International Lending Institution Safety Act of 1987

Summary

International Lending Institution Safety Act of 1987 - Amends the International Lending Supervision Act of 1983 to require Federal banking agencies to jointly review annually the aggregate transfer risk exposures of U.S. banking institutions to foreign countries categorized by such agencies as either Other Transfer Risk Problems (OTRP) or Substandard. Provides that in estimating the value of such transfer risk the agencies shall estimate the degree to which an actual or real value of such exposure would be less than the book value of such exposure. Specifies that such estimate of exposure shall be based upon the following factors: (1) the price that banks are receiving to sell or swap loans to such countries; (2) relevant factors in loan rescheduling and restructuring agreements; (3) prospects for resumption of regular debt service; (4) export earnings by such countries; (5) foreign exchange reserves held by such countries; (6) compliance with external debt service obligations; and (7) relevant external debt service history. Directs each appropriate Federal banking agency to require a banking institution to: (1) establish and maintain a special reserve in the amount of not less than one-tenth of the difference between the book value of the institution's total exposure to foreign countries categorized as either OTRP or Substandard and the actual or real value of such exposure; and (2) increase such reserve each year by an amount not less than one-tenth of such difference. Specifies that such reserves shall be considered as part of capital and surplus or allowances for possible loan losses for regulatory, supervisory, or disclosure purposes. Provides that amounts allocated to such reserves shall not be treated as a directed charge off pursuant to certain Treasury regulations. Requires the Federal banking agencies to conduct a study of any regulatory or accounting barriers to exchange of foreign debt for equity. Requires each such agency to transmit a report on such study to the Congress, including recommendations for legislation. Directs the Secretary of the Treasury to ensure that any rescheduling of the indebtedness of any foreign country to the United States shall be accompanied by commitments that such foreign country will enhance the conditions for private direct investment by U.S. business concerns as well as by nationals of the foreign country. Provides that failure to comply with such commitments shall render that country ineligible for further rescheduling of such indebtedness until such commitments are honored, unless the Secretary informs the Congress in writing that such failure stems from factors beyond the control of the foreign country and that it is in the best interest of the United States to waive the restriction.

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Timeline

1. 1 April 1987

   Introduced

   Read twice and referred to the Committee on Banking.

   Source: IntroReferral

2. 1 April 1987

   Introduced

   Introduced in Senate

   Source: IntroReferral

Votes

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Versions

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Documents

1 official file

• Introduced in Senate

  summary · EN · 1 April 1987

  Open at official source

Sponsors

• Sen. Gramm, Phil [R-TX] · R · Sponsor
• Sen. Proxmire, William [D-WI] · D · Sponsor
• · ssbk00 · Standing

Related records

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