloated bureaucracy,
an unwieldy and distorted tax system, and a failure to implement fundamental fiscal reforms
led to a buildup of debt which overwhelmed the authorities in August of last year. The Russian
banking sector never developed into an effective mechanism for allocating savings to
productive private investment. It follows from these shortcomings that the Russian
government's capacity to implement fundamental fiscal and structural reforms will be a core
consideration in assessing both the likely trajectory of Russian policies going forward and the
appropriate level of support for those policies by the international community.
With respect to IMF economic and financial policies toward Russia in the aftermath of
the August crisis, critics of Russia's reform process have focused their critiques on two
aspects. First, they have argued that Russia's default and devaluation last August demonstrate
that the macroeconomic prescriptions of the IMF, prescriptions supported by the United States
and other G-7 governments, were flawed. Second, they have argued that Russia is simply '"too
corrupt" to reform.
2
The first criticism is the equivalent of concluding that the medicine is ineffective when
the patient has not taken it or has only intermittently taken half the recommended dosage. My
sense is that there was and is quite a broad consensus, both in Russia and in the West,
regarding the benefits of macroeconomic stabilization in terms of building confidence,
facilitating long-term planning and investment, and providing the basis for economic growth.
Having said this, it is also broadly understood that a robust fiscal framework was never put in
place in support of the stabilization that was achieved in Russia in 1995. Without a sustainable
financial structure for the public sector backed by a credible budget process, it was only a
matter of time until the effects on government debt of the compounding of high interest rates
would cause the macroeconomic stabilization that had been achieved to crater. However, it
was not possible to predict when the failure to fully reform Russia's budget and tax systems
would be manifested in the markup. Moreover, the severe setback to stabilization that
ultimately resulted in no way detracts from the fundamental desirability of the course that was
persistently advocated but not consistently pursued from 1995 on. There was always a
reasonable chance that the race between the forces of fiscal reform and the arithmetic of fiscal
excess would be won by the former.
The second criticism of policy toward Russia -- the issue of corruption -- assumes,
incorrectly in my view, that the causal arrow between corruption and reform points in only one
direction. In fact, one of the core goals of a balanced program of reform is the elimination of
opportunities for corruption which proliferate in a system that is ruled by arbitrary
administrative controls administered by underpaid bureaucrats. From this perspective, the
disturbing persistence of widespread corruption is indicative of just how far Russia has to go
and of the inadequacy of progress over the past eight years. Corruption in Russia is a very
serious issue not only for Russia but also for the international community that is trying to be
supportive of Russian reform.
For this reason, the issues of crime and corruption have received increased attention in
recent years, much of it linked in one way or another to our efforts. To set the record straight,
we have been working with the Russians for several years now to combat organized and other
types of crime. U.S. government programs have focused on development of the rule of law,
law enforcement training, building working relationships between U.S. and Russian law
enforcement counterparts to enhance cooperation on specific criminal cases, and negotiation of
core law enforcement agreements to enhance overall coordination of anti-crime efforts on the
basis of internationally accepted standards. We have also supported anti-corruption efforts, by
helping to promote good governance and transparency. At the Department of Treasury's
Financial Crimes Enforcement Network (FINCEN), we are working with Russian authorities
to assist in the development of money-laundering legislation and the creation of a financial
intelligence unit for the surveillance of large-scale financial transactions.
There are some early indications that all this work is beginning to bear fruit. Notably,
the Office of the Prosecutor General has initiated and is prosecuting numerous cases against
3
Russian officials, including high-level officials, who have allegedly abused their government
positions. Russia is also beginning to pass much-needed legislation, including civil and
criminal codes, which will form the basis of a "rule of law" society. Perhaps most
importantly, there are signs of greater recognition at the poIiticallevel of the negative
consequences which unchecked crime and corruption can have on the development of
democracy and sustainable economic growth. However, I do not want to understate either the
seriousness of the corruption issue in Russia or the difficulty of dealing with such phenomena
once they are entrenched. We will continue to support programs that help Russia combat
corruption.
Looking forward, and moving on to my fifth point, we believe that the approach that
best serves Russia's interests, as well as those of the United States, involves principally a
renewed commitment by Russia to the market-oriented process of reform. The scope of U.S.
and international assistance should be predicated on the quality of the efforts of the Russian
authorities and the support they receive from the general population. The strategic importance
of Russia dictates continued engagement, but a process of engagement that is predicated on
performance, not just promises. We intend to continue to stand ready to engage Russia across
a broad spectrum of pursuits and to remain alert to new opportunities to reinforce economic
and financial reforms. We also intend to continue our long-standing support for the
International Financial Institutions' objectives in Russia, with program objectives appropriately
gauged to current conditions as well as conditioned on Russia's adherence to its program of
reform.
Because of past policy failures, Russia now faces serious external financial challenges.
The issue of Russia's external debt problem is, in turn, intimately bound up with the issue
cooperation with the Fund for three key reasons:
First, avoiding additional borrowing or printing money to finance budget deficits
requires the type of fiscal and monetary discipline and the close technical attention to
detail and consistency that a Fund program can engender;
Second, Russia will need external financing to help cover a substantial financing gap
over the program period; and
Third, Paris Club creditors will not proceed to negotiate about Russia's debt situation
without an IMF-approved economic program in place; such a program helps provide
confidence that Russia is implementing the policy steps needed establish a sustainable
external financial position.
The program that the Russian authorities have agreed with the IMF focuses on areas
such as fiscal reform and strengthening the banking system that we believe are key to restoring
stability to the economy, and the Paris Club (assuming Russia has put its new IMF-supported
program in place) can help provide needed "breathing space" regarding Russia's external
4
payment obligations. We hope to avoid a counterproductive outcome where an impossibly
large external debt burden reduces incentives for Russia to remain engaged and to continue the
process of economic reforms. At the same time, we must be realistic about what Russian
policy can achieve under current political circumstances. We must also be cautious about
adding further to Russia's debt burden, and we must ensure that any funds advanced by the
IMF are dedicated to the repayment of obligations to it. Similarly, any funds advanced by the
World Bank or EBRD should be targeted to the achievement of well-specified reform
objectives.
On my final point, we must recognize that Russia continues to face very difficult
economic challenges and it is handicapped by its limited accomplishments to date. Against this
background, Russia and the international financial community should try to develop new,
innovative ways to promote on a broader basis the transformation of Russia to a fully
functioning market democracy using mechanisms that reflect the lessons of recent years. Once
a new economic program supported by the IMF is in place and pressure on Russia's external
financial position has abated, the focus should be on helping Russia craft a comprehensive
reform strategy that will be politically salable to a broad spectrum of Russian citizens.
Emphasis should be on:
lower tax rates with more uniform application (including increased pressure on taxdelinquent enterprises);
comprehensive bank restructuring;
increasing the flow of financing to small- and medium-sized enterprises;
improving the investment climate by enhancing the rule of law, reducing the regulatory
burden and strengthening the rights of minority shareholders;
redirection of expenditure priorities towards health and education;
reductions in redundant bureaucracy and in arrears to teachers and health service
workers; and
increased attention to Russia's regions, with extra support directed to those regions that
display a willingness to embrace more aggressive reforms.
Greater emphasis should also be placed on our dialogue with Russia on issues of
political legitimacy and on the development and implementation of a robust social contract.
Finally, more attention should be paid in the coming months to an intensification of the
dialogue between the Fund and the Bank on structural reforms so that progress on structural
5
issues advances in tandem with achievements with respect to fiscal and other macroeconomic
stabilization goals.
This agenda is challenging. There is no assurance that it can be implemented, but in
our view it is the way forward. However, it is up to Russia to choose this course.
Mr. Chairman, I hope these points have been helpful, and I stand ready to try to
answer any questions from you and this distinguished committee.
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TREASURY
omCE OF PUBlJC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622.2960
EMBARGOED UNTIL 1:30 p.m. EDT
June 9, 1999
TREASURY SECRETARY ROBERT E. RUBIN
REMARKS TO THE BRETTON WOODS COMMITTEE
Thank you. It is a pleasure to speak with you today. The first speech I gave as Treasury
Secretary four and a half years ago was before the Bretton Woods Committee. It seems
appropriate that one of the last speeches I will give as Treasury Secretary is also before you,
because we have seen in recent years just how critically important the issues I discussed with you
four years ago -- the imperative for our economic well being of strong U.S. leadership and
engagement with respect to the issues of the global economy -- truly are.
The six and a half years oftrus Administration have been marked by an ever greater
economic interdependence amongst the nations of the global economy, including the greatly
increased globalization of financial markets.
~
The new reality created by the global economy has brought tremendous opportunities
around the globe. When I first started in the investment banking business over thirty years ago,
developing countries were largely irrelevant with respect to the U. S. economy, while in recent
years they have been absorbing over 40 percent of our expOlts. The process of globalization has
helped lift tens of millions of people out of poverty in the developing world even after allowing
for the Asian financial crisis, although much certainly remains to be done. And I believe that these
growing economic ties and open markets have contributed to the trend towards greater
democracy across the globe, though here too there is much still to do.
Having said all that, global interdependence has also presented new risks. In 1995, we
experienced what some have called the first financial crisis of the 21 51 century in Mexico, a
situation that could have spilled across our border without President Clinton's decision -- in the
face of overwhelming public opposition -- to join with the IMF to help restore confidence and
economic stability in Mexico. In the last two years, a financial crisis of unprecedented scope
unfolded in Asia. It spread quickly within that region, affected other countries around the world
and posed a very real risk to our economy. And the default of the Russian government on its
domestic debt created havoc in financial markets around the world.
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All of these events demonstrate that the basic principle that your organization has stood
for -- that our economic well-being is inextricably linked to the rest of the world -- is even more
true and more obvious today than it was six years ago, not to mention 50 years ago when the
Bretton Woods Institutions were founded.
While some have said that the development of the global economy and the role and power
of global markets has diminished the power of sovereign governments, in fact the opposite is true.
But this role has changed. Instead of exercising economic control, the role of government now is
to create the sound policies -- from fiscal discipline to good public education -- that will attract
capital and promote investment, while at the same time pursuing social, environmental and other
non-market objectives. And with increased global interdependence the importance of
governments pursuing sound policies, is not only an issue of interest to them but to every other
country as well~ since failure in one country can now much more readily affect other countries.
To help our nation prosper in this environment, President Clinton has consistently pursued
a strong international e.conomic strategy of opening markets abroad while keeping our markets
open; promoting growth and reform in developing countries; and dealing with financial crises
when they occur. And I believe that strategy has been a major factor in the strong economic
conditions our nation has enjoyed over the past six and a half years.
However, the turmoil in the global economy in the last few years has caused great
controversy around globalization and around market-based economies. In other countries around
the globe there is debate over whether nations should retreat from global integration and from
market-based policies through measures such as capital controls and greater state direction of
economic affairs. And in our country some argue that we should turn inward and retreat from the
world. I believe, and your organization believes, just the opposite -- that we turn inward at our
peril and that our national interest requires that we exercise leadership across the fun panoply of
international issues. Moreover, my experience in government has also reinforced for me my belief
that the market-based system offers the best opportunities to promote growth and improve
standards of living across the globe.
Yet the turmoil does underscore something long recognized and discussed: that there are
risks in the global market-based system and that there are some purposes that markets by their
nature cannot achieve. The challenge is to put in place measures that effectively deal with these
issues, to create the conditions in which free flows of capital and market-based economies work
best. Meeting this challenge, in my view, will inc/ude focusing on three key areas: strengthening
the international financial institutions, reforming the international financial architecture and
maintaining an open trading system.
First is to strengthen and reform the international financial institutions, which this
organization was created to promote, so that they best meet the needs of today's rapidly changing
world. For fifty years, these institutions have been at the center of the effort to create a stronger,
more prosperous global economy, and on the whole, they have contributed much to these goals.
One can look at any number of developing nations or countries making the transition from
communism -- from Chile to Poland -- that have received advice and assistance from the IFIs over
the years, and have made real progress. Most recently, of course, the IFIs have played a critical
2
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role in confronting the global financial crisis, where I believe, on balance, the IFIs have acted
sensibly and made a great contribution in the face of enormously complex and, in many ways,
unprecedented issues.
Even before this crisis, the IFIs recognized the need to improve their own operations and
broaden their scope to adapt to the new issues surrounding the global economy. We have worked
forcefully with these institutions to reduce overhead, become more open, promote private sector
development, focus on health care, education, and the issues of women, and become more
sensitive to environmental concerns, core labor standards and human rights. Over the last two or
three years, the IMF and the World Bank have provided an intense focus on corruption, which is
now recognized as a major economic issue -- and in. some cases probably is the greatest
impediment to success -- in many developing countries. And, more recently, the IFIs have
developed new mechanisms for dealing with financial crisis. Going forward, the IFIs must
continue on the path of change and reform -- even when the spotlight of attention caused by the
crises dims.
Second, we must carry forward the reforms of the international financial architecture that
were initiated earlier in this Administration. We have formulated a comprehensive approach -not a dramatic single initiative of some sort, but a powerful program of measures to be
implemented and improved upon over time -- and we are working to coalesce international
support for it, including the G-7 Leaders Cologne Summit later this month.
One of our aims is to work with developing countries to identify best practices for
developing countries across a broad range of economic poljcy areas, and then create inducements
for developing countries to adopt such practices. Another is to find ways to encourage better risk
management in industrial country financial institutions, whose inadequate focus on risk that led to
excess capital flows played a major role in the Asian financial crisis. Both of these aims are
preventive. In addition, we seek to find better means of responding to crisis, an effort which must
include developing an appropriate private sector role in crisis response.
The third area that is critical to a successful international economic strategy is to continue
to press for an open trading system. I think we should all be deeply troubled by the calls for
restricting access to our markets here and at home. For example, the House of Representatives,
by a vote of two to one, recently passed a bill imposing quotas on steel imports -- a bill that is
inconsistent with WTO standards and antithetical to open, market-based economic growth. That
bill could well pass the Senate, and such action in the strongest major economy in the world
creates a real risk of strengthening the already increased protectionist pressure being felt around
the world. It is no exaggeration to say that this could get off a wave of market access restrictions,
but the voices of free trade have been silent.
It is, I might add, worth noting that the United States, which has the most open markets of
any major economy in the world, has 4.3 percent unemployment, and massive new job creation in
recent years, while continental Europe, whose markets are far less open, has IOta 12 percent
unemployment and virtually no job growth.
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At the same time, we must recognize that trade -- just like technology to a far greater
degree -- does have dislocating effects on some. A forward-looking international policy must be
coupled with a forward-looking domestic policy, which provides our people with the tools to
succeed in the global economy, and helps those that are dislocated successfully reenter the
economy as quickly as possible.
The issues I have discussed today -- reforming the IFIs, strengthening the international
financial architecture, and maintaining open markets -- are not simply questions of economics, but
politics. As I prepare to step down as Treasury Secretary, I think one of the key lessons
reinforced during the past few years is that the politics of international economic policy are just as
important as the policy. Good policy will not be put in place and maintained unless there is
adequate political support. In that respect, we must focus on working to broadly share the
benefits of growth and globalization, including through bilateral and multilateral aid, targeting
resources to the most vulnerable and offering debt relief to the poorest nations that are committed
to refonn. Measures such as these are not only good economic policy, they are critical to building
support for that policy.
At the same time, in our own country, we must broaden understanding of our stake in the
global economy. That understanding is not broadly shared among the American people, and, as I
said at the beginning of my remarks, the voices of those advocating that we turn inward are
growing more numerous and getting stronger.
I believe we may be at a crossroads, both at home and abroad. People all over the world
have benefited enormously from globalization, and open markets and market-based systems have
proliferated across the globe. Yet their basic precepts are being challenged by leaders in key
nations, including our own.
In this context, all of us now must do far more here and abroad, to build public support for
the policies that your organization has done so much to foster. I'd like to thank you for your help
and support during my tenure in government and I know that Larry Summers looks forward to
your help and support during his tenure. I might add that while many of you know Larry, for
those who don't, you will find that he brings to this job an extraordinary combination of great
intellectual prowess, practicality, experience with the issues, and seriousness of purpose. He is
equipped to be, as I have no doubt he will be, a truly outstanding Secretary. Let me conclude by
saying, as I step down as Secretary, that I firmly believe that the decades ahead can be very good
for our economy, our country and the global economy at large, but that to realize that potential
we must an work together on both the substantive and the political challenges to achieving sound
economic policy in the new century.
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DEPARTMENT
TREASURY
OF
THE
TREASURY
NEWS
~~1~78~9~. . . . . . . . . . . . . . . . . . . . . .1I......
............................
-
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W .• WASHINGTON, D.C .• 20220. (202) 622·2960
Contact: Lydia Sermons
FOR IMMEDIATE RELEASE
June 10. 1999
(202) 622-2960
TREASURY OFFICIAL ADDRESSES MAYORS GUN VIOLENCE TASK FORCE
Treasury Under Secretary for Enforcement James E. Johnson will address the U.S.
Conference of Mayors Gun Violence Task Force plenary session to discuss national firearms
legislation and enforcement issues at 11 a.m. (EDT) on Friday, June 11. at the Fairmount Hotel.
123 Baronne Street, Bayou 1 Room. New Orleans, Louisiana.
Reporters without conference credentials should contact the U.S. Conference of Mayors
press office at the Fairmount Hotel at (504) 529-4769-_
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---------------------------------------------------------------------------------·U S Governmenl Pnntlno O\hr:~ . ?'?8
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T REA S II R \'
NEWS
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OmCE OF PUBUC AFFAIRS • 1500 PENNSYLVANlAAVENUE. N.W. • WASHINGTON, D.C•• 20220 • (202) 622.2960
EMBARGOED FOR RELEASE AFTER PRESS CONFERENCE
Text as Prepared for Delivery
June 10, 1999
TREASURY SECRETARY ROBERT E. RUBIN
PRE G-7 PRESS CONFERENCE
This weekend, I will travel to Frankfurt to meet with the G-7 Finance Ministers and the
European Commission. This will be my last G-7 meeting as Treasury Secretary. As I have said
before, in my view, these meetings provide a very effective opportunity for the finance ministers
ora small group ofleading economies that occupy a similar position in the global economy to
come together in an infonnal setting to exchange views, to develop common positions, and to
prepare the ground for action as needed. I think these meetings are indispensable in providing
leadership on the issues of the global economy.
Our task at this meeting will be to prepare for the following weekend's Summit in
Cologne. We will focus on three basic areas: continuing the work to reform the international
financial architecture for the 21st century; strengthening the global economy and promoting
balanced growth; and working to accelerate the provision of relief from ongoing debt problems of
the highly indebted poor countries _
World Economy
The first challenge we face is promoting growth and recovery in the global economy.
With respect to the industrialized nations, while the most likely scenario for the United States
remains solid growth and low inflation., subject to the usual ups and downs and the risks of the
global economy, we believe a]] of the G-7 countries must act to promote solid domestic demand
led growth. I am sure we will be discussing how Japan and Europe pJ'an to move forward on
growth in their economies. We have begun to see som~ turnaround in the economic performance
of the Asian economies affected by financial crisis, and several of the other countries affected by
the crisis, such as Brazil, that have so far taken effective action to limit the potential impact of
financial crisis on their own economies. However, these countries still face enormous challenges,
which makes it critical that they sustain implementation of their reform agendas.
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It is also critically important that Europe and Japan do their part because the international
system cannot sustain indefinitely the large imbalances created by the disparities in growth and
openness between the U.-S. and its major trading partners.
Financial Architecture
The second major issue we will focus on is global financial architecture. Our approach to
this work has been based on the fundamental belief that a market-based system provides the best
prospect for the global economy, but that crisis prevention and response to crisis need to be
substantially improved.
We believe that we can use thisweekend'srreeting to agree on a package of concrete
measures to present to our Leaders that wiil strengthen this market-based system by meeting these
objectives.
The third key challenge is for the G-7 to find a way to address the continuing problems of
high debt burdens in the Highly Indebted Poor Countries (HIPCs) to provide a lasting exit from
the debt problems these countries face by promoting the adoption of economic refonn policies;
freeing up more resources for poverty alleviation, sustainable development and good governance;
and establishing an environment that promotes the savings and investment necessary for growth.
On March 16, President Clinton called on the international community to pursue a comprehensive
approach to debt relieffor the IllPCs that would provide more relief, faster, to a broader range of
heavily indebted poor countries that have strong reform programs. The President said that, "Our
goal is to ensure that no country committed to fundamental reform is left with a debt burden that
keeps it from meeting its peoples' basic human needs and spurring growth."
Other Challenges
We will address two other challenges that are particularly important to U.S. strategic
interests.
We plan to meet with our Russian counterparts during the meeting to discuss the new
government's plans for economic stabilization and reform. We have an important interest in
promoting stability and economic growth in this key nation.
Finally, we will discuss our ongoing efforts concerning the economic consequences of the
Kosovo conflict. We have been working closely with our European partners and will use this
meeting to help ensure a successful effort in this area.
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OFFICE OF PUBLIC Ar'FAIRS -1500 PENNSYLVANIA AVENUE. N.W .• WASHINGTON. D.C •• 10220 - (202) 622.Z960
EMBARGOED mrrX:L 2: 30 P. M.
CONTAC'l':
.rune 10, 1999
Office of Financing
202/691-3550
TREASl7RY OFFERS 13-WEEK AND 26-WEEK BILLS
The Treasury ~ll auction two series of Treasury bills totaling
approximate1y $15,000 million to refund $15 , 901 million of publicly held
securities maturing JUne 17, 1999, and to pay down about $901 million.
Xn ad~tion to the public holdings, Federal Reserve Banks for their own
accounts hold $7,814 million of the maturing bills, which may be refunded at
the higbest discount rate of accepted competitive tenders. Amounts issued
to these accounts will be in addition to the offering amount.
The ma~uring billa held by the public include $2,699 million held by
Federal Reserve Banks as agents for foreign and international monetary authorities, which may be refunded within the offering amount at the highest discount
r~te of accepted competitive tenders.
Additional amounts may be issued for
Rch accounts if the aggregate amount of new bids exceeds the aggregate amount
of maturing bills.
~e4suz:yDirect customers requested that we reinvest their maturing
holdings of approximately $932 million into the 13-week bil~ and $691
million into the 26~ek bill.
Tenders for the bills will be received at Federal Reserve Banks and
Brtulc:hes and at t:he Bureau of the Public: Debt, Washington, D.C. 'rhis offering
of Treasury securities is governed by the terms and conditions set forth in
the tinifoxm Offering Circular for the Sale aD(! :Issue of l'Iarketabl.e Book-E:D.try
Treasury Sills, Notes, and Bonds (31 CFR Part 356, AS amended).
Details about each of the new securities are given in the attacbed o£ferizlg highlights.
000
Attachment
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OF TREASURY OrFERINGB OF BXLLS
TO BE rSSUED JUNE 17, 1999
H7GHL~GHTS
June 10, 1999
Offering Amount •••••••••.•••..••.••••••• $7,500 million
De8Qription of Offering:
Term and type of security •••••••••••••••
CUSll» numb.r •• '.' •••••..•••.•••••••••••••
Auotion date ••••••••••••••••••••••••••••
Issue date ••••••••••••••.•••••.•••••••••
Maturity date ••••••••••.••••••.•••••••••
Original issue date •••••••••••••••••••••
Currently outstanding ••••.•••••••••.••.•
~nLmum bid amount and multipl ••••••••••
~e
91-day bill
912795 CB 5
JUne 14, 1999
JUne 11. 1999
September 16, 1999
September 17, 1998
$26,552 million
$1,000
$7,500 million
182-day bill
912795 CY 5
June 14, 1999
JUne 17, 1999
December 16, 1999
JUne 17, 1999
$1,000
following rules apply to all 8ecurities mentioned above:
BWbmi8sion of Bids:
Nonoompetitive bids ••.•.•••• Accepted in full up to $1,000,000 at the highest discount rate of
accepted competitive bids.
Competitive bids •••.•••.•••• (1) Must be expressed as a discount rate with three decimals in
increments of .005%, e.g., 7.100%, 7.105%.
(2) Net long position for each bidder must be reported when the sum
of the total bid amount, at all discount rates, and the net long
position is $1 billion or greater.
(3) Net long position must be date~ined as of one half-hour prior
to the closing time for receipt of c~etitive tenders.
Maximum Recognized Bid
at a Bingle Yield ••••..•..•• 35% of public offering
M&K~um
Award ••••••••••••.•••••• 35% of public offering
Receipt of Tender.,
Nonc~etitive tenders •••••• Prior to 12:00 noon E~8tern D~light Saving time on auction day
Competitive tenders •...••••• Prior to 1:00 p.m. Eastern Daylight Saving time on auction day
Payment Terms: By charge to a funds account at a Federal Reserve Bank on issue date, or payment
of full par amount with tander. ~r.as~irect customers can use the Pay Direct feature which
authorizes a charge to their account of record at their financial institution on issue date.
From: TREASURY PUBLIC AFFAIRS
DEP:\I{TI\lENT
-
OF
TilE
--...:.t~.
8-10-99 3:32pm
p. 43 of 52
TREASURY
NEWS
OFnCE OF PUBUC AFFAIRS • 1500 PENNSYLVANlAAVENUE, N.W. • WASlDNGTON, D.C •• 20220. (202) 62~2960
EMBARGOED FOR 12:30 P.M. (EST)
June 11, 1999
Contact: Public Affairs
(202) 622-2960
UNDERSECRETARY OF THE TREASURY FOR ENFORCEMENT
JAMES E. JOHNSON REMARKS BEFORE THE U.S. CONFERENCE OF
MAYORS GUN VIOLENCE TASK FORCE, NEW ORLEANS
Mayor Corradini, Mayor Harmon, members of the Gun Violence Task Force, and
distinguished leaders from cities and towns across the nation. I am pleased to be with
you today to share my thoughts on three important issues: the problem of youth violence;
how easy access to fIrearms makes violence IDuch more deadly; and most importantly,
what steps we can take together to address this critical issue.
As Mayors and members of city councils, you know all too well the magnitude
and severity of this problem. You have sat with parents who have buried their children.
You have tried to console the inconsolable. If today is a typical day, thirteen young
Americans will die from gunshot wounds. Thirteen lives full of hopes and dreams will
end in tragedy. Thirteen children who could have contributed to their families, SChools,
neighborhoods, and communities will have their lives cut short.
The Conference of Mayors has a thirty-year history of providing strong leadership
in the fight against crime and violence. As a representative of all federal law
enforcement officials, I thank you, and your President, Mayor Corradini, for your
leadership and support, and I can assure you that we at the Department of the Treasury -and our colleagues at the Department of Justice ~- have benefited tremendously from our
partnership with you. I am here to bring the Administration~s perspective on these issues,
to ask you to join us as we redouble our efforts to do more, and as the day goes on, to
learn more from your experience on the front lines.
For the past six years, President Clinton and Vice President Gore have stood with
you in the fight against violent crime: putting mOre police onto the streets of our
neighborhoods and communities; working to get guns out of the hands of those who
should not have them; working to remove from our streets certain high-powered weapons
that no one should possess; and working closely with your law enforcement authorities to
investigate, to arrest, and to prosecute those who violate our firearms laws.
RR-3200
----~------------------------------------------------------------------------!:::.pr.
releases, speeches, public schedules and official biographic$, call our 24..1zour fax line at (202) 622-2040
·U.S. Ciovemm9l1\ Prinlll'lg ORlee: 1998· 6190$$$
28889
From: TREASURY PUBLIC AFFAIRS
B-10-99 3:33pm
As part of a coordinated effort with you, and with our allies at the state and
federa1level, this approach has achieved tremendous results. Over the last six years, the
number of violent crimes committed with a fireann is down 27 percent. Homicides·
committed with firearms dropped 24 percent, robbery with firearms 27 percent, and
aggravated assault with fireanns has dropped 26 percent. But thcse figures are still too
high.
Over the same time period, federal. state, and local fireanns convictions have
risen sharply, and the number of federal cases in which the firearms offender is sentenced
to five or more years in prison is also up substantially.
The Brady background check system also works. Its goal is to prevent felons,
juveniles, and other prohibited persons from obtaining a firearm. Over 250,000 such
people have been thwarted in their attempts to obtain a fireann because of Brady checks.
In short. during the Clinton/Gore Administration. more police are on the street,
more of our most violent offenders are going to prison for longer periods of timet and
prohibited persons are having a harder time gaining easy access to weapons.
The Administration continues to work vigorously on its enforcement efforts, and
wants to do an even better job -- working hand-in-hand with you and other civic and
community leaders - to make our neighborhoods, communities. towns, rural hamlets,
and cities safer places to live.
There is a consensus in our country on how to do thj5. Americans favor smart,
tough, and comprehensive enforcement and preventioll solutions to decrease the
incidence of firearms violence and to make our communities safer. There is a consensus
that certain people, such as violent criminals, felons, and unsupervised juveniles, should
not have access to fueanns and explosives; that we do 110t need to have certain types of
weapons and ammunition in our schools, our neighborhoods, our commWlities, and our
cities; that fireanns and explosives must be bought and sold legally and responsibly; and
that firearms must be stored safely and securely by their.owners so that fewer of our
troubled youth will have access to weapons that can kill and maim, and so that fewer still
will end up as needless victims of an accidental pull of the trigger.
The Clinton/Gore Administration has set forth a legislative package designed to
pursue these aims. Let me focus on three core principles of these proposals: keeping
guns out of the hands of our young people; stopping the illegal trafficking offIreanns;
and preventing the tragic and accidental deaths that happen all too often as the result of
the improper storage of firearms.
Every day, we are reminded that guns and young people are a lethal mix.
President Clinton's bill aims to keep guns out of the hands of our young people by raising
the age for youth possession of a handgun from 18 to 21, and by banning juvenile
possession of semi·automatic assault rifles.
2
p. 44 of 52
From: TREASURY PUBLIC AFFAIRS
B-10-99 3:33pm
We need to target the criminal behind the criminal: the illegal gun trafficker. The
President's bill will close the u gun show loophole" by imposing mandatory record
keeping and background check requirements. The President's bill will limit the quantity
of handguns any person can purchase to one per month.
Finally, we believe that no parent should mourn a child who has come across a
weapon and lost his life in a deadly accident. To this end, the President's bill seeks to
prevent tragic and accidental deaths by requiring firearms dealers to provide secure
storage or safety devices with every firearm sold, and by holding parents criminally liable
for recklessly allowing their children access to their guns, if the children use those guns
to cause death or serious bodily injury.
There are other proposals in the Presidertfs legislative package also designed to
combat the illegal or inappropriate possession, trafficking, and use of firearms. Together,
they represent sound, commonsense, and reasonable approaches to this issue. Indeed, the
United States Senate took a promising step forward when. with Vice President Gore's
tie-breaking vote, it passed legislation that incorporated some~ though not all, of these
provisions.
As we meet here today, the House of Reprcsentiltives is considering legislation
proposed by the Clinton/Gore Administration that would give law enforcement
authorities more tools to help combat the very serious problem of youth violence. Yet,
some have come forward to try to defeat or to dilute this sensible legislation.
As President Clinton has remarked many times in connection with these issues, and as he
has challenged each of us, we can do better. We must do better. TIle lives of our
children are too important to entrust to the whims of narrow interests.
More federa11aws and more federal, state, and local prosecutions are, of course,
essential to our success, but standing alone, they wi 11 not eliminate the serious problem of
youth violence. Federal enforcement authorities continue to need the leadership and
assistance of State and local officials -- mayors like yourselves. police and sheriffs'
departments, and community group leaders -- to help slOP youth violence. On behalf of
Secretary Rubin, I can assure you that the Treasury Department and the Bureau of
Alcohol, Tobacco, and Firearms -- ATF -- are fully committed to working with Mayors
and with local authorities and community groups to help combat youth violence
involving firearms.
Let me share with you some concrete evidence of that commitment. In July 1996,
President Clinton and the Treasury Department launched a new kind of law enforcement
program, the Youth Gun Crime Interdiction Initiative -- yeGn -- to work with cities in
targeting firearm violations involving youth and juveniles.
ATF operates the Youth Crime OWl program in 27 cities - from Los Angeles to
Miami and from Houston to Philadelphia. TIle President's firearms legislation would
increase the number of participating cities to 75 by the year 2003. Through the Youth
Crime Gun effort, local police and sheriffs' departments work with our dedicated ATF
3
p. 45 of 52
ze889
From: TREASURY PUBLIC AFFAIRS
8-10-99 3:34pm
agents to trace all recovered crime guns and to identify and arrest illegal gun traffickers
and criminal users offireanns. This program works. It works in Houston, in Chicago
'
and in St. Louis.
yeGn and crime gun tracing have helped police departments across the country
to identify, to investigate, and to arrest those who put guns out onto the streets and into
the hands of gang members, minors, felons, and drug traffickers - none of whom should
have guns. Police departments that understand how their local illegal gun market
operates have a far greater ability to cut off that market and, ult.imately, to shut it down.
Let me give you one example of what the yean program has accomplished.
Between January 1989 and May 1996, a gtm store owner in St. Louis, Missouri
knowingly sold guns to straw purchasers and fafsified forms fur straw purchasers. ATF
investigators determined that some 350 firearms wbich had be~n recovered at crime
scenes had all gone through that gun store. Other guns distributed from the store had
been used in ten murders, including one during a bank robbery. The bottom line here: as
a result of crime gun tracing, the owner and two of his employees pled guilty to a variety
offireanns violations; they are currently awaiting sentencing.
Anti-trafficking strategies, of course, are but one piece of the enforcement puzzle.
There are others. Earlier this year, President Clinton directed Secretary Rubin and
Attorney General Reno to pull these pjeces together by developing an integrated violence
reduction strategy. The President's Directive call::; for us to work closely with city
leaders and community members to develop innovative strategies, to gather the best of
what you, in this room, have done in your cities and communities, and to build on it.
We know that there are promising approaches to build upon, because we have
started them together: Project Atlantis in Atlanta: Chicago's Anti-gun Enforcement
Program, known as CAGE; Philadelphia's Firearms Trafficking Task Force; and the Los
Angeles Police Department's Youth Crime Gun Interdiction Detail are examples of some
of the proven programs that can serve as models for other cities. Mayors, city councils,
police and sheriffs' departments, community organizations, ATF, U.S. Attorney's offices,
and numerous state and local agencies all work together in these programs with a
common aim: to help deter youth violence and to identify illegal suppliers of firearms to
gang members and drug dealers. As we develop this national strategy, we will come to
you for your experience., your insight, and your support, ~md we hope to be able to
support you, as well, as you continue to develop your own strategies.
Before I close, I would like to share with you some personal thoughts and
observations. Recently, I went to Colorado to meet with the law enforcement officers
and local authorities who responded to the attack at Columbine High School. I don't
think that I will ever forget what I saw in Littleton. The schuol had been stopped cold.
As I walked through hallways, I sawall the signs of a vibrant school life: lockers chocked
full of books; posters from the student body campaign; and 1;igns cheering on the sports
teams. I saw many things that one would expect to sec in n place of joy, a place that
should have been a haven. But it was no haven. Walls and Hoors had been pock-marked
4
p. 46 of 52
From: TREASURY PUBLIC AFFAIRS
2BBB9
B-10-99 3:35pm
p. 47 of 52
by bullets and scarred by bombs. The damage, the murder in that place, was brought
about by two youths who should never have had access to guns and never have had
access to bombs.
Every day, the toll of Columbine is visited on aLII' nation. Everyday, thirteen
youngsters disappear forever from our lives as victims of gun violence. As Treasury's
Under Secretary for Enforcement, as a representative of federal law enforcement. and,
most importantly, as a father of two little girls, I find that statistic unacceptable.
Together, each of us in this room must continue all our important mission. Every
life we work to save, every death we work to prevent, will be our victory. Together, we
must pledge to recommit ourselves to programs and policies that work, and we can work
to develop even better strategies to ensure that riur children can live their lives in the
freedom and security that should be their birthright.
Thank you.
- 30-
5
TOTAL P.05
-----------------------------------------------------------------------------------
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
lOR IMMEDIATE RELEASE
CONTACT:
Office of Financing
202-691-3550
rune 14, 19 9 9
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
June 17, 1999
September 16, 1999
912795CB5
Term:
Issue Date:
Maturi ty Date:
CUSIP Number:
4.620%
High Rate:
Investment Rate 1/:
4.753%
Price:
98.832
All noncompetitive and successful competitive bidders were awarded
ecurities at the high rate.
Tenders at the high discount rate were
llotted 52%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Accepted
Tendered
Cornpeti ti ve
Noncompeti ti ve
$
21,726,823
1,332,404
7,177,1192/
324,936
324,936
23,384,163
7,502,055
4,059,310
43,864
4,059,310
43,864
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
5,844,715
1, 332,404
23,059,227
PUBLIC SUBTOTAL
TOTAL
$
27,487,337
$
11,605,229
Median rate
4.605%: 50% of the amount of accepted competitive tenders
tendered at or below that rate.
Low rate
4.530%:
5% of the amount
[accepted competitive tenders was tendered at or below that rate.
lS
ld-to-cover Ratio
I
I
=
23,059,227 / 7,177,119
=
3.21
E~ivalent coupon-issue yield.
Awards to TREASURY DIRECT = $1, 022,898,000
http://www.publicdebt.treas.gov
H20)
-
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
f'OR IMMEDIATE RELEASE
June 14, 19 9 9
CONTACT:
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
June 17, 1999
December 16, 1999
912795CY5
Term:
Issue Date:
Maturity Date:
CUSIP Number:
4.855%
High Rate:
Investment Rate 1/:
5.059%
Price:
97.546
All noncompetitive and successful competitive bidders were awarded
iecurities at the high rate.
Tenders at the high discount rate were
lllotted 35%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tender Type
Tendered
Competitive
Noncompeti ti ve
$
$
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
4,053,701
1,085,554
5,139,255 2/
21,303,755
PUBLIC SUBTOTAL
TOTAL
20,218,201
1,085,554
Accepted
2,373,864
2,373,864
23,677,619
7,513,119
3,755,000
321,136
3,755,000
321,136
27,753,755
$
11,589,255
Median rate
4.820%: 50% of the amount of accepted competitive tenders
'as tendered at or below that rate.
Low rate
4.750%:
5% of the amount
f accepted competitive tenders was tendered at or below that rate.
i~to-Cover Ratio
=
21,303,755 / 5,139,255
=
4.15
/ E~ivalent coupon-issue yield.
/ Awards to TREASURY DIRECT = $767,897,000
http://www.publicdebt.treas.gov
RR-3204
~~.---------------------------------------------------
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
Contact: Office of Financing
(202) 691-3550
June 16, 1999
TREASURY'S INFLATION-INDEXED SECURITIES
JUL Y REFERE:\fCE CPI NUMBERS AND DAILY INDEX RATIOS
Public Debt announced today the reference Consumer Price Index (Cpr) numbers and
daily index ratIos for the month of july for the following Treasury inflation-indexed securities:
(I) the 3-318 0 0 la-year notes due January 15,2007, (2) the 3-5/8% 5-year notes due July 15,
2002, (3) the 3-5. S~ 0 la-year notes due January IS, 2008, (4) the 3-5/8% 30-year bonds due
April 15, 2028. (5) the 3-78°0 10-year notes due January 15,2009, and (6) the 3-7/8%
30-year bonds due April 15.2029. This infonnation is based on the non-seasonally
adjusted C.S. City Average All Items Consumer Price Index for All Urban Consumers
(CPI-C) pubhshed by the Bureau of Labor Statistics of the U.S. Department of Labor.
In addItIon to the pubhcation of the reference CPI's (Ref CPI) and index ratios, this
release pro\1des the non-seasonally adjusted CPI-L' for the prior three-month period.
ThIS Infonnatlon IS J\aIiable through the Treasury's Office of Public Affairs automated
fax system b;, callIng 202-b22-2040 and requestIng document number 3205. The infonnation is
also Jvadabk on tht: Internet Jt Public Debt's v.ebslle (http:/\Vwv.:.pubIicdebt.treas.gov).
The Inf(lmutlon for August IS expected to be released on July 15, 1999.
000
Attachment
RR-3205
http://www.publicdebt.treas.go v
lREASURY INFLA lION·INDEXED SECURITIES
ReI CPI and Index Ratios lor
July 1999
S.c urtty
O.. crlptlon
CUSIP Numb ..
O,t.d Olt.
Orlglnllillu, Dot.
Add'tlon.1 Illu. Do ••
1 l18'/, 10 V.,r Not..
S.rt .. A 2007
9128212Ml
J.nUlry 15. 1997
F .brlliry 6. 1997
Ap"l 15. 1997
1 618'/, 6 Yur Note.
Sorin J 2002
9128273A8
July 16. 1997
July 15. 1997
October 16. 1997
3 618'1, 10 Year Notea
Serln A·2008
9128273TI
Janu.ry 15. 1998
January 15. 1998
October 16. 1998
3·618'10 30· Year Bonds
Bondi 01 April 2028
912810F05
April 16. 1998
April 15. 1998
July 16. 1998
Mlturtty O.t.
R.' CPI on O ••• d Olt.
Jlnulry 16. 2007
16841548
July 16. 2002
16016484
January 15. 2008
161 66484
April 16. 2028
161.74000
Oil.
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
1
2
3
4
41
II
7
•
I
10
11
12
13
14
111
18
17
18
19
20
21
22
23
24
26
26
27
28
29
30
31
1999
199'
199'
199'
1999
199'
1999
1999
1999
'''1
1999
1999
1999
1999
1999
199'
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
CPI-U INSA) for :
R.' CPI
Ind .. Rilio
Ind .. Rltlo
Index Ratio
Index Ratio
16620000
16620000
166 20000
16620000
16620000
16620000
16620000
166 20000
16620000
16620000
104901
104901
104901
104'01
104901
104901
104901
104901
104901
104901
104901
104901
104901
104901
104901
104901
104901
1 04901
104901
104901
104901
104901
104901
104901
104901
1.04901
1 04901
1 04901
1.04901
1 04901
104901
1 03775
1 03776
1 03776
1 03776
1 03776
1 03776
I 03776
1 03776
103775
I 03776
I 03776
1.03776
1 03776
103776
1 03776
1 03776
1.03776
1.03776
1.03776
1.03776
1.03776
1.03776
1.03776
1.03776
1.03776
1.03776
1.03776
1.03776
1.03776
1.03776
1.03776
1.02875
102876
1.02876
1.02876
1 02876
1 02876
1.02876
1 02876
102876
1 02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1.02876
1 02758
102768
1 02768
1.02768
1.02768
1.02768
1 02768
1 02768
102758
1.02768
1.02768
102768
102768
1.02768
1.02768
102768
1.02768
102768
1.02768
1.02758
1.02758
1.02768
1.02768
1.02758
1.02768
102758
1.02758
1.02768
1.02768
102758
1.02758
' " 20000
16620000
166 20000
16620000
16620000
168 20000
16620000
16620000
16620000
16620000
16620000
16620000
166.20000
166.20000
166.20000
166.20000
16620000
16620000
166.20000
166.20000
166.20000
Mlrch 1999
166.0
April 1999
166.2
May 1999
I
I
I
166.2
TREASURY INFLA TlON-INDEXED SECURITIES
Ref CPI and Index Ratios for
July 1999
Sacurll)'
Oeu"pllon
CUSIP Number
Oaled Date
Orlglnall •• ue Date
AddItIonal Inu. D.'.
3 7/8'/, 10 Yur Not ••
Se"e. A 2009
9128274'1'5
January 15. 1999
J~rlUary 15. 1999
]·718'>', 30·Yur Bond.
Bond. of April 2029
912810FH6
April 15. 1999
April 15. 1999
Mllurlty Dale
R.f CPI on Dated Oa ..
January 15, 2009
16400000
April 16. 2029
16439333
Oat.
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
July
I
2
3
4
1999
1999
1999
1999
5
19it
6
1999
1999
1999
1999
199.
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
1999
7
••
10
II
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
CPI-U (NSA) for:
Ref CPI
Ind .. Ratio
Ind .. Rilio
161 20000
16620000
166 20000
166 20000
16620000
16620000
16620000
166 20000
16620000
16620000
166 20000
166 20000
16620000
16620000
16620000
166 20000
166 20000
16620000
166.20000
166.20000
166.20000
16620000
166.20000
16620000
166.20000
166.20000
166.20000
166.20000
166.20000
16620000
166.20000
101341
101341
101341
101341
101341
191341
101341
1 01341
101341
101341
101341
101341
1 01341
101341
101341
101341
1 01341
1 01341
1.01341
1.01341
1.01341
101341
1.01341
1.01341
1.01341
1.01341
1.01341
1.01341
1.01341
1.01341
1 01341
101099
1 01099
101099
101099
101099
101099
101099
1 01099
101099
101099
101099
1.01099
101099
101099
101099
101099
1.01099
101099
1.01099
1.01099
1.01099
1.01099
1.01099
1.01099
1.01099
1.01099
1.01099
1.01099
1.01099
1.01099
1.01099
March 1999
165.0
April 1999
166.2
May 1999
166.2
From: TREASURY PU8LIC AFFAIRS
2BB89
D EPA R T 1\1 E N T
0 F
T II E
8-10-99 3:35pm
p. 48 of 52
T R E ..\ SUR Y
NEWS
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C.• 20220 • (202) 622.2960
-
FOR IMMEDIATE RELEASE
June 15, 1999
Contact: Dan Israel
(202) 622-2960
TREASURY SECRETARY ROBERT E. RUBIN STATEMENT ON MEXICO
We welcome and support Mexico's economic program announced today in the context of
the stand-by arrangement with the IMP. Mexico's firm policy response to recent economic and
financial turbulence helped to preserve stability and growth over the past year, building on
reforms of the past several years. Mexico's conunitment to a sound economic program,
supported by the IMF, should improve prospects for (:ontinued strong economic performance.
Finance officials from our two governments will continue to consult frequently about
economic and financial developments in our countries over that period. Our close dialogue is
facilitated by the various mechanisms we have to ensure ongoing consultation and cooperation,
including the North American Financial Group, the Binational Commission, and swap line
arrangements between our two countries under the North American Framework Agreement,
which have been in place since 1994. In that regard, we welcome this opportunity to announce
that the U.S. Treasury and the U.S. Federal Reserve have taken the decision to renew the NAFA·
swap lines for another year, through December 2000. Treasury and Mexico have had a swap line
since the early 1940's.
-30RR-3206
--
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.
·u.s. Govemman\ Prlnllng Office:
1998· 619.559
DEPARTMENT
OF
THE
TREASURY
NEWS
lREASURY
~/78~q~. . . . . . . . . . . . . . . .. .
..................
-
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C.. 20220. (202) 622-2960
Weekly Release of U.S. Reserve Assets
June 15, 1999
The Treasury Department today released U.S. reserve assets data for the week ending
June 11,1999.
As indicated in this table, U.S. reserve assets totaled $72,822 million as of June 11,
1999, up from$71,757 million as of June 4 .
. ,);:U.S .. ReserveAssets
;'(mji1ilonsofuS d~Hars)
1999
Total
Reserve
Week Ending
Assets
Special
Drawing
Gold
Stock
11
· ht S
R Ig
21
Foreign
.
C urrencles
Reserve
31
Position in
ESF
SOMA
IMF
21
June 4, 1999
71,757
11,049
9,728 .
14,666
14,668
21,646
June 1 1, 1999
72,822
11,049
9,822
15,047
15,049
21,855
1/ Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of April 30, 1999. The March 31,
1999 value was $11,049 million.
2/ SDR holdings and the reserve position in the IMF are based on IMF data and revalued in dollar terms at the official
SDRIdollar exchange rate. Consistent with current reporting practices, IMF data for June 4, 1999 are final. Data for SDR
holdings and the reserve position in the IMF shown as of June 11, 1999 (in italics) reflect preliminary adjustments by the
Treasury to the June 4, 1999 IMF data.
3/ Includes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's System Open Market
Account (SOMA). These holdings are valued at current market exchange rates or, where appropriate, at such other rates as
may be agreed upon by the parties to the transactions.
RR-3207
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~---------~;------------------~,----------------------------------------------------------
o
federal financing
WASHINGTON. D.C. 20220
bankNEWS
FEDERAL FINANCING BANK
May 31, 1999
Kerry Lanham, Secretary, Federal Financing Bank (FFB) ,
announced the following activity for the month of April 1999.
FFB holdings of obligations issued, sold or guaranteed by
other Federal agencies totaled $41.6 billion on April 30, 1999,
posting an increase of $183.6 million from the level on
March 31, 1999. This net change was the result Of an increase in
holdings of agency debt of $381.0 million, a decrease in holdings
of agency assets of $210.0 million, and an increase in holdings
of agency guaranteed loans of $12.6 million.
FFB made 47
disbursements during the month of April.
FFB also received 17
prepayments in April.
Attached to this release are tables presenting FFB April
loan activity and FFB holdings as of, April 30, 1999.
RR-3208
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0
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Ll)
~
0>
N
(\J
to
N
o
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VJ
~
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(\J
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to
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0
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Page 2 of 4
FEDERAL FINANCING BANK
APRIL 1999 ACTIVITY
-
DRROWER
AMOUNT
FINAL
INTEREST
DATE
OF ADVANCE
4/2
4/2
4/5
4/5
4/5
4/6
4/6
4/6
4/7
4/7
4/8
4/8
4/9
4/12
4/16
4/16
4/19
4/19
4/20
4/20
4/21
4/21
4/22
4/22
4/23
4/26
4/27
4/30
4/30
$600,000,000.00
$220,200,000.00
$100,000,000.00
$900,000,000.00
$51,100,000.00
$100,000,000.00
$675,000,000.00
$5,800,000.00
$550,000,000.00
$75,000,000.00
$340,000,000.00
$135,100,000.00
$365,900,000.00
$227,200,000.00
$200,000,000.00
$356,500,000.00
$500,000,000.00
$456,500,000.00
$400,000,000.00
$303,700,000.00
$300,000,000.00
$288,200,000.00
$100,000,000.00
$348,200,000.00
$504,400,000.00
$249,000,000.00
$37,500,000.00
$200,000,000.00
$424,400,000.00
4/5/99
4/5/99
4/6/99
4/6/99
4/6/99
4/7/99
4/7/99
4/7/99
4/8/99
4/8/99
4/9/99
4/9/99
4/12/99
4/13/99
4/19/99
4/19/99
4/20/99
4/20/99
4/21/99
4/21/99
4/22/99
4/22/99
4/23/99
4/23/99
4/26/99
4/27/99
4/28/99
5/3/99
5/3/99
4.617%
4.553%
4.565%
4.565%
4.524%
4.553%
4.553%
4.545%
4.524%
4.545%
4.545%
4.523%
4.543%
4.441%
4.420%
4.460%
4.440%
4.482%
4.460%
4.503%
4.482%
4.482%
4.503%
4.523%
4.553%
4.597%
4.628%
4.638%
4.678%
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
5/A
$61,932,954.88
$32,125.89
$40,373.91
$11,524.00
$1,623,393.00
$398,301.00
$37,382.66
10/1/26
1/2/25
7/31/25
7/31/25
1/2/25
11/2/26
7/31/25
5.833%
5.618%
5.643%
5.689%
5.717%
5.796%
5.725%
S/A
5/A
S/A
S/A
S/A
S/A
S/A
MATURITY
RATE
;ENCY DEBT
~.S.
POSTAL SERVICE
1.5.
1.5.
1.5.
1.5.
1.5.
/.5.
1.5.
1.5.
1.5.
1.5.
1.5.
1.5.
1.5.
1.5.
1.5.
1.5.
1.5.
postal
postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
I.S.
1.5.
1.5.
1.5.
.5.
.5.
.5.
.5.
.5.
.5.
.S.
.S.
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
VERNMENT - GUARANTEED LOANS
ENERAL SERVICES ADMINISTRATION
namb~ee Office Building
e~PhlS
IRS Service Cent.
o ey Services Contract
~leY.Square Office Bldg.
~;PhlS IRS Service Cent.
• C Building
lley Services Contract
fA is a Semi-annual rate.
4/1
4/9
4/12
4/14
4/22
4/26
4/30
Page 3 of 4
FEDERAL FINANCING BANK
APRIL 1999 ACTIVITY
-
DATE
DRROWER
AMOUNT
OF ADVANCE
FINAL
MATURITY
INTEREST
RATE
WERNMENT - GUARANTEED LOANS
~EPARTMENT
OF EDUCATION
I.Va. state College
i.Va. state College
4/19
4/20
$183,781.62
$20,420.18
4/7
4/16
4/19
4/19
4/22
4/27
4/29
4/30
4/30
$1,365,000.00
$2,000,000.00
$1,400,000.00
$1,506,000.00
$3,500,000.00
$181,000.00
$1,500,000.00
$3,000,000.00
$4,500,000.00
9/1/26
9/1/26
5.768% S/A
5.737% S/A
1/2/24
1/3/33
12/31/31
12/31/29
1/3/33
1/2/18
12/31/31
1/3/33
1/2/24
5.668%
5.624%
5.705%
5.714%
5.649%
5.896%
5.713%
5.656%
5.616%
IURAL UTILITIES SERVICE
'ineland Telephone #403
loutheastern Indiana #496
rohnson county Elec. #482
laquoketa Valley #515
'ennyrile Elec. #513
larshalls Energy Co. #458
~celsior Elec. #468
Ilue Ridge Elec. #512
Iho-Me Power # 480
If A is
a Semi-annual rate:
Qtr. is a Quarterly rate.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Page 4 of 4
FEDERAL FINANCING BANK HOLDINGS
(in millions)
Program
Agency Debt:
USPS
Fiscal Year
Net Change
10/1/98-04/30/99
April 30, 1999
March 31,1999
Net Change
0411-04/30/99
$2,874.4
$2,493.4
$381.0
($2,821.7)
($2,821.7)
--
sub-total*
$2,874.4
$2,493.4
$381.0
Agency Assets:
FmHA-RDIF
FmHA-RHIF
DHHS-HMO
DHHS-Medical Facilities
Rural Utilities Service-CBO
$3,630.0
$8,550.0
$3.1
$7.2
$4,598.9
$3,675.0
$8,715.0
$3.1
$7.2
$4,598.9
($45.0)
($165.0)
$0.0
$0.0
$0.0
($45.0)
($950.0)
$0.0
$0.0
$0.0
$16,789.2
$16,999.2
($210.0)
($995.0)
$2,718.5
$7.6
$15.2
$1,419.9
$2,445.0
$16.5
$1,138.7
$13,998.7
$209.6
$3.8
$2,721.2
$7.4
$15.2
$1,419.9
$2,445.0
$16.5
$1,138.7
$13,979.8
$213.5
$3.8
($2.7)
$0.2
$0.0
$0.0
$0.1
$0.0
$0.0
$19.0
($3.9)
$0.0
($110.5)
$3.0
($15.2
($71.5
($28.1
($1.01
($86.2
($167.7
($23.8
($0.1
sub-total*
Government -Guaranteed Lending:
DOD-FMS
DoEd-HBCU+
DHUD-Community Dev. Block Grant
DHUD-Public Housing Notes
General Services Administration+
001 -Virgin Islands
DON-Ship Lease Financing
Rural Utilities Service
SBA-StatelLocal Development Cos.
DOT -Section 511
sub-total *
grand total *
* figures may not total due to rounding
+ does not include capitalized interest
--
$21,973.6
$21.961.0
$12.6
---------------
---------------
---------------
$41,637.2
$41,453.6
$183.6
($501.1
======== '"
($4,317.8)
From: TREASURY PUBLIC AFFAIRS
lBBB9
F P .\ R T \1 E N T
f)
0....
B-10-99 3:35pm
T II J<:
TREASURY
p. 49 of 52
.. f{ f': :\ S (' It Y
NEWS
on'lCE OF PUSLIC A(.·FAIRS .15UO PKNNS'iLVANIA AVENUE .• N.W•• WASHINGTON, P.C .• 20220. (202) 622.2960
~GOED
UNTIL 2:30 P.M.
CONTACT:
J\f.Ae 16, 1999
O££1ce of FinAncing
202/691-3550
TREASURY TO AUCTXON
$lS,O~O
MILLION OF 2-YEAR NOTES
~e Treaaur,y will auction $15,000 million of 2-year notes eo refund
$28,4'9 million of pUb11cly hela securi~ieB maturing JUne 30, 1999, and
to pay doWZl. about: $13,479 m:i.llioD.
1ft addition to the public holdings, Federal Rase~e Bank. hold $2,484
own accounts, which may be
re£unded by issuing an addltioDal amount. of the new security.
mllicn of the maturing securities for eheir
~ maturing securities beld by the public lnclude $3,520 m~11ion held
Federal Reserve Baaks aa agents £Q~ £oreign and internatioDal monetary
authorities. Amounts bid for these accounts by Federal Reserve Banks wdll
~ added to the offering.
~
T.r.aBur.yDj~.ct
customers requested that we reinvase their mAturing
holding. of apP!l:oximatel.y $721 million into the 2-YGa: Dote.
The auction wi11 be conducted in the single-p~ice auction format.
and Qoncompatit.ive awards will ~e at the highest yield of
accepted cOZD»eti ti.va tenders.
Ul
~ompeti~ive
The notes
be~g offara~ to~ A~e elio1~le
and B~anchea ana at
This Offering o~ Trealilu:y
.8Quritiaa i8 govorned b.Y ~he terms and conditions .et for~h in the Unifor.m
Offering Circula~ for the Sale aDd Issue of Ma~k.t&ble Book-Entry Treasury
Bill., HoteG, and Bonds (31. cn Part 356, aG emended).
Tenders will be
r.~e1vea
for the STRZPS program.
at Federal Reserve
S~B
the Bu:eau of the P1.lJ)11c Debt., Washington, D. C.
Details about the new
lllghlightlf •
secur~ty
are given in the attaohed
offe~ing
000
AttaC:bllient
Ri-3209
--..
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From: TREASURY PUBLIC AFFAIRS
zeBU9
8-10-99 3:36pm
p. 50 of 52
H~GHLIGHTS
OF TREASURY OFFERING TO THE PUBLIC OF
2-YEAR NOTES TO BE ISSUED JUNE 30. 1999
June 16. 1999
Offering Am¢Unt···· ••••••••• • ••••••••••••• $15.000 mdllion
.
De8c~!ption of Offerini:
~.~ and type of e.curitY
••••••••••••••••• 2-year noCes
Serio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Z-2001
CUSIP number· ••••••••••••••••••••••••••••• 912827 SJ 7
Auction da~~ ••••• •• .••••••••••••••••.••••• JUne 23. 1999
IlJsue date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . June 30, 1999
Datad date .................................. Jwle 30, 1999
Maturity date ••••••••••••••••••••••••••••• ~ne 30, 2001
IZlterest rate •••••••••••••••••••••••••"•••• Determined. based on t.he highest
accepted oompetitiv. ~ia
Yi.ld ••••••••••••••••••••••••••••••••••••• Decer.min.a at auctio~
Xntereet payment aates •••••••••••••••••••• Decembe~ 31 and JUne 30
Min~um bid amount and ~ltipl.a •••••••••• $1,000
Accrued interest payable by i~vestor •••••• None
Premium or diacount ••••••••••••••••••••••• C.ter.mined ~t auction
STat's Information:
Hin~
requ1~ed
••••••••••••••••••• Determdned at auction
•••••••••••••••••••••• 912820 DX 2
Due aate (a) and ctJSX;Et number (s)
fo~ addit.ional TZNT(~) ••••••••••••••.••• Mot applieable
amoUAt
Co~s cosz~ numhe~
Submissio~ of Bida;
Noncompetitive bids:
Aceepted in full up to $5,000,000 at tho highest
accepted yield.
C~titive bida:
(1) MUst be expressed as a yield with three c!ecimals, e.~., 7.123%.
(2) N.t long poaition fo~ each biaa.~ must be reported when the sum
of ~he tota1 bid ~ount, at ~ll yields, and the net long position
is $2 billion or g~eater.
(3) Nat long position must be determined AS of ona half-hour p~ior to
the closing t~ for receipt of competitive tenders.
~~
Ka3~
Recognized Bid at a Sin9le yi.ld •••••• 35% of public offe~ing
Award ••••••••••.•••••••••••••••••••••• 35% of public offering
Receipt of ~endars:
Noncompetitive tenders: Prio~ to 12:00 noon Eastern Daylight Saving
ttme on auction day.
C~etitiv. tendere;
Prio~ to 1:00 p.m. Eastern Dayligbt Saving
time OD auction day.
Te~s:
By charge to a f~nds account at a Federal Reserve Bank on
issue date, o~ paymant of full par amount with tender.
~r8a~ur,yDirec~
~8tame~~ can use the Pay Dir.ct feature ~h~ch a~~ho~izes a chArge to their
aCCOUfte of record at their f1nancial institution on issue date.
Payment
TOTAL P.02
ZlBB9
From: TREASURY PUBLIC AFFAIRS
D E P ..\ R T ;\1 E 1\ T
'IREASURY
-
0 F
TilE
8-10-99 3:37pm
T I{ F .\ S IJ
p. 51 of 52
J{ \"
NEWS
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oFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANlAAVENUE, N.W•• WASHINGTON, D.C•• 20220. (202) 622.2960
EMBARGOED UNTIL 10 A.M. EDT
Text as Prepared for Delivery
June 17, 1999
TREASURY DEPUTY SECRETARY LAWRENCE H. SUMMERS
NONUNEE FOR SECRETARY OF THE TREASURY
SENATE FINANCE COMMITTEE
Chainnan Roth, Ranking Member Moynihan, members of this Committee, I am grateful for the
opportunity to appear before you again, today in connection with my nomination to be Secretary
of the Treasury. I am greatly honored by the trust in me that the President has demonstrated by
nominating me to follow in the distinguished tradition at Treasury of Lloyd Bentsen and Bob
Rubin.
For the past six and a half years, I have served at the Treasury Department From 1993 until
1995, I served under Secretary Bentsen as Under Secretary for International Affairs, where my
focus was on international financial issues. For the past 4 years, I have served as Secretary
Rubin's deputy. In that capacity I have participated in the fonnulation of the Adntinistration' s
economic and budget strategy and worked on Treasury priorities - ranging from debt
management, to protecting the nation's borders - as well as continuing to work actively on
international issues.
It has been an immense privilege for me to work with President Clinton and the other members
of his economic team, with the Federal Reserve, with this Committee and with others in
Congress to put in place a core economic strategy for this country. That strategy has been based
on macro-economic stability and achieving fiscal discipline. It has been based on making critical
public investments, particularly investments in people, in education especially. It has been based
on a recognition of America's interest in open markets and stable growth around the world.
Mr.
Chainnan~
while important challenges remain and we in the United States can never afford
to be complacent. the strength of the American economy in recent years stands out. Powered by
the initiative and enterprise of the American people and our market system we are enjoying the
lowest rates of inflation and unemployment in a generation. We have seen the restoration of
American economic leaderslup around the world. And most important of all. for the past several
years we have seen the fastest growth in real earnings of American workers in 25 years.
RR-3210
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at (202) 622-2040
·u.s. GQ\I9mm9n1 Prinllllg OWes: 199B· 919-559
From: TREASURY PUBLIC AFFAIRS
19999
8-10-99 3:37pm
p. 52 of 52
We can all acknowledge the remarkable contribution that Secretary Rubin has made to Our
economy over {he past six and a half years. At Treasury the right course has been set. Our
challenge will be to caIl'Y on.
If confirmed as Secretary I will focus on five priority objectives:
•
First, maintaining a strong economic strategy, based on continued fiscal discipline and the
use of this moment of opportunity to address the long-terms problems facing Social Security
and Medicare.
•
Second, ensuring that a strong economy translates into growth in the living standards of
American workers and their families, and that no part of this country or group of Americans
is left behind.
•
Third, building the strong, stable and growing global economy on which American prosperity
and security ultimately depends. while at the same time working to ensure that global
integration benefits American workers, farmers and businesses.
•
Fourth, striving to ensure that the American financial system is as safe, competitive and
efficient as possible in meeting'the needs of American consumers and businesses.
•
Fifth, supporting the tradition of excellence and integrity in the career staff of the Treasury
Department and its Bureaus that I have come to so much admire during my six and a half
years at the Department.
Mr. Chairman, it has been by privilege both as Under Secretary and as Deputy Secretary to work
with this committee on many issues. If confinned r look forward to working even more closely
with you in the future and with others in Congress on the full range of challenges that we face.
Thank you once again, Mr. Chairman, for bringing me before this committee. Now I would be
pleased to respond to any questions that you or members of the Committee may have.
-30-
2
TOTAL P.02
Ot'FleE 0 ...· PUBLIC AFl;AJRS .1500 PENNSYLVANIA AV~NUE. N.W .• WASllINGTON. D.C.t 20220. (202) 622.2960
EMBARGOED UNTIL 2: 30 P. M.
June 17, 1999
CONTACT:
Office of Financing
202/691-3550
TREASURY OFFERS 13-WEEK, 26-WEEK, AND 52-WEEK BILLS
The ~easury will auceion ebree .eries of Traasury bills tota1ing
approximately $25,000 million to refund $24,246 million of publicly he~d
securities maturing June 24, 1999, and to raise about $754 million of new
ca.sh.
In addition to the public holdings, Fede.al Reserve Banks for their awn
accounts ho~d $11,359 mil~ioD of the maturing bills, which may be refunded at
the highest discount rate of accepted competitive tenders. Amounts issued to
these accounts will be in addition to the offering amount.
The maturing bills held by the public include $4,6~6 million held
by Federal Reserve Banks as agents for fore.ign and international monetary
authorities, which may be refunded within the offering amount at the highest
discount rate of accepted competitive tenders. Addi tional amounts may be
issued for such accounts if the aggregate amount of new bids exceeds the
a.ggregate amount of maturing bills. For purposes of det.exmining such
additional amounts, foreign and international monetary authorit.ies are
considered to hold $3,314 million of the original ~3- and 26-week issues, and
$1,302 million of the original 52-week issue.
TreasuryDirect customers requested that we reinvest their maturing
holdings of approximately $921 million into the 13-week bill, $648 million
into the 26-week bill, and $561 ~llion into the 52-week bill.
Tenders for the bills will be received ae Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington, n.c. This offering of Treasuxy securities is governed by the terms and conditions set:. forth
in the unifor.m Offering Circular for the sale and Issue of Marketable Bookbtry Treasury Bills, Notes, and Bonds (31 CFR Part 356, as amended).
Details about:. each of the new securities are given in the attached
offering highlights.
RR-3211
000
Attachment.
--------------------------------------------------------------------------------------------For press releases, speeches, public schedules and official biographies, caLl our 24·hour fax line at (202) 622·2040
----------~~--~------------------------------------------
HIGHLIGHTS OF TREASURY OFFERINGS OF BILLS
TO B~ ISSUED JUNE 24, 1999
June 17, 1999
Offering Amount •..•..•..••.•..••... $7,500 million
Description of Offering,
Term and type of security •..••..••• 91-day bill
CUSIP number •.••••..••.•••••••••••• 912795 CP 11
Auction date ...•••.•..•••.•..•..••• June 21, 1999
Issue date ......••••...••••..•..••. June 24, 1999
Maturity date ...•.•..•.•••.•.•..... September 23, 1999
Original issue date .•••...•••...•.. March 25, 1999
Currently outstanding .•...••••..••• $11,085 million
Minimum bid amount and multiples •.• $1,000
$'1,500 million
$10,000 million
la2-day bill
912795 CZ 2
June 21, 1999
June 24, 1999
December 23, 1999
June 24, 1999
364-day bill
912795 EB 3
June 22, 1999
June 24, 1999
June 22, 2000
June 24, 1999
$1,000
$1,000
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids •..•.• Accepted in full up to $1,000,000 at the highest discount rate of accepted
competitive bids.
Competitive bids •..•....• (1) Must be expressed as a discount rate with three decimals in increments
of .005%, e.g., 7.100%, 7.105%.
(2) Net long position for each bidder must be reported when the sum of the
total bid amount, at all discount rates, and the net long position is
$1 billion or greater.
(3) Net long position must be determined as of one half-hour prior to the
closing time for reoeipt of competitive tenders.
Maximum Recognized Bid
at a Bingle Yield •..•.••. 35% of public offering
Maximum Award ....••••.•.•••• 35% of public offering
Receipt of Tenders:
Nonoompetitive tenders .•• Prior to 12:00 noon Eastern Daylight Saving time on auction day
Competitive tenders ..•.•• Prior to 1:00 p.m. Eastern Daylight Saving time on auction day
Pa~ent
Terms ...•.......•... By charge to a funds account at a Federal Reserve Bank on issue date, or
payment of full par amount with tender.
Treasu~Direct customers can use the
Pay Direct feature which authorizes a charge to their account of record at
their financial institution on issue date.
DEPARTMENT
TREASURY
OF
THE
TREASURY
NEWS
~178~9. . . . . . . . . . . . . ._
. . . . . . . . . . . . . .
OmCE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220· (202) 622-2960
CONTACT: Maria Ibanez
FOR IMMEDIATE RELEASE
June 21, 1999
(202) 622-2960
UNITED STATES AND SLOVENIA SIGN NEW INCOME TAX TREATY
The Treasury Department today announced that U.S. Ambassador Nancy Ely-Raphel and
Slovenian Ministry of Finance State Secretary Milojka Kolar-Celarc signed a new income tax
treaty between the United States and Slovenia in connection with President Clinton -s visit to
Ljubljana. This treaty, if ratified, will be the first between the United States and a country in the
former area of Yugoslavia.
"Slovenia has made astounding progress in the transition from a closed economy to an
open one," said Assistant Secretary for Tax Policy_ Donald C. Lubick. "This treaty demonstrates
that we are willing to act quickly to establish a treaty relationship with newly-industrialized
countries when they have made the necessary progress and preparations."
The proposed treaty with Slovenia generally follows the pattern of the 1996 U.S. Model
Tax Convention, while incorporating some provisions found in recent U.S. treaties with other
developing countries and in the Organization for Economic Cooperation and Development
(OECD) Model. As with all bilateral tax treaties there are some variations. In the proposed
treaty, these differences reflect particular aspects of Slovenian law and treaty policy_ the
interaction of U.S. and Slovenian law and U.S.-Slovenian economic relations.
The proposed treaty is subject to ratification and \Vi 11 enter into force upon the exchange
of instruments of ratification. It will have effect, with respect to taxes withheld at source_ for
amounts paid or credited on or after the first day of the third month following the date the treaty
enters into force. In other cases the treaty will have effect with respect to taxable years
beginning on or after the first day of January following the date on which the treaty enters into
force.
-30RR-3213
------------------------------------------------------------------------For press releases, speeches, public schedules and official biographies, call our 24-hollr fax line at (202) 622-2040
--------------------------------------------------------------------------
--
DEPARTMENT
OF
THE
TRE SURY
-
OFFICE OF PUBUC AI-fAIRS '" 1500 PENNSYl.VANlA AVENUE, N.W.
-
-
TREASURY
NEWS
~
WASHINGTON, D.C." 20220" (202) 622·2960
_ _ _ _=_Il_~~~~~~Im&9~~WM!!lW.4'74'mlW~<W.w~/4W/~/""""""~-Ia>/,IUlM'TU#~::l
EMBARGOED UNTIL 9:00 A.M. EDT
Remarks as Prepared for Delivery
June 21, 1999
TREASURY UNDER SECRETARY FOR ENFORCEMENT .JAMES E. .JOHNSON
TESTIMONY BEFORE THE SENATE CAUCUS
ON INTERNATIONAL NARCOTICS CONTROL
Mr. Chairman and members of the Caucus, thank you for the opportunity to discuss what
law enforcement believes to be nIle or the most insidious f<mns of drug money laundering, the
Colombian Black Market Peso Exchange (BMPE) This system oflaundering drug proceeds has
been used by Colombia's drug syndicates t<)r a number or years.
Mr. Chairman, I would again like to thank you, this Caucus, and other concerned olTicials
for your leadership and efl<Rts on this vital matter. Your vigilance has helped the federal
government maintain the BMPF as a major target of its anti-money laundering etrorts. In
addition, 1 would like to thank you personally ()!- your unflagging support of our overall counterdrug efrofts, particularly those orthe U.S Customs Service.
As this Caucus is well aware, international crime constitutes a national security threat It
also is a threat brought home to us directly - on OLlr streets, in our schools, and within our
communities. Such crime, paliicularly as it relates to drugs, is the work of international criminal
enterprises.
Money laundering is critical to the survival and growth of these organizations As
President Clinton remarked to the United Nations on the (ii1icth anniversary oC its creation.
We must not allow criminals to wash the blood off profits from thc
sale of drugs, from terror or organized crime. Together we must
say ... to organizcd criminals, terrorists, drug tratlickcrs and
smugglers, you have nowhere to run and nowhere to hide.
RR-3214
------.-----~----.------------.---------------------------
2
At thc same time, following the money trail is an ctTcctivc mcans of attacking the
organizations. Indeed, if money laundcring is the "life blood" of crime, it is also, as Secretary
Rubin has observcd, "the Achilles heel, as it gives us a way to attack the leaders of criminal
organizations." So it is with the I3MPE and its link to the Colombian drug traflickers. An attack
on the BMPE -- onc of the systems sustaining Colombian drug cartels -- constitutes an attack on
the cartels themselves. Our gains against this money laundering system ultimately mean fewer
dl1lgs on our streets, less drug-related violence, and more lives saved.
Wc have taken several steps designed to cnhance our efforts in this fight. We have
worked to design and implemcnt smal1 and tough law enforcement initiatives focused specifically
on the SMPE systcm. Our efforts have resulted in successful cases and significant seizures. We
look to filrther build upon these efforts through close cooperation with our international partners,
including the Government of Colomhia, as well as outreach to and a partnership with the private
sector. I will provide you with a detailed accounting regarding these effol1s below, but briefly
summarized, they include
Continuing to make solid cases against BMPE pal1icipants at every "choke point" of
the system;
Improving, through an inter-agency working group, coordination of and consultation
on law enforcement operations directed at the BMPE;
Improving international cooperation, by enlisting the collaboration of foreign
governments, particlliarly Colomhia; and
Establishing partnerships with the private sector by reaching out to the (] Sand
international business communities.
In order to place the foregoing initiatives in their proper context, I would like to take a few
moments to briefly summarize the operations of the system itself
Colombian Black Mal·ket Peso Exchange System
To the best of our knowledge, the BMPE is the largest continuing money laundering
system in the Western Hemisphere Anecdotal US. law enforcement evidence and estimates from
Colombian customs authorities indicate that the system may be responsible for laundering as much
as $) billion annually.
The SMPE first was created in the 19)Os when importers, attempting to avoid the
requirements of Colombian law, including taxes and duties, began buying U S dollars on the
black market. Theil, as now, Colombian importers needed large amounts of US dollars to
purchase foreign goods for domestic sale. Access to lJ S. dollars that Colombian importers need,
however, is regulated by Colombian law and administered by the country's central bank. Before
the Colombian central bank COli verts pesos to dollars it requires that the importer certify that
necessary import permits have been obtained and that duties and taxes have been paid
3
As Colombian drug tratlicking became prevalent, the traffickers soon recognized the value
of this system. Indeed, there are now three principal groups making use of the BMPE and on
whom we continue to focus: drug tratllckers who makes millions of U.S. dollars off sales of his
poison, peso brokers who convel1s the illicit dollars into usable Colombian pesos, and Colombian
importers who provide the Colomhian pesos to the peso broker in exchange for the U. S. dollars.
Alvin James of the Financial Crimes Enforcement Network (FinCEN) will provide much
greater detail on the process, but the following briefly summarizes the 13MPE in the drug context:
Colombian drug traffickers' proceeds from the sale of drugs are in U. S. dollars and are located in
the U. S. The tratlickers sell these dollars to black market Colombian peso brokers, who have
operatives in the U.S. Once the peso broker takes possession of the currency in the U.S., the
trafticker receives the agreed upon amount as pesos, discounted by as much as 2S percent. The
size of the commission rctlects the risks incurred hy the peso broker, who must place the cash in
the US. tinancial system despite the repol1ing and record-keeping requirements orthe Bank
Secrecy Act (BSA). At this point, having received the pesos and transferred the money
laundering burden to the broker, the drug traflicker steps out of the laundering process.
Once the peso broker owns the US. currency, his goal is to quickly resell the dollars at a
profit. The peso broker's customer is otten a Colombian impol1cr who wants U. S dollars to
engage in international trade. The imp0l1ers who use the peso brokers intend to smuggle their
goods into Colombia.
The Colombian importer usually wants the dollars in a more manageable and less
conspicuous form than currency. To accommodate the importer, the peso broker's first task is to
place most of the U. S currency in the U. S tinancial systcm. As noted above, such placement
must be accomplished ill ways that minimi7.e the chances of detection in light or the USA
reporting and record-keeping requirements structuring below the currency repol1ing thrcshold,
commingling drug money with legitimate currency deposits of a business, or outbound smuggling
of the currency which is then placed in a foreign financial institution and then returned to the
United States.
The Colombian imp0l1er pays for the dollars by providing pesos to the broker in
Colombia. The peso broker then transfers the dollars at the instruction of the importer to the
merchant providing goods to the smugglcr. The merchant is often in the United States, but also
may be in other places that commonly do business with Colombia. Once thc dollars are placed in
a merchant's account, proof oC their ncxus to a narcotics transaction becomes much more diflicult
Unless there is proof that the merchant had knowledge oCtile laundering schemc, he may claim to
be an innocent owner, and the drug dollars becomc an indistinguishable e1ernent of general
commerce.
It is important to note that just as money laundering generally is a global problem, so too
is the BMPE. Indeed, the businesses that are being paid by or at the direction orthe dollar/peso
broker are not limited to one particular country Through our undercover and other enforcement
operations, we have learned of money laundering activities involving the BMPE in countries in
Asia and Europe, as well as the United States.
Our Response
As noted, our response to the BMPE has three main components: tough and smart law
enforcement; international cooperation; and outreach to the private sector. This overall program
has been developed and is being overseen by the recently formed Black Market Peso Exchange
Working Group.
The BMPE Working Group
Building on the work of other coordinating mechanisms, including the Interagency
Coordination Group, the BMPE Working Group hrings together the tools of Treasury's and
Justice's enforcement bureaus and the regulatory agencies. This effort ensures that we use all
available resources to mount a comprchensive attack against the BMPE system as a wholc.
The BMPE Working Group integrates law enforcement and regulatory ctT0I1s with
intelligence data support Tn addition to Treasury's law enforcement hureaus and agencies
(Customs, IRS-CID, the Bureau of Alcohol, Tohacco and Firearms, the Office of the Comptroller
of the Currency, FinCEN, and the Oflice of Foreign Assets Control), the BMPE Working Group
includes: the Department of JlIstice~ the Drug Enforcement Administration (DEA), the Federal
Bureau of Investigation (FBI), the National Drug Intelligence Center (NOTe), the Federal
Reserve Board, and the United States Postal I nspection Service
With such wide pal1icipation, the BMPE Working Group helps ensure that all available
legal and regulatory tools are used in a comprehensive attack against the BMPE. The
participation of the Department of Justice ensures that a\l strategic initiatives designed and
implemented by the BMPE Working Group are legally sound. Participation of FinCEN and
NOle ensures that Bank Secrecy Act information, including suspicious activity reports, and other
data are thoroughly analyzed. The federal bank regulatory agencies ensure that information
developed by the Working Group that helps identify suspicious activity related to the RMPF is
communicated to financial institutions, which then will be better ahle to identify and report such
suspicious activity to law enforcement. Finally, the participation of Customs, IRS, DEA, and FRl
ensure that their investigative resources and talents are used etfectively and in a coordinated
manner.
The RMPE Working Group helps provide each of the participating agencies information
available through others, as well as means or accessing such information Additionally, and in
coordination with Fanny Kertzman, t he Director of Colombia's Revenue and Customs Service
(DIAN), it has created an analytical subgroup devoted to the analysis of shared information,
including that received from Colombian authorities This subgroup, composed of representatives
from FinCEN, Customs, Justice, the IRS, OFAC, and NDW, will join their counterparts in a
bilateral task force initiative in Colomhia to review, analyze, and discuss specific data that may
further the investigation and prosecution of cases against the BMPE. For this and other reasons,
am pal1icularly pleased that DIAN Director Kertzman is here with us today and look forward to
hearing her contirmation that this task force will meet in Bogota in the very near future.
Our interagency work at home and abroad complements other resources. Customs, for
example, in coordination with FinCEN, has recently established a national Money Laundering
Coordination Center (MLCC) which will help coordinate the intelligence generated from
undercover operations targeting the RMPE conducted by Customs and other participating
agencies. Customs expects the Center to be fully operational by December of this year. Customs
also has employed the "Numerically Integrated Profiling System" (NIPS), that has historically
been used to identify trade fraud and related anomalies, in an effort to identifY export commodities
and businesses that are a part of the Colombian Black Market Peso Exchange system.
Smart and Tough Enforcement of Laws
A system this complex requires a comprehensive response that comhines all resources
available to law enforcement and regulators. Since the early 1980's, we have successfully
investigated and prosecuted individuals laundering dl1lg proceeds through the BMPE. The US.
Customs Service reports that over the past eight years alone, its undercover operations have led
to the seizure of $800 million in cash and monetary instruments, 2, 100 arrests, and the seizure of
over 100,000 pounds of cocaine. These Ligures include two of the largest single seizures of cash
in the history of federal law enforcement, $22 lnillion in Operation CASACAM in Miami and $1 S
million in Operation Omega in Los Angeles.
In addition, the Internal Revenue Service's Criminal Investigation Division has
investigated approximately 250 cases directly involving the BMPE The investigations revealed
the wide range of businesses that, throllgh import and export activities (in those cases, of auto,
truck, and airplane parts) can he exploited by the 13MPE
International Cooperation
Notwithstanding certain investigative successes, the 13MPE continues its operations
Further gains depend greatly on extending this fight to the international arena This is fitting,
since the BMPE is a serious international threat. The business community in Colombia has
sutfered serious market loss because of the 13MPE system that essentially fuels the Colombian
contraband market. This contraband market, largely tinanced by drug money, offers goods at
subsidized prices, cOllliesy of t he narcotics traflkkers
Therc is growing recognition among governments that they must deal firmly and
effectively with elusive, sophisticated and well-tinanced criminals. Integral to our anti-BMPE
efforts is working more closely with such governmcnts in developing an effective response to the
threat of money laundering. We must strive to improve bilateral and multilateral cooperation and
information exchange.
To further this goal, Treasury has had several high-level discussions with Colombian
officials over the past nine months. In September \998, Secretary Rubin, Deputy Secretary
Summers, and I met with President Pastrana, who committed to work with U.S. authorities on the
issue. Deputy Secretary Summers and I followed up on this discussion by meeting in October
with the Colombian ambassador, with whom I have had several additional conversations since In
addition, Ms. Kertzman has met with me and several U.S officials on more than one occasion
over the past year.
In addition, the Oepariments of Treasury and Justice co-chaired two days of talks with
senior ot1icials from Colombia's Customs, Foreign Trade, and Banking Superintendence offices on
BMPE and what steps each could take separately and collectively to combat the problem. These
informal discussions represented an important breakthrough, ushering in a number of cooperative
initiatives and programs important to law enforcement etforts in both countries. The United
States has begun similar work with governments and officials from the Cree trade zones of Aruba
and Panama. Bringing together all of these key players in order to bring the collective weight of
our resources, experiences, and effor1s to hear on this money laundering system is integral to our
BMPE strategy.
The United States also is promoting several multilateral initiatives through organizations
such as the Financial Action Task Force (FA TF)1 FAIT brings legal, financial and law
enforcement exper1s into the policy making process. The BMPE action plan intends to build on
such anti-money laundering programs by proposing expansion of the process to incorporate trade
and business representatives and f(JCllS upcoming meetings on trade related money laundering Tn
addition, the United States is working with regional organizations, such as the Caribbean Financial
Action Task Force, to foclls attention on liee trade zones and the extent to which businesses are
being lIsed Cor, or are facilitating money laundering.
Partnerships with the Private SectQ["
Finally, we will enlist the private sector in this tight. All of the Treasury law enforcement
bureaus have traditionally ttlrthered their missions through outreach and partnerships to relevant
private sector interests. Our light against the RMPE is no ditferent. The first step in forming this
paltnership with the private sector must be to engage the public and business community on the
essential aspects of the llMPE. FinCEN took an impor1ant first step in July 1997, by initiating a
series 01' meetings with local and national banks in the Miami area In these meetings, FinCEN
shared information that could help banks identify sllspicious activity related to BMPE. We also
received invaluable information from the hanking cOlllmunity regarding its view of this problem
I
The FAIl" was estahllshed hy (;-7 Ikads (lfStale
III
I')X')
:llld IS
lI(l\\ Cllllljlllscd nf2(; memher C(llllllries, wh()se
purpose is to develop and promote standards and poliCies It 1 ctllllhalllHlIley laundering
7
These meetings culminated in a FinCEN advisory describing the BMPE to the law enforcement
and financial communities
We are seeing results from these outreach efforts to the private sector. For example,
suspicious activity reports (SARs) being tiled by financial institutions specifically addressing the
BMPE have increased from 27 in 1997 to 118 in 1998. As ofmid-Junc 1999,98 SARs have been
filed citing the BMPE.
Moving forward, this collaboration with the private sector will be vital. It reduces the
risks that business and financial institutions are inadvertently facilitating the BMPE. It also
provides policy makers with the benefit of private sector experience and expertise while assuring
that policies reflect and meet the private sector's needs and concerns.
Indeed, this is a two-way process. Companies and industries need to know that their
otherwise standard business activities are being used by sOllie to furiher the HMPF, that their
goods may be tinanced by narco-dollars, and that their goods are illegally smuggled into Colombia
and sold at substantially lower prices driving out legitimate businesses. We in turn would like to
hear from the business community as to what procedures they have or can put in place to make
sure that they are not used in this way.
As a part of our efTort to work with the business community, lJ. S Customs is launching a
national campaign today, alerting businesses to the BMPE system and its indicators. FinCEN is
issuing a follow-up to its 19<n Advisory that updates the financial community on what we have
learned as a result of recent regulatory measures. I will have an opportunity to discuss these
advisories further next week, when I speak the 19<)<) annual meeting of the Association of Home
Appliance Manufacturers.
Our efTorts are not -- and canllot -- be limited to the U. S. business community The
BMPE involves businesses 1Iot only in the US. and Colombia, but also in Asia, Europe and other
parts of the America. We intend to engage the international business community, bilaterally as we
have done in Colombia, and IlIultilaterally We are pursuing the expansion of F ATF participation
to the international business community just as it was expanded to the banking community We
are supporting a CF ATF meeting that will specitically address free trade zone issues and money
laundering. We also intencJ to pursue a broader alliance against HMPE with other regional
international organizations sllch as the Asia Pacific Group on Money Laundering
CONCLlJSION
In conclusion, Mr, Chairman, I would like to reiterate the Caucus' contribution toward
our country's understanding of one of its most serious national security threats -- drug money
laundering,
I believe that our strategy will help make significant inroads against the BMPE system,
We have much work ahead of us and will continue to consult with other agencies and Congress as
we pursue this mission, I would be happy to answer any questions you and or the other Members
may have, Thank you,
-30-
l8889
From: TREASURY PUBLIC AFFAIRS
() E I' . \ N. T 1\1 E 1\ T
0 F
THE
10-19-99 3:45pm
p. 1 of 19
T R E :\ S l; I~ \'
NEWS
-
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE. N.W•• WASHINGTON. D.C.. 20220. (202) 622.2960
,June 22, 1999
Weekly Release of U.S. Reserve Assets
The Treasury Department today released U.S. reserve assets data for the week ending
June 18, 1999.
u.s.
As this table indicates,
reserve assets totaled $72,087 million as ofJune 18, 1999,
down from$72,739 million as of June 11.
Reserve
Gold
Drawing
.
C urrencles
31
Position in
'1J
21
June 11, 1999
72,739
11,049
9,796
15,047
15,049
21,798
June 18, 1999
72,087
11,049
9,750
14,795
14,796
21,696
II Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown arc: as of Apri130, 1999. The March 31.
1999 value was $11,049 million,
21 SDR holdings and the reserve position in the IMF are based on IMP data md revalued in dollar terms at the official
SDRIdollar exchange rate. Consistent with current reporting practices. IMF data for June 11. 1999 are final. Data for
SDR holdings and the reserve position in the IMF shown as of June 18, 1999 (in italics) reflect preliminary adjusrments by
the Treasury to the June 11, 1999 IMF data.
31 Includes holdings of the Treasury's Exchange Stabilization Fund (ESp) and the Feder:u Reserve's System Open Market
Account (SOMA). These holdings are v:uued :tt current tll3Iket exchange rates or, where appropriate, at such other rates as
may be agreed upon by the parties to the trmsactions.
RR-32~5
---~------~------~----~----------~~~~~--~--------~~--~--------------------
-!orpress releases, speeches. public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
~
·,1
C:
T"__ . _ Q I \ t
C)nnrJ"",
nlr~·
1QQA _ Flrg.. 5!B
TOTAL P.01
-
PUBLIC DEBT NEWS
- Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
FOR IMMEDIATE RELEASE
June 21,
1999
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
June 24, 1999
September 23, 1999
912795CP4
Term:
Issue Date:
Maturi ty Date:
CUSIP Number:
4.610%
High Rate:
Investment Rate 1/:
Price:
4.741%
98.835
All noncompetitive and successful competitive bidders were awarded
securities at the high rate.
Tenders at the high discount rate were
allotted 12%. All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
$
Competitive
Noncompeti ti ve
24,615,659
1.297,416
$
7,331,055 2/
25,913,075
PUBLIC SUBTOTAL
180,918
180,918
26,093,993
7,511.973
3,364,235
9,082
3,364,235
9,082
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
TOTAL
6,033,639
1,297,416
29,467,310
$
Median rate
10,885,290
4.595%: 50% of the amount of accepted competitive tenders
Low rate
4.530%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
was tendered at or below that rate.
Bid-to-Cover Ratio
= 25,913,075 / 7,331.055 = 3.53
1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $1,003,982,000
http://www.publicdebt.treas.gov
RR-3216
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
June
21,
Office of Financing
202-691-3550
CONTACT:
1999
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
June 24, 1999
December 23, 1999
912795CZ2
Term:
Issue Date:
Maturity Date:
CUSIP Number:
4.850%
High Rate:
Investment Rate 1/:
Price:
5.055%
97.548
All noncompetitive and successful competitive bidders were awarded
securities at the high rate.
Tenders at the high discount rate were
allotted 84%.
All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
$
Competitive
Noncompetitive
$
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
3,872,843
1. 004,997
4,877,840 2/
23,573,965
PUBLIC SUBTOTAL
TOTAL
22,568,968
1,004,997
2,632,738
2,632,738
26,206,703
7,510,578
3,425,000
132,262
3,425,000
132,262
29,763,965
$
11,067,840
Median rate
4.850%: 50% of the amount of accepted competitive tenders
tendered at or below that rate.
Low rate
4.750%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
~s
Bid-to-Cover Ratio
=
23,573,965 / 4,877,840
=
4.83
1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $ 71 7,246,000
http://www .publicdebt.treas.gov
RR-3217
'DEPARTMENT
-
01"
THE
TREASURY
omCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622·2960
EMBARGOED UNTIL 10 A.M. EDT
Text as Prepared for Delivery
June 22, 1999
TREASURY DEPUTY SECRETARY LAWRENCE H. SUMMERS
NOMINEE FOR SECRETARY OF THE TREASURY
ST ATEMENT BEFORE THE SENATE BANKING COMMITTEE
Chairman Gramm, Ranking Member Sarbanes, members of this committee, I am
grateful for the opportunity to appear before you again, today in connection with my
nomination to be Secretary of the Treasury. I am greatly honored by the trust in me that the
President has demonstrated by nominating me to follow in the distinguished tradition at
Treasury of Lloyd Bentsen and Bob Rubin.
For the past six and a half years, I have served at the Treasury Department. From
1993 until 1995, I served under Secretary Bentsen as Under Secretary for International Affairs,
where my focus was on international financial issues. For the past 4 years, I have served as
Secretary Rubin's deputy. In that capacity I have participated in the formulation of the
Administration's economic and budget strategy and worked on Treasury priorities - ranging
from debt management, to protecting the nation's borders - as well as continuing to work
actively on international issues.
It has been an immense privilege for me to work with President Clinton and the other
members of his economic team, with the Federal Reserve, with this Committee and with others
in Congress to put in place a core economic strategy for this country. That strategy has been
based on macro-economic stability and achieving fiscal discipline. It has been based on making
critical public investments, particularly investments in people, in education especially. It has
been based on a recognition of America's interest in open markets and stable growth around
the world.
Mr. Chairman, while important challenges remain and we in the United States can
never afford to be complacent, the ~trength of the American economy in recent years stands
out. Powered by the initiative and enterprise of the American people and our market system we
are enjoying the
RR-3218
'--------------------------------------------------------------------------.!::.tess releases, speeches, public schedules and official biographies, caU our 24-hour fax line at (202) 622-2040
"
lowest rates of inflation and unemployment in a generation. We have seen the restoration of
American economic leadership around the world. And most important of all, for the past
several years we have seen the fastest growth in real earnings of American workers in 25
years.
We can all acknowledge the remarkable contribution that Secretary Rubin has made to
our economy over the past six and a half years. At Treasury the right course has been set. Our
challenge will be to carry on.
If confirmed as Secretary I will focus on five priority objectives:
•
First, maintaining a strong economic strategy, based on continued fiscal discipline and the
use of this moment of opportunity to address the long-term problems facing Social Security
and Medicare.
•
Second, ensuring that a strong economy translates into growth in the living standards of
American workers and their families, and that no part of this country or group of
Americans is left behind.
•
Third, building the strong, stable and growing global economy on which American
prosperity and security ultimately depends, while at the same time working to ensure that
global integration benefits American workers, farmers and businesses.
•
Fourth, striving to ensure that the American financial system is as safe, competitive and
efficient as possible in meeting the needs of American consumers and businesses.
•
Fifth, supporting the tradition of excellence and integrity in the career and political staff of
the Treasury Department and its Bureaus that I have come to so much admire during my
six and a half years at the Department.
Mr. Chairman, it has been by privilege both as Under Secretary and as Deputy Secretary to
work with this committee on many issues. If confirmed Stu Eizenstat and I look forward to
working even more closely with you in the future and with others in Congress on the full range
of challenges that we face.
Thank you once again, Mr. Chairman, for bringing me before this committee. Now I
would be pleased to respond to any questions that you or members of the Committee may
have.
-30-
-
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
FOR IMMEDIATE RELEASE
19 9 9
CONTACT:
Office of Financing
202-691-3550
June 22,
RESULTS OF TREASURY'S AUCTION OF 52-WEEK BILLS
364-Day Bill
June 24, 1999
June 22, 2000
912795EB3
Term:
Issue Date:
Maturi ty Date:
CUSIP Number:
4.890%
High Rate:
Investment Rate 1/:
5.163%
Price:
95 . o-~6
All noncompetitive and successful competitive bidders were awarded
securities at the high rate.
Tenders at the high discount rate were
allotted 12%.
All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Tendered
Tender Type
$
Competi ti ve
Noncompe tit i ve
21,721,684
940,964
$
1,302,000
1,302,000
23,964,648
10,010,638
4,570,000
268,000
4,570,000
268,000
Foreign Official Refunded
SUBTOTAL
Federal Reserve
Foreign Official Add-On
$
7,767,674
940,964
8,708,638 2/
22,662,648
PUBLIC SUBTOTAL
TOTAL
Accepted
28,802,648
$
14,848,638
Median rate
4.860%: 50% of the amount of accepted competitive tenders
Qs tendered at or below that rate.
Low rate
4.750%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-cover Ratio
=
22,662,648 / 8,708,638
=
2.60
1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $664,669,000
RR-3219
itttp:!!www.publlcdebt.treas.gov
----------------------------------------------------------------------------------------
PUBLIC DEBT NEWS
-Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
FOR IMMEDIATE RELEASE
June 23, 1999
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 2-YEAR NOTES
Interes t Rate:
Series:
CUSIP No:
STRIPS Minimum:
Issue Date:
Dated Date:
Maturity Date:
5 3/4%
Z-2001
9128275J7
$800,000
High Yield:
Price:
5.754%
June 30, 1999
June 30, 1999
June 30, 2001
99.993
All noncompetitive and successful competitive bidders were awarded
securities at the high yield.
Tenders at the high yield were
allotted 72%.
All tenders at lower yields were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Competitive
Noncompetitive
$
24,173,147
1, 536,067
$
2,484,255
1, 500,000
2,484,255
1, 500,000
Federal Reserve
Foreign Official Inst.
$
29,693,469
13,465,447
1,536,067
15,001,514 11
25,709,214
PUBLIC SUBTOTAL
TOTAL
Accepted
Tendered
Tender Type
$
18,985,769
Median yield
5.725%:
50% of the amount of accepted competitive tenders
tendered at or below that rate.
Low yield
5.650%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
DS
Bid-to-Cover Ratio == 25,709,214 I 15,001,514
=
1.71
1/ Awards to TREASURY DIRECT = $973,718,000
http://www .pu blicdebt. treas.gov
RR-3220
OffICE OF PUBLIC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. _ WASHINGTON. D.C .• 20220 - (202) 622·2960
EMBARGOED UNTXL 2: 30 P. lit.
JUne 24, 1999
CONTACT:
Office of Financing
202/69~-3550
TREASURY OFFERS 13-WEEK AND 26-WEEK BILLS
The Treasury will auction two series of Treasury bil1s totaling
$15,000 million eo refund $24,040 million of publicly held
securities maturing JUly 1, 1999, and to raise About $960 ~llion of new cash.
approx~tely
In addition to the public holdings, Federal Reserve Banks for their own
accounts hold $7,207 million of the maturing bills, which may be r~£unded at
the highest discount rate of accepted competitive tenders_ Amounts issued
to these accounts will be in addition to the offering amount.
The maturing bills held by the public include $2,601 million held by
Federal Reserve Banks as agents for foreign and international monetary authorities, which =ay be refunded within the offering amount at the highest discount
rate of accepted competitive tenders_ Additional ~ounts may be issued for
such accounts if the aggregate amount of new bids exceeds the aggregate amount
of maturing bills.
TreaB~Direct customers requested that we reinvest their maturing
holdings of approximately $892 million into the ll-week bill and $705
million into the 26-week bill.
Tenders for the Qills will he received at Federal Reserve Banks and
Branches and at the Bureau of the Public DeQt, Washington, D.C. This offering
of Treasury securities is governed by the terms and conditions set forth in
the Uniform Offering Circular for the Sale ~d Issue of Marketable Book-Entry
~easury Bills, Notes, and Bonds (31 CPR Part 356, as amended).
Details about each o£
ing highlights.
~he
new securities are given in the attached offer-
000
RR-3221
Attachment
For press releases, speeches, public schedules and official biographies, call our 24·hou,. fax line at (202) 622.2040
-------------------------------------------------------------------------------------------
HIGHLIGHTS OF TREASURY OFFERINGS OF BILLS
TO BE ISSUED JULY 1, 1999
June
Offering Amount •.••.••••..•••••••••.
J". ••
Description of Offering:
T.~ and type of security .•••••••...••••
Cl1SIP number •.••••.••••.•.••••••..•.••••
Auction date .••••••.•••....•••......•..•
Issue date ••••••••••...••.•••••.•...•••.
Maturity date ••••••••.•••...•••••...•••.
Original issue date ••••••.•••.•.•.•.••••
Currently outstanding .•••.•••.••....••••
Minimum bid amount and multiples •.•.••••
~e
:a, 1999
$7,500 million
$7,500 million
91-day bill
912795 CQ 2
June 28, 1999
July 1, 1999
September 30,1999
April 1, 1999
$11,6.9 million
$l,OOO
182-day bill
912795 DA 6
June 28, 1999
July 1, 1999
December 30, 1999
July 1, 1999
$1,000
following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids .•.•.•••• Accepted in full up to $1,000,000 at the highest discount rate of
accepted c~etitive bids.
Competitive bids ..••....•••. (1) MUst be expressed as a discount rat. with three decimals in
increments of .005%, e.g., 7.100%, 7.105%.
(2) Net long position for each bidder must be reported when the sum
of the total bid amount, at all discount rates, and the net long
position is $1 billion or greater.
(3) Net long position must be determined as of one half-hour prior
to the closing time for receipt of competitive tenders.
Maximum Recognized Bid
at a Single Yield •••....•••. 35% of public offering
Maximum Award •••••••••••....•••. 35% of public offering
Receipt of Tenderss
Noncompetitive tenders .••••. Prior to 12:00 noon Eastern Daylight Saving time on auction day
Competitive tenders ••.•••••. Prior to 1100 p.m. Eastern Daylight Saving time on auction day
P(Yment Termss By charge to a funds account at a Federal Reserve Bank on issue date, or payment
of full par amount with tender.
Tre4Bu~Dir6ct customers can use the Pay Direct feature which
a~thorizea a charge to their aocount of record at their financial institution on issue date.
o
federal financing
WASHINGTON. D.C. 20220
bankNEWS
FEDERAL FINANCING BANK
June 24, 1999
Kerry Lanham, Secretary, Federal Financing Bank (FFB) ,
announced the following activity for the month of May 1999.
FFB holdings of obligations issued, sold or guaranteed by
other Federal agencies totaled $41.1 billion on May 31, 1999,
posting a decrease of $506.1 million from the level on
April 30, 1999. This net change was the result of a decrease in
holdings of agency debt of $141.2 million, in holdings of agency
assets of $340.0 million, and in hcldings of agency guaranteed
loans of $24.9 million.
FFB made 38 disbursements during _tne
month of May.
FFB also received 30 prepayments in May.
Attached to this release are tables presenting FFB May loan
activity and FFB holdings as of May 31, 1999.
RR-322;
CD
N
OJ
N
0
l{)
~
N
<;J
N
N
~
N
<D
o
N
Vl
Vl
~
CL
N
0
N
CD
LL
LL
Page 2 of 4
FEDERAL FINANCING BANK
MAY 1999 ACTIVITY
~ORROWER
FINAL
MATURITY
INTEREST
RATE
DATE
AMOUNT
OF ADVANCE
5/3
5/3
5/4
5/4
5/5
5/6
5/7
5/14
5/17
5/17
5/18
5/18
5/19
5/20
5/21
5/24
5/28
5/28
$450,000,000.00
$457,900,000.00
$300,000,000.00
$317,900,000.00
$429,400,000.00
$227,100,000.00
$97,100,000.00
$316,900,000.00
$350,000,000.00
$304,200,000.00
$200,000,000.00
$256,800,000.00
$401,200,000.00
$258,800,000.00
$221,900,000.00
$48,400,000.00
$200,000,000.00
$283,200,000.00
5/4/99
5/4/99
5/5/99
5/5/99
5/6/99
5/7/99
5/10/99
5/17/99
5/18/99
5/18/99
5/19/99
5/19/99
5/20/99
5/21/99
5/24/99
5/25/99
6/1/99
6/1/99
4.638%
4.742%
4.678%
6.942%
4.732%
4.742%
4.740%
4.761%
4.710%
4.836%
4.761%
4.784%
4.753%
4.731%
4.730%
4.763%
4.784%
4.781%
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
5/14
5/17
5/17
5/17
5/17
5/25
5/26
$515,854.42
$382,318.14
$269,407.05
$207,687.05
$8,577.00
$180,479.30
$18,859.75
10/1/26
7/31/25
7/31/25
7/31/25
7/31/25
11/2/26
1/2/25
5.932%
6.108%
6.108%
6.108%
6.108%
6.004%
60000%
S/A
S/A
S/A
S/A
S/A
S/A
S/A
5/14
5/14
5/24
5/24
5/24
$480,912.73
$903,420.87
$32,667.92
$40,694.83
$341,509.71
9/4/29
9/1/09
9/1/27
9/1/26
9/1/26
5.805%
5.389%
6.006%
6.013%
6.013%
S/A
S/A
S/A
S/A
S/A
IGENCY DEBT
U.S. POSTAL SERVICE
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Postal
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
Service
OVERNMENT - GUARANTEED LOANS
GENERAL SERVICES ADMINISTRATION
Chamblee Office Building
fuley Services Contract
Foley Services Contract
Foley Services Contract
Foley S~uare Office Bldg.
reTe Bu~lding
Kemphis IRS Service Cent.
~EPARTMENT
OF EDUCATION
tougaloo College
tougaloo College
~ethune Cookman
~.Va. State College
tVa. State College
IIA is a semiannual rate.
Page 3 of 4
FEDERAL FINANCING BANK
MAY 1999 ACTIVITY
-
IORROWER
DATE
AMOUNT
OF ADVANCE
FINAL
MATURITY
$3,953,000.00
$1,500,000.00
$303,000.00
$3,000,000.00
$2,000,000.00
$2,920,000.00
$1,173,000.00
$347,425.00
12/31/20
12/31/31
12/31/13
7/2/01
10/1/29
7/2/29
6/30/00
12/31/13
INTEREST
RATE
PVERNMENT - GUARANTEED LOANS
R~
UTILITIES SERVICE
Arizona Electric #427
Altamaha Elec .. #467
Beaver Creek Coop. #391
Jackson Energy # 5 2 7
brted Elec. #519
Citizens Elec. #529
Mountain Parks Elec. #397
Colton Tele. #526
Qtr. is a Quarterly rate.
5/7
5/10
5/10
5/11
5/21
5/25
5/26
5/28
5.920%
5.960%
5.653%
5.259%
5.997%
5.942%
4.954%
5.784%
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Qtr.
Page 4 of 4
FEDERAL FINANCING BANK HOLDINGS
(in millions of dollars)
Program
Monthly
Net Change
Fiscal Year
Net Change
5/1/99- 5/31/99
10/1/98- 5/31/99
May 31. 1999
April 30. 1999
2.733.2
2.874.4
-141. 2
-2.962.9
2,733.2
2.874.4
-141. 2
-2.962.9
3.565.0
8.275.0
3.1
7.2
4.598.9
3.630.0
8.550.0
3.1
7.2
4.598.9
-65.0
-275.0
0.0
0.0
0.0
-110.0
-1. 225.0
0.0
0.0
0.0
Subtotal*
16.449.2
16.789.2
-340.0
-1. 335.0
Government-Guaranteed Lending:
DOD-Foreign Military Sales
DoEd-HBCU+
DHUD-Community Dev. Block Grant
DHUD-Public Housing Notes
General Services Administration+
DOl-Virgin Islands
DON-Ship Lease Financing
Rural Utilities Service
SBA-State/Local Development Cos.
DOT-Section 511
2.705.8
9.4
15.2
1.419.9
2.436.0
16.5
1.138.7
13.996.8
206.7
3.8
2.718.5
7.6
15.2
1.419.9
2.445.0
16.5
1.138.7
13.998.7
209.6
3.8
-12.7
1.8
-0.1
0.0
-9.0
0.0
0.0
-2.0
-2.9
0.0
-123.2
4.8
-15.3
-71.5
-37.1
-1. 0
-86.2
-169.7
-26.7
-0.1
Subtotal*
21.948.7
21.973.6
-24.9
-526.0
Grand total*
41. 131.1
41.637.2
-506.1
-4.823.9
Agency Debt:
u.s. Postal Service
Subtotal*
Agency Assets:
FmHA-RDIF
FmHA-RHIF
DHHS-HMO
DHHS-Medical Facilities
Rural Utilities Service-CBO
* figures may not total due to rounding
+ does not include capitalized interest
--
--
280B9
From: TREASURY PUBLIC AFFAIRS
IJ E I~ .\ R T :\ lEN T
'IREASURY
-
() F
T Ii E
T
10-19-99 3:47pm
I~
p. 6 of 19
E A S l! R \"
NEWS
OFF1CE OF PUBUC AFFAIRS ·1500 PENNSYLVANlAAVENUE, N.W.• WASHINGTON, D.C.• 20220. (202) 622-2960
FOR IM1v1EDIATE RELEASE
Text as Prepared for Delivery
June 29, 1999
STATE.MENT OF STUART E. EIZENSTAT
NOMINEE FOR DEPUTY SECRETARY OF THE TREASURY
BEFORE THE SENATE FINANCE COMMITTEE
Mr. Chairman and Members of this Committee, thank you for allowing me the opportunity
to appear before you concerning my nomination to be the Deputy Secretary of the Treasury. In
making this nomination, the President has honored me with his trust, for which I am deeply
grateful.
In all of my senior public positions in the Carter and Clinton Administrations, I have made
it a watchword to have open, close, respectful, and cordial relations with members of the Senate
and House, regardless of party. I have had the privilege of meeting with many Members of this
Committee over the years. You will continue to find me responsive to you, and I consider it a
high priority to merit your confidence.
At various times in my public career, I have worked on most of the issues, both domestic
and foreign, that come before this Committee. I have worked closely with the business and
financial communities over several decades.
During the President's first tenn, I served under Secretary of State Warren Christopher as
the U.S. Ambassador to the European Union in Brussels. It was then that I helped initiate the
New Transatlantic Agenda, through which the United States and the European Union are
developing closer ties in this post-Cold War era, and the Transatlantic Business Dialogue, which
brings together European and American business leaders to provide advice on removing
impediments to transatlantic trade and investment. In 1995, I was named Special Envoy for
Property Claims in Central and Eastern Europe, a position I continue to hold. I have encouraged
the return to individuals and religious communities of the property that the Nazis had confiscated
and the communists had nationalized. For my service while in Brussels, Secretary Christopher
conferred on me the highest award the State Department can give to a non-career Ambassador,
RR-3223
----------------------------------------------------------------------------------For press releases, speeches, public schedules and official biographies, call our 24.hour fax line at (202) 622-2040
-
·u.s. Govammgnl Prlnl1l11J Ollica: 199B· $1S-S59
28809
From: TREASURY PUBLIC AFFAIRS
10-19-39 3:48pm
p. 7 of 13
the Foreign Affairs Award for Public Service. I returned from Brussels in 1996 to become Under
Secretary of Commerce and International Trade. In this position, I established the Compliance
Center, which for the first time has given the U.S. government the capacity to monitor foreign
govemment compliance with the trade agreements reached with the United States; we
consequently have greater assurance that we are obtaining for U.S. business and workers the full
benefits of the trade agreements we have negotiated.
In this second term, under the distinguished leadership of Secretary of State Albright, I
have been Under Secretary of Economic, Business and Agricultural Affairs, I have advised
Secretary Albright on international economic policy and have led the work of the State
Department on issues ranging from trade negotiations to bilateral relations with major partners
such as Japan and the European Union. I was named Special Envoy of the President and the
Secretary of State for the Promotion of Democracy in Cuba to encourage our allies to condition
their relations with Cuba on improvement in human rights and democracy there -- efforts that led
to the Common Positions on Cuba by the European Union, In 1997 and 1998, I coordinated two
massive government studies on Nazi gold and the role of neutrals on World War II; and I led the
Washington Conference on Holocaust-Era Assets, which among other things produced historic
principles for the return of the Nazi-looted art, helped solve the Swiss Bank dispute, and
contribu;ed to promoting justice for the survivors of the Holocaust and their families before the
advent of the new mil1ennium.
My State Department
responsibilities~
my work as a sous sherpa in the G-8 process; and
my service as Alternate Governor of the World Bank, the Inter-American Development Bank, the
Asian Development Bank, the African Development Bank, the African Development Fund, and
the European Bank for Reconstruction and Development -- all provide experience for the position
of Deputy Secretary ofthe Treasury.
From my various positions in this Administration, I have learned that one of our most
fundamental strengths and sources of influence around the world comes from the strength of the
U.S. economy, which President Clinton, Vice President Gore, Secretary Rubin, Deputy Secretary
Summers have helped to create. They have set the right course with the support of the U.S.
Congress. Maintaining a strong U.S. and world economy is our central challenge.
I look forward to working with Deputy Secretary Sununers to achieve the five critical
objectives that he indicated to this Committee he will focus on if confinned as Secretary of the
Treasury: maintaining a strong economic strategy, which includes both continued fiscal discipline
and addressing long-term Social Security and Medicare problems; ensuring that our strong
economy means growth in living standards for all Americans; building the sort of global economy
that can underpin U.S. security and the prosperity of American workers; striving to ensure the
safety, competitiveness, and efficiency ofthe U.S. financial system; and supporting the excellence
and integrity of Treasury's career staff.
2
2BBO~
From. TREASURy PUBLIC AFFAIRS
10-19-99 3:48pm
p. 8 of 19
Mr. Chairman, Deputy Secretary Summers has assured me that, if confirmed, we would
function as a team in the same productive way he worked with Secretary Rubin. With your
support, I look forward eagerly to forming that partnership with him and working closely with
you.
In closing, I especially want to thank my family and, most particularly, my wife Fran, for
enduring with me the sacrifices and stresses of public service. I could not be here today without
her support and that of my sons Jay and Brian. Jay's wife Jessica, and Brian's fiancee Erin
Grossman.
Mr. Chairman, I wish to express to you my thanks for being able to come before you. Let
me now try to respond to questions you and the Committee may have,
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From: TREASURY PUBLIC AFFAIRS
Z8889
1REASURY
10-19-99 3:49pm
p. 10 of 19
NEWS
omCE OF PUlJUC AFFAIRS *1500 PENNSY.(.VANIAAVENUE. N.W. * WASHINGTON, D.C.. 20220. (202) 622.2960
FOR lMMEDIATE RELEASE
Text as Prepared for Delivery
June 29, 1999
STATEMENT OF LEE SACHS
NOMINEE FOR ASSISTANT SECRETARY OF THE TREASURY
FOR FINANCIAL MARKETS
BEFORE TIlE SENATE FINANCE COMMITTEE
Mr. Chainnan, Senator Moynihan, Members of the Committee, I am honored to
appear before you today as you consider my nomination to be Assistant Secretary of the
Treasury for Financial Markets. I am pleased to have my family with me today: my wife
Whitney and our twin daughters Julia and Kathryn, my parents, Jo Ann Werbel and Franklin
Sachs and my grandmother Ida Sachs.
It is truly an honor to have been nominated by the President for this position. I am
particularly grateful to Secretary Rubin and Deputy Secretary Summers for their strong support
and for the confidence they have expressed in me by supporting my nomination. They have
assembled a truly talented group of professionals at the Treasury Department and it is my
earnest desire to be able to make a further contribution to their efforts.
Before arriving at Treasury a short time ago, I spent 13 years at the Investment
Banking firm of Bear, Stearns & Co., including 7 as a Senior Managing Director and Head of
Global Capital Markets. In that capacity, I gained broad experience in many areas of the
financial markets, including trading, underwriting, research and investment banking. In
particular, one of my areas of focus was advising some of the world's largest corporate
borrowers as to the most efficient manner in which to finance their operations in the
increasingly complex global capital markets.
For the past ten months, it has been my privilege to serve at the Treasury Department
as Deputy Assistant Secretary for Government Finance Policy. During this time, Treasury
has been deeply involved in a variety of issues that are vital to our national economic wellbeing and to the global financial system. If confirmed as Assistant Secretary, 1 would
welcome the opportunity to continue to apply my 13 years of financial market experience to
help address the wide array of issues facing the Treasury Department. In particular, I would
RR-3224
--~--------~---------------------------------------------------------------!.or press releases, speeches, public scheduks and official biographies, call Qur 24-hour fax line at (202) 622-2040
·U,S. Gove.-n"'''''t Prin\lng Ol!ica: 1998·
()1g.!.S~
0: ZOBO~
From: TREASURY PUBLIC AFFAIRS
10-13-99 3:50pm
p. 11 of 13
be committed to promoting the competitiveness and efficiency of our financial markets and to
ensuring that we continue to successfully meet the new debt management challenges associated
with an age of surplus.
It is an honor to appear before this Committee today and, if confIrmed, I look forward
to working closely with this Committee and the rest of the Congress. Thank you Mr.
Chairman. I would be pleased to answer any questions that you or other members may have.
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TOTAL P.02
DEPARTMENT
TREASURY
OF
THE
TREASURY
NEWS
~~/78~q~. . . . . . . . . . . . . . . . . . . .. . .
......................
OFFICE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622-2960
FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
June 29, 1999
STATEMENT OF JEFFREY RUSH, JR.
NOMINEE FOR INSPECTOR GENERAL
SENATE FINANCE COMMITTEE
Good Morning, Mr. Chairman, Senator Moynihan, and members of the Committee. It
is an honor for me to appear before this Committee as the President's nominee for the position
of Inspector General for the Department of the Treasury.
I am pleased that my wife Dawn could join me today. This is the second time that the
President has nominated me for a position requiring the advice and consent of the Senate. As
a career civil servant, there is no higher honor.
I have spent the past five years serving the Administration and the Congress as the
Inspector General at the U.S. Agency for International Development (USAID). During that
period, my staff has completed more than 1900 audits and more than 290 investigations. Our
audit work has resulted in about $250.7 million in questioned cost and funds put to better use.
Our investigations have resulted in 12 criminal convictions, 15 civil actions, 230
administrative actions, and about $11.9 million in monetary recoveries. The USAID Office of
Inspector General (OIG) has made important contributions to the agency's sustainable
development and humanitarian assistance efforts.
My public service began in August 1968, when I joined the U.S. Army. Following
basic combat training, I received training as a counterintelligence agent at the U.S. Army
Intelligence Training School, Fort Holabird, Maryland. From February 1969 until July 1971,
I conducted background investigations, and other domestic counterintelligence duties,
including dignitary protection and facilities security.
RR-3225
-------------------------------------------------------------------------------Forpress -"lpases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
--------
My career in the civil service began in August 1971 as a special agent with the OIG,
U.S. Department of Agriculture (USDA). I received my training as a criminal investigator
from the Federal Law Enforcement Training Center. From August 1971 until November
1975, I conducted a wide range of complex and sensitive investigations. I served as a
supervisory special agent from December 1975 until December 1978. I completed 30 hours
towards a graduate degree in Administration of Justice during the years that I worked as a
supervisory special agent in the USDA OIG 's Kansas City Regional Office.
From December 1978 until June 1980, I served as the Assistant Regional Inspector
General and from June 1980 until October 1983, I served as Regional Inspector General for
the USDA OIG's Chicago Regional Office. In October 1983, I was promoted into the Senior
Executive Service as the Deputy Assistant Inspector General for Investigations. From October
1983 until August 1994, I shared the responsibility of managing more than 300 employees
engaged in investigative and law enforcement operations. From 1986 to 1990, I attended law
school at night at the George Mason University School of Law. I received my Juris Doctor
degree in May 1990. I was admitted to the Virginia State Bar in October 1990, the District of
Columbia Bar in February 1991, and the Supreme Court of the United States in November
1993.
-~
If confirmed by the Senate, I will work to establish an office capable of meeting its
statutory responsibilities, and contributing to the performance of the Department of the
Treasury. I will work closely with the Treasury Inspector General for Tax Administration to
ensure that the Department is well served by our respective offices. I have known Inspector
General
David C. Williams for more than a decade, and I look forward to working with him.
That concludes my statement. I would be pleased to answer any questions that you
have.
Thank you.
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2
-
PUBLIC
DEBT
NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
FOR IMMEDIATE RELEASE
June 28, 199 9
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
91-Day Bill
July 01, 1999
September 30, 1999
912795CQ2
Term:
Issue Date:
Maturity Date:
CUSIP Number:
4.750%
High Rate:
Investment Rate 1/:
4.889%
Price:
98.799
. -,.
All noncompetitive and successful competitive bidders were awarded
securities at the high rate.
Tenders at the high discount rate were
allotted 43%.
All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
-----------------
$
Competi ti ve
Noncompeti ti ve
20,288,276
1,258,485
$
5,923,276
1,258,485
-----------------
7,181,761 2/
21,546,761
PUBLIC SUBTOTAL
321,967
321,967
Foreign Official Refunded
-----------------
SUBTOTAL
Federal Reserve
Foreign Official Add-On
21,868,728
7,503,728
3,567,430
206,533
3,567,430
206,533
-----------------
$
TOTAL
25,642,691
Median rate
$
11,277,691
4.710%: 50% of the amount of accepted competitive tenders
Low rate
4.620%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
was tendered at or below that rate.
Bid-to-cover Ratio
=
21,546,761 /7,181,761 == 3.00
1/ Equivalent coupon- issue yield.
2/ Awards to TREASURY DIRECT = $968,619,000
RR-3226
http://www.publlcdebt.treas.gov
-
PUBLIC
DEBT
NEWS
Department of the Treasury • Bureau of the Public Debt • Washington. DC 20239
TREASURY SECURITY AUCTION RESULTS
BUREAU OF THE PUBLIC DEBT - WASHINGTON DC
CONTACT:
FOR IMMEDIATE RELEASE
June 28, 1 9 9 9
Office of Financing
202-691-3550
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
182-Day Bill
July 01, 1999
December 30, 1999
912795DA6
Term:
Issue Date:
Maturi ty Date:
CUSIP Number:
. -,
4.960%
High Rate:
Investment Rate 1/:
5.173%
Price:
97.492
All noncompetitive and successful competitive bidders were awarded
securities at the high rate.
Tenders at the high discount rate were
allotted 70%.
All tenders at lower rates were accepted in full.
AMOUNTS TENDERED AND ACCEPTED (in thousands)
Accepted
Tendered
Tender Type
$
Competi ti ve
Noncompe tit i ve
18,930,289
1,032,026
$
5,222,315 2/
19,962,315
PUBLIC SUBTOTAL
2,278,733
2,278,733
Foreign Official Refunded
4,190,289
1,032,026
-----------------
SUBTOTAL
Federal Reserve
Foreign Official Add-On
Median rate
7,501,048
3,640,000
1,463,167
3,640,000
1,463,167
-----------------
$
TOTAL
22,241,048
27,344,215
$
12,604,215
4.950%: 50% of the amount of accepted competitive tenders
was tendered at or below that rate.
Low rate
4.870%:
5% of the amount
of accepted competitive tenders was tendered at or below that rate.
Bid-to-cover Ratio
=
19,962,315 / 5,222,315
=
3.82
1/ Equivalent coupon-issue yield.
2/ Awards to TREASURY DIRECT = $783,998,000
RR-322\
http://www .publlcdebt.treas.gov
DEPARTMENT
OF
THE
TREASURY
NEWS
TREASURY
........IIII......IIIIII....IIII........~j}J78~9~. . . . . . . . . .IIIIII..II..............IIIIII.
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C.. 20220. (202) 622-2960
Weekly Release of U.S. Reserve Assets
June 29, 1999
The Treasury Department today released U.S. reserve assets data for the week ending
June 25, 1999.
As this table indicates, U.S. reserve assets totaled $71,988 million as of June 25,1999,
up from$71,944 million as ofJune 18.
,
.~:.,;,~- .">
'. -
; U.S~ Reserve Assets
~.-
".' ; 'reo;' .'
1999
;c.::,;
>. ~'(Iiiijliolls of.Us·~abar~j . ..
Total
Reserve
Week Ending
1/
,:
Assets
Special
Gold
Stock
Drawing
11
Rights
2/
'~
-.
-
,
.,
-,,"-
.
.'
...
·';~i~.
~,
.:
Foreign
Currencies
-
~+."
Reserve
3/
Position'n
ESF
SOMA
IMF2'
June 18, 1999
71,944
11,049
9,747
14,795
14,796
21,556
June 25, 1999
71,988
11,049
9,758
14,801
14,801
21,580
Gold stock is valued monthly at $42.2222 per fine troy ounce. Values shown are as of May 31,1999. The April 30,
1999 value was $11,049 million.
2/ SDR holdings and the reserve position in the IMF are based on IMF data and revalued in dollar terms at the official
SDRI dollar exchange rate. Consistent with current reporting practices, IMF data for June 18, 1999 are final. Data for
SDR holdings and the reserve position in the IMF shown as of June 25, 1999 (in italics) reflect preliminary adjustments by
the Treasury to the June 18, 1999 IMF data.
3/ Includes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's System Open Market
Account (SOMA). These holdings are valued at current market exchange rates or, where appropriate, at such other rates as
may be agreed upon by the parties to the transactions.
RR-322S
---~-------------------------------------------------------------------------------------!or
press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
'U S Government Print Ina O"lce 1998·
619-S~q
DEPARTMENT
OF
THE
lREASURY {g}
TREASURY
NEW S
FOR IMMEDIATE RELEASE
June 30, 1999
Contact: John Longbrake
(202) 622-2960
GORE, RUBIN ANNOUNCE LOW-COST ELECTRONIC ACCOUNT
Vice President Al Gore and Treasury Secretary Robert E. Rubin announced Wednesday
the final details of Treasury's Electronic Transfer Account (ETA) and the financial institutions that
have committed to offer it.
Treasury designed the ETA, a low-cost account to be offered at federally-insured financial
institutions, to allow federal payment recipients to take advantage of Direct Deposit. The first
institutions to reach a preliminary agreement to offer the ETA are: Banco Popular de Puerto Rico
& N.A., Bank of America, Britton & Koontz First National Bank, Chase Manhattan Bank,
Washington State Bank and Wells Fargo & Company. The ETA will be available at some
institutions late this summer.
"Broad participation by banks, savings and loans and credit unions of all sizes will be
essential to the success of the account," said Secretary Rubin. "By offering the ETA, these
institutions are expanding access and services to their communities, helping to bring more
Americans into the financial services mainstream. ET As will provide a simple, safe and secure
way to receive federal payments. "
The final ETA structure will allow federal payments recipients to sign up for an ETA,
receive Direct Deposit through another commercially available account of their choice, or elect
to continue receiving a paper check. By working with consumer groups and financial institutions
and conducting independent market research, Treasury has developed a broadly supported program
that creates access to Direct Deposit for millions of Americans who do not have accounts today.
The ETA will be available only through federally-insured banks, thrifts and credit unions.
Financial institutions choosing to offer the ETA will be required to enter into a contractual
agreement (ETA Financial Agency Agreement) with the Treasury Department.
RR-3229
---~-----------------------------------------------------------------------------------
-!:::,press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
/
Under the agreement, the ETA would:
•
be an individually owned account at a federally-insured financial institution;
•
be available to any individual who receives a federal benefit, wage, salary, or
retirement payment;
•
accept electronic federal payments;
•
be subject to a maximum price of $3 per month;
•
have a minimum of four cash withdrawals and four balance inquires each month, to
be included in the monthly fee through any combination of proprietary ATM and/or
over-the-counter transactions;
•
provide the same consumer protections that are available to other account holders
at the financial institution;
•
allow access to on-line point-of-sale (POS) networks, if available;
•
require no minimum balance, except as required by federal or state law; and
•
provide a monthly statement.
Financial institutions also may choose to pay interest on account balances and/or permit
additional non-federal deposits. Over the next several months, Treasury expects the number of
participating institutions to increase substantially through an extensive outreach campaign designed
to inform both institutions and consumers about the benefits of the ETA.
The ETA is the latest step in implementing provisions of the Debt Collection Improvement
Act (DCIA) of 1996, which directs Treasury to assure that federal payment recipients have easy
access to a reasonably priced account in order to receive electronic payments. Treasury will
publish the final ETA attributes in the Federal Register in the near future.
Treasury published on Sept. 25, 1998, the final rule governing federal payments by
electronic funds transfer (EFT). The final rule provides for the ETA and details the broad
circumstances under which recipients can continue to receive paper checks if electronic deposit
would cause a hardship. The final rule emphasizes recipient choice and the importance of
ensuring that recipients are not disadvantaged or forced into making a choice that is not right for
their circumstances.
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U E ... :\ It T MEN T
() F
T II J.:
1B-19-99 3:5Bpm
p. 12 of 19
T REA S II I{ Y
NEWS
OffiCE OF PUBUC AFFAIRS .1500 PENN5n.VANIAA'VENlJE. N.W•• WASlllNGTON. D.C•• 20220 * (202) 622-2960
EMBARGOED UNm 7 P.M. EDT
Text as Prepared for Delivery
June 29, 1999
TREASURY SECRETARY ROBERT E. RUBIN
REMARKS TO LOCAL INITIATIVE SUPPORT CORPORATION DINNER
It is a pleasure to join you this evening. As you know, I will be stepping down as
Treasury Secretary in just a few days. It seems appropriate that one of my final speeches as
Secretary is before LISe to discuss an issue that I think is one of the most important for the
future economic well-being of our country: promoting economic opportunity in America's
economically distressed areas, both in our inner cities and rural areas.
I believe -- and more importantly, I know that the President and Vice President strongly
believe -- that all ofus have an enormous stake in promoting real opportunity in America's
economically distressed areas, no matter where we live or what our incomes may be. Just think
of the difference it would make in reduced social costs and improved productivity if we could
bring the residents of these areas into the economic mainstream.
And as I look back over my six and a half years in the Administration -- four and a half at
Treasury after two in the White House -- one of the things that has brought me the most
satisfaction has been our focus on economically distressed areas. The Clinton Administration
has undertaken a broad range of actions that have had a real impact on the lives of the residents
of these areas, such as the Earned Income Tax Credit, which we greatly expanded and then
fought to protect it when it was threatened, or the low income housing t3..,( credit, whose
expansion we strongly support, or the Brownfield tax incentives, or protection of eRA and
expansion of the CDFI program, just to name a few.
I do not want to minimize the magnitude of the challenges that still lie before us -- they
are great - but there has been real progress during the past few years. Unemployment is down in
America's largest inner cities. Home ownership is up for lower income people, And wages have
begun to rise for low-income people, after being stagnant for many years.
LIse has been an important partner in the efforts that have produced these successes.
Your work represents entrepreneurialism in the pursuit of public purpose. You encourage
leadership in communities, and then work with those leaders to promote housing, job creation
and community revitalization. There is no question that LIse has made a real and substantial
I
RR-3230
---~-----------------------------------------------------------------------------~ press releases, speeches, public schedules and rdJicial biograPhies) callOW" 24-hOUT fax line at (202) 622-2040
·U.S. CiOllornmOl"lI Prit\ling Olfico: 1'l9S·
el:)..~5(j
From:-rRE~~URY
PUBLIC AFFAIRS
10-19-99 3:51pm
p. 13 of 19
difference, conceptually and in action on the ground, and it is very important that you continue to
do so in the future. I know, from discussions I have had, that LISC is continuing to generate new
ideas of the kind you would expect to fInd in the most forward looking organizations.
In my tenure in government, I have gained a deep appreciation for the power of the
community development corporation concept - which I had not been familiar with before I came
to government. I have seen how so much of the important work of economic development
occurs at the community level through CDCs. And I have had the opportunity not only to talk
with people in CDCs who are involved in this, but also to visit some of the places where all of
this is happening. In the BrOIL'" I saw block after block of renovated or new housing where there
used to be ruins, thanks to the work of groups like MBD. In Los Angeles, I met a leader of a
CDC, Concerned Citizens for South Central Los Angeles. Juanita Tate, who had taken a large
piece of land that had been environmentally contaminated and turned it into an industrial park.
When I visited they already had significant leasing. She combined this with ajob readiness
program so that people in the area would have the training and interpersonal skills necessary to
work in these new located businesses. and companies were signing up to hire local workers.
In Chicago, I visited a business mentoring program called the Runner's Club, which
connects- young entrepreneurs from inner city areas with established, larger businesses and saw
what a difference Greg White and his CEO advisory board is making. In Boston, I visited a
catering business funded by a Community Development Financial Institution and heard about the
partnerships being developed between Boston Community Capital and corporate leadership to
invest in Boston's neighborhoods. And let me also mention that I have visited these sorts of
programs overseas, in India, the Philippines, Vietnam and elsewhere. I believe that just as it is
critical to our future economic well-being to bring the residents of our economically distressed
areas in this country into the economic mainstream, so too is it important for growth and
economic and social stability in developing countries, Which absorb 40 percent of our exports, to
promote opportunity for all their people.
There are a great many programs dealing with the issues of the inner cities that are
working all over the country. Some are federal programs, some are state or local, and some are
private initiatives. Their success depends in large measure on all of you, and others like you
around the country. But, as I said a moment ago, the challenges ahead are still enormous.
In that light, let me touch briefly on a few of the issues.on.which the Administration is
focused as we go forward.
Firs~
is to continue to work to promote a strong economy. It is critical that we continue
to pursue the economic strategy of fiscal discipline, investing in people, and open markets that
has been so instrumental in producing the strong economic conditions we enjoy today, which in
turn have affected job creations and standards of living in distressed areas. Those who focus on
the problems of distressed aTeas too often focus too little on supporting the actions requisite for a
strong economy) while those who focus on promoting a strong economy too often focus too little
2
From: TREASURY PUBLIC AFFAIRS
lBB09
10-19-99
3:52pm
p. 14 of 19
on all the additional work needed to move forward in distressed areas.
Second, is to protect the Community Reinvestment Act. As you know, this
Administration reformed the regulations under eRA and those reforms plus vigorous support for
the program have resulted in increasing capital going into distressed areas by many multiples.
Yet CRA has been threatened continually. The President has repeatedly said that he wiil use his
veto to protect eRA,
Third, is to strengthen the CDFI Fund program, which has been very successful and has
enormous promise.
Fourth~ is to promote two recent initiatives by the President, BusinessLINC, which
encourages business mentoring, and the New Markets initiative, which is designed to help
encourage new private sector equity investment for business growth in our distressed inner cities
and rural areas.
Fifth and finally, let me mention an area, which as I have gotten more and more involved
in these issues strikes me as particularly important: job readiness. While having a strong national
economy is an absolute requisite for growth in distressed inner cities and rural areas, and will
help a lot of people, there are many who, as a result of historical circumstances, lack the skills,
habits and attitudes to successfully function in the mainstream work force. Our Secretary of
Labor, Alexis Hennan., understands the importance of this issue: she started her career in this
area. I know that LISe has a nascent effort in this area and I think. it could be very useful for
LISe and other groups to expand on this in the years ahead.
Tn conclusion, let me reiterate that as I step down, one of the things I feel best about in the
last six and a half years is this Administration's involvement in the issues of distressed
communities. I believe that this is critically important to the economic well being of all of us.
Larry Summers, who, as you know, will be the next Treasury Secretary - subject to the will of
the Senate has been my partner through this whole period, and is deeply committed to these
same issues. I know that, if confirmed, he very much looks forward to working with you and to
working on this whole agenda that is so important to the economic weUMbeing of millions of
American families and to all of us. And I know that I will continue to remain involved with
these issue::; as I leave government. Thank you very much and I wish you all the best.
_M
3
TomL P.83
From: TREASURY PUBLIC AFFAIRS
o
EPA R T 1\'1 E N T
o.~
TilE
10-19-99 3:52pm
p. 15 of 19
T REA SUit Y
(71)9
-
omCE OF PUBlJC AFFAIRS -1500 PENNSYLVANlAAVENUE, N.W. - WASHlNGTON. D.C.• 20220 _ (202) 622.2960
FOR IM:MEDIATE RELEASE
June 30. 1999
Contact: Dan Israel
(202) 622-2960
TREASURY RELEASES IMF ARTICLE IV CONSULTATION
The Treasury Department is releasing the concluding statement by the staff of the
International Monetary Fund for this year's Article IV Consultarion with the United States.
In their statement, IYIF staff again extend high praise to the U.S. Administration. and
-,. the
Federal Reserve for their conduct of economic policy, noting that LL[t]he U.S. authorities are to be
highly commended for their sound fiscal and monetary policies, which have contributed
significantly to what is now approaching the longest economic expansion in U. S. history." Fund
staff also noted the importance of this performance for the rest of the world: "During the recent
difficult period of turbulence in the world economy. the United States economy has been the
principal engine of global growth, and U.S. monetary policy played a key role in stabilizing
international financial markets."
The strength of the U.S. economy, according to Uv1F staff. can be attributed [0 the
continued implementation of sound fiscal and monetary policies. "Steadfast efforts to improve the
fiscal outlook have helped to turn the unified federal budget balance to a surplus in FY 1998 for
the first time in 30 years, and structural budget surpluses are expected to be sustained under
current policies over the longer term. Monetary policy has continued to support the expansion
while containing inflation. At the same time, strong employment growth, partly attributable to the
flexibility ofU. S. labor markets. has contributed to a decline in the unemployment rate to its
lowest level in decades." However, the lMFs statement goes on to note that ·'US. growth will
need to slow from its recent rapid pace to a rate more in line with the economy's long-run
potential" and further states the policy challenge of ensuring that I'a restoration of a more evenly
distributed pattern of demand growth is accomplished in a nondisruptive manner."
Release of this statement is consistent with a broad effort by the UnitedSrates to enhance
the transparency of the IMF. which has led among other things to public distribution of an
increasing number of Press Information Notices (PINs) for Article IV consultations. The United
States is also pan of a pilot program recently established by the IMF's Execurive Board to allow
countries to release the staff reports on their Article IV reviews. The United States expects to
release the staff report later this year.
-30(Statement of Fund Mission attached)
-
RR- 3231
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~
10009
From: TREASURY PUBLIC AFFAIRS
13-19-99
3:53pm
INTERNATIONAL MONETARY FUND
1999 Article IV Consultation with the United States of America
Statement of the Fund Mission
June 17, 1999
1.
The U.S. authorities are to be highly commended for their sound fiscal and monetary
policies, which have contributed significantly to what is now approaching the longest
economic expansion in U. S. history. Steadfast efforts to improve the fiscal outlook have
helped to tum the unified federal budget balance to a surplus in FY 1998 for the first time in
30 years, and structural budget surpluses are expected to be sustained under current policies
over the longer term. Monetary policy has continued to support the expansion while
containing inflation. At the same time, strong employment growth, partly attributable to the
flexibility of U.S. labor markets, has contributed to a decline in the unemployment-rBk to its
lowest level in decades. During the recent difficult period of turbulence in the world
economy, the United States economy has been the principal engine of global growth, and
U.S. monetary policy played a key role in stabilizing international financial markets In the
period ahead, however, U.S. growth will need to slow from its recent rapid pace to a rate
more in line with the economy's long-run potential. The policy challenge for both the United
States and its international partners will be to ensure that a restoration of a more evenly
distributed pattern of demand growth is accomplished in a nondisruptive manner.
2.
In recent years, the supply side of the U.S. economy has behaved differently than
expected by most analysts, including the IMF staft: with growth exceeding projections and
inflation continuing to decline well into the period of sustained growth. Despite tight labor
markets, wage demands have remained moderate, in part reflecting the effects of favorable
price shocks that have contributed to unanticipated increases in real wages. Efforts to control
benefits costs have reined in the rate of growth in employee compensation. At the same time,
the appreciation of the dollar and the fall in commodity prices, along with stiffer competition
in U.S. markets, have served to contain inflation. At this stage, a good deal of uncertainty
surrounds estimates of potential output and the natural rate of unemployment, making these
indicators less useful as guides for macroeconomic policy. Strong investment and continued
productivity gains have probably raised potential output more rapidly than in preceding
periods. but it is difficult to gauge the extent to which recent developments reflect a
sustainable change in structural economic conditions and how much is attributable to
transitory factors. Regardless of the uncertainty about the new limits of productive capacity,
the economy still faces resource constraints, and the recent very strong growth in aggregate
demand cannot be sustained for long without having intlationary consequences.
Although the performance of the U.S. economy has been remarkable, some
3.
significant risks have emerged. In particular, while national savings has increased
substantially since 1992, personal savings has fallen to an unprecedentedly low level, partly
reflecting the effects of the large gains in wealth associated with what many indicators
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suggest is a significantly overvalued U. S. equity market. At the same time, the external
current account deficit has widened sharply, owing to the appreciation of the dollar and the
rapid pace of domestic demand growth in the United States. Moreover, the factors that have
contributed to the favorable wage and inflation performance in recent years may have only
transitory effects. A reversal of these conditions, if it were to unfold rapidly, could cause
problems for macroeconomic management While the decline in personal savings and the rise
in the current account imbalance, which reflects the relative cyclical positions of the U S. and
other major economies, do not warrant any immediate policy responses, they do heighten the
potential risks associated with any overheating.
Unless there is evidence soon that the strength of demand growth is abating, the
4.
authorities may need to move to tighten monetary policy to ensure that the expansion remains
on a sustainable, noninflationary path. Since economic conditions in the rest of the world and
in global financial markets have improved somewhat, a modest tightening would have a less
damaging effect than it would have had earlier. While judgements on the timing of such
action are especially difficult in the current circumstances, waiting too long to act wO}J\d risk
having to raise rates more sharply later to stem a pickup in inflation, which would increase
the likelihood.of a sharp stock market correction and a "hard landing". The recent shift to a
bias toward firming the stance of monetary policy in the intra-meeting period recognizes
these potential pressures, and it will be especially important for the Federal Reserve to
continue to respond rapidly and to be forward looking in its conduct of policy.
5.
The Administration's intention to preserve a substantial portion of the federal budget
surpluses in prospect over the medium term and beyond is laudable. Maintenance of
substantial budget surpluses is appropriate for both short-term stabilization and long-term
structural reasons. In the near term, resisting new tax and spending initiatives in order to
realize the projected budget surpluses is essential to avoid adding funher fuel to already
strong aggregate demand pressures. In the long term, allowing surpluses to materialize will
help prepare the federal government for the rising tide of unfunded liabilities associated with
the aging of the population. The IMF staff believes that an appropriate longer-term fiscal
objective would be to PUI the Social Security and Medicare programs into actuarial balance,
and then keep the remainder of the budget balanced on average, allowing for changes in
cyclical conditions.
6.
Although a consensus appears to have emerged in Congress to maintain substantial
surpluses, it will be necessary to continue to resist pressures to cut taxes and increase
spending as the budget deliberations proceed. In this regard. discretionary spending caps and
the PA YGO financing requirement have fostered discipline in the budget process,
contributing to the sustained fiscal consolidation since FY 1992. These budget enforcement
measures are set to expire in 2002, and the IMF staff believes that long-term budget
discipline would be well served by appropriate modest adjustments to the spending caps and
by extending both measures beyond their expiration.
7.
Tax cuts proposed by the Administration in its FY 2000 Budget continue a tendency
to use tax incentives to promote specific economic or social goals. These incentives
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complicate the income tax system. thereby undermining transparency and increasing
compliance costs. With the aim of simplifying the income tax system, the 11v1F staff
continues to take the view that the authorities should limit recourse to the use of tax
expenditures.
8.
The Administration s proposal for Social Security is a useful first step toward shoring
up the system's finances, but further effoI1s are needed to achieve long-term actuarial
balance. The total size of the funding gap is relatively small by international standards, and in
principle) could be corrected without radical changes to the system. The lMF staff endorses
the Administration s intention to maintain the system's current structure, which has been
highly successful in reducing poverty among the elderly_ Nevertheless, the proposed use of
general revenues and the plan to invest a small portion of Trust Fund assets in equities raises
important concerns. Removing the link between outlays and Social Security payroll taxes
could potentially erode an effective budget constraint; one that probably has provided a
check on unwarranted growth in Social Security benefits over the years. The
Administration's plan to invest some Trust Fund assets in equities would contribute t9
improving the finances of Social Security, but its overall macroeconomic impact -would be to
simply shift the composition of public and private asset portfolios without substantially
contributing to a needed increase in national savings. There is also the potential risk that
investment of these funds in private securities could ultimately be influenced by political
consideration, creating distortions which could adversely affect private sector investment
decisions. In the view of the IMF staff, a comprehensive solution to Social Security's longterm financial problem should involve small adjustments in the system's parameters
(increases in contribution rates, an increase in the retirement age, and/or cuts in benefits),
which need to be enacted soon.
1
1
Although the Administration s proposal to transfer general revenues to the HI Trust
9.
Fund would also lessen the actuarial imbalance facing Medicare, it falls well short of
restoring the long-term financial viability of the system. The lMF staff urges the
Administration to consider a more comprehensive solution to Medicare's financial problems
that would involve a menu of options, including reducing benefits. raising co-payments and
deductibles, and increasing contribution rates. It also has to be recognized that periodic
adjustments to the program are likely to be required because of the diffIculties in projecting
Medicare outlays, and a mechanism for making adjustments in the program's parameters on a
regular basis should be established. Timely adoption of a comprehensive plan to shore up the
longer-term financial viability of Medicare would avoid the need for more draconian
measures at a later stage.
1
10.
Over the past year and a half, the appreciation ot'the U.S dollar has shifted demand
abroad, helping to avert overheating in the United States and mitigating the adverse effects of
global economic turbulence. As growth outside the United States recovers, especially in the
economies of key trading partners, some reversal of safe-haven capital flows, and some
depreciation of the dollar can be expected, helping to narrow the U.S. external current
account deficit. The U.S. authorities need to continue to implement sound macroeconomic
and structural policies to increase the likelihood that any correction in the dollar's value will
p.:8 of 19
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be an orderly process. In particular, the prospects for sustained fiscal surpluses in coming
years should raise national saving and help gradually to ease pressures contributing to the
relatively high external current account deficit. Furthermore, if the dollar were to depreciate
suddenly and sharply, the Federal Reserve, although not targeting the exchange rate, would
be well-positioned, if needed, to tighten monetary policy in order to limit the risk of a
sustained effect on inflation.
II.
In the last year, the appreciation of the U. S. dollar and the weakness in domestic
demand abroad has heightened competition faced by U.S. import-competing producers and is
stimulating protectionist sentiment. It is in the interest of both the United States and the
international community that these protectionist pressures be strongly resisted. In particular,
steps need to be taken to ensure that protection from "unfair trade" in the form of
antidumping and countervailing duties - even if they conform with WTO obligations - is not
simply used as a means of inhibiting competition from imports Rather, there are sound
economic reasons for administering these procedures with the objective of providing import
protection only in those cases where foreign producers are engaged in anticompetiti'll.~
behavior. At the same time, the United States should continue to be a major force for the
advancement of multilateral trade liberalization in order to foster a more hospitable global
environment for trade. The ability of the United States to play such a leadership role would
be enhanced by approval of fast-track negotiating authority. U.S. reliance on the WTO's
dispute-settlement mechanism to resolve trade disputes, rather than pursuing unilateral
actions. has supported the WTO's rules-based approach to international trade. The IMF staff
hopes that the United States and the authorities in other countries will continue to seek
cooperative solutions in recent high-profile disputes. refrain from resorting to restrictive trade
measures, and work together to improve the dispute-settlement mechanism.
Under the Administration's FY 2000 budget, official development assistance (ODA)
12.
would be held at its recent historically low level of less than 0.1 percentage of GDP over the
five-year budget horizon. The IMF staff urges the authorities to raise the priority assigned to
ODA and to re-establish the leadership role of the United States in this area, thereby helping
to catalyze a resurgence in such assistance worldwide.
TOTHL P.05
DEPARTMENT
OF
THE
TREASURY
NEWS
'IREASURY
~~/78~9~. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .
..............................
OFFICE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622-2960
FOR IMMEDIATE RELEASE
June 30. 1999
Contact: (202) 622-2960
ST ATEMENT BY TREASURY SECRETARY ROBERT E. RUBIN AND
COUNCIL OF ECONOMIC ADVISERS CHAIR JANET L. YELLEN
The Administration recognizes and respects the independence of the Federal Reserve in
making decisions about the nation's monetary policy. We share the goal of maintaining solid
economic growth with low inflation.
We have strong and balanced economic growth, supported by growing budget surpluses
and substantial reductions in federal debt. We believe that the economy will continue on a sound
path. led by strong private-sector investment which is creating a foundation for long-term growth
and higher living standards for all Americans in the future.
-30-
RR--3232
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
OFFlCE OF PUBLIC AFFAIRS e1500 PI::NN::>Yl.VANIA AVJ:;NllE, N.w. e WASHINCTOtol, D.C.e 20220. (202) 622-2960
EMBARGOED U'N'TIL 2: 30 P.M.
JuDe 30, 1999
CONTACT:
Office of Financing
202/691-3550
TREASURY TO AUCTION $1,000 MILLZOS OF
9-1/2-Y&AR 3-7/8% INFLATION-INDEXED NOTES
The Treasury will auction $7,000 million of 9-1/2-year 3-7/8%
inflation-indexed notes to raise cash.
Amounts bid by Pederal Reserve Banks for their own accounts and as
agents for foreign and international monetary authorities will be-~dded to
the offering.
Tbe auction ~ll be conducted in the single-price auc~ion format.
All co=petitive and noncompetitive awards will be at the highest yield of
accepted competitive tenders.
The notes hein§ offered today are eligible for the STRIPS
progr~.
Tenders will be received at Fed.eral Reser;re BaDks and Branches and
at the Bureau of the Public Debt, Washington, D. C. This offering of
Treasury securities is governed by the terms and co~tions set forth in
the Uniform Offering Cireular for the Sale and Issue of Marketable BookEntry Treasury Bills, Notes, and Bonda (31 erR. Part 356, as amended).
For origi~l issue discount (OZD), IRS regulations permit reopenings
of inflation-indexed securities without regard to OXD rules, provided that
the reopenings occur not more than one year after the original securities
were first issued to the public. ~erefore, the OID l~e does no~ app1y
to this auction.
Details about the security are given in the attached offering
high1ights.
000
Attachment
RR-3233
Fo, press releases, speeches, public schedules and official biographies, call our 24-hour fax lille at (202) 622-2040
H~GHLIGBTS
OF TREASURY OFFERING TO THE PUBLIC OF
9-1/2-YEAR INFLATION-INDEXED NOTES TO BE ISSUED JULy 15, 1999
June 30, 1999
Offering Amount ••.••.••.......•..••.•.•• $7,000 million
Description of Offering:
Term and type of security ...••.....••.•• 9-1/2-year inflationindexed notes (reopening)
Series ..•..••............•.........•...• A-2009
CUSIP number . . . . . . . . . . . . . . . . . . . . . . . . . . . . 912827 4Y 5
Auction date ••.•.•.••..............••... July 7, 1999
Issue date ••••.....•................••.. July 15, 1999
Dated date .••...........•...........••.. JanUAry 15, 1999
MAturity dAte ..•.••.••.••.•.••...•..•••• January 15, 2009
Interest rate •••••••••.••.•••••.•••••••• 3-7/8%
Amount originally issued .•••......•...•• $8,532 million
Adjusted amount currently outstanding •.• $8,645 million
Real yield •..•.••......•.•••.••...•..•.• Dete%mined at auction
Interest payment dates .•.......•..••.•.• January 15 and July 15
Min~ bid amount and multiples ...•.... $1,000
Accrued interest........................ None
Premium or discount .•..•.•..•..•....•... Determined at auctio~
S~PS
~nfor.mation:
Cor.pus
COS~P
$1,000
number ••••••.••...••••••••. 912820 DN'
Submission of Bids:
Noncompetitive bids:
Will be accepted in full up to $5,000,000 at the
highest accepted yield.
Competitive bids:
( 1) Must be expressed AS A real yield ~th three decimals, e.g., 3.123%.
(2) Net long posicion for each bidder must be reported when the sum of the
total bid amount, at all yields, and the net long position is $2 billion
or greater.
(3) Net long po8ition 1IN.t. b. det.erminec1 lUI of one half-hour prior to the
closing time for receipt of competitive tenders.
~
Max~
Recognized Bid at a Single yield ••••.••••• 35% of public offering
Award ••••.••••••..••.••••..•••••••.••.•.•• 35% of public offering
Re~.ipt
of T9nders:
Noncompetitive tenders: Prior to 12:00 noon Eastern Daylight Saving time
on auction day.
Competitive tenders: Prior to 1;00 p.m. Eastern Daylight Saving t~ on
auction day.
Payment Terms; By charge to a funds account at a Federal Reserve Bank on iss\
date, or payment of full par amount with tender.
TrelSsuryDirect customers C~
u.. the ~ay Direct feature which authorizes a charge to their account of
recor4 at their tinancial institution on issue date.
Indexing Lnformation:
CPI Base Reference Period ..•.... _ 1982-l984
Ref cpr 01/15/1999 .....••...•.... 164.00000
Kef CPI 07/~S/~999 ••••••••••••..• ~66.20000
Index Ratio 07/15/1999 ••••..•...... 1.01341
16364120 4
HAB
@FedFRASER