The U.S. banking business is one of our most regulated industries. Bank examiners have vast powers to bring about compliance with strict regulations and standards.
So how is it that U.S. banks can get by with lending U.S. depositors’ money to foreigners on terms so much more favorable than American business and farmers can get? The biggest banks in the United States have been lending vast sums to Communist countries on easy terms not available to any U.S. firm or farm or even to the U.S. Government.
Western countries and Japan have provided the Soviet bloc with about $130 billion in low-interest, unsecured loans, and this sum is rising at the rate of $2 billion per month. The U.S.S.R. share of these loans is about $43 billion.
Most of these loans were sent eagerly, with no strings attached. They included a loan by First National Bank of Chicago for $200 million to the Soviet Union last year, and one the previous year to Communist Hungary for $210 million.
When Hungary threatened to default last year, First Chicago postponed the payment due-date for four years. The banks call that “rescheduling” the loan, but that’s a euphemism for default that is artfully concealed by a misleading audit.
A Chicago First bank representative was asked if the money could be used for missiles. He replied, “It could, of course, but we would hope not. We can’t control that.”
Of course they can’t. Because the Kremlin can dictatorially allocate resources, cash from U.S. banks helps to finance military support for terrorist states, genocide in Afghanistan, KGB operations, and the Soviet military buildup.
Why are banks so eager to “loan” their money to uncreditworthy Communists? Probably the same reason why businesses are so eager to “sell” their products to Communist “customers” who can’t pay in real money. U.S. banks and businesses can write off their losses, which means the U.S. taxpayers end up holding the bag.
The focus for this promotion of subsidized loans and trade is a unique organization called the U.S.-U.S.S.R. Trade and Economic Council (USTEC). It held a conference in Moscow in April at which some 500 American businessmen and government officials met with a like number of Soviet representatives.
The Pied Piper of this excursion was Secretary of Commerce William Verity, a founder of USTEC in 1973 and its chairman from 1978 to 1984. He boasted that, “The U.S. is going to have to get used to the idea that the Soviets are good trading partners. Right now, we don’t have that feeling. A lot of people feel it’s a lousy idea.”
Indeed, many people do think that giving to the Communists preferential treatment through easy loans and trade on credit is a lousy idea. Senator Jesse Helms called USTEC “quite simply an arm of the Soviet Government, under KGB control, whose purpose is to subvert the U.S. economy.”
When Mikhail Gorbachev came to Washington D.C., last December, the principal purpose of his visit was not to sign a treaty, but to attend a private meeting at the Soviet Embassy with some of the most powerful promoters of easy-credit trade between the U.S. and the U.S.S.R. Those men included the perennial Armand Hammer, longtime friend of Kremlin bosses since the days of Lenin; Dwayne Andreas, one of the U.S. grain moguls who have been making big bucks on grain sales to Russia subsidized by the American taxpayers; and USTEC president James H. Giffen.
On the NBC TODAY show the next day, Giffen predicted that “the level of [non-agricultural] trade could go from a billion dollars… up to four or five billion per year and maybe even higher – into the 10- to 15-billion [range].” Asked if he really wanted to make the Soviet Union an economic superpower, Giffen replied, “I think we do.”
All Republicans elected on November 8 should be held to fulfillment of what their 1988 Platform called a “fundamental principle.” The Platform demanded “an end to untied credits, particularly general purpose loans which provide the Soviet Union with desperately needed hard currency to bolster its weak economy and facilitate illicit Soviet purchase of U.S. technology.”
A human rights watchdog organization called the American Foundation for Resistance International has released an excellent five-point test for loans to Soviet-bloc states. U.S. banks should not lend to Soviet-bloc states (1) at rates or terms more favorable than available to U.S. taxpayers, (2) when there is less repossessable security than American borrowers must provide, (3) unless the banks publicly disclose all the terms, (4) unless the funds are earmarked and monitored to prevent diversion to military purposes, and (5) unless the borrower complies with generally accepted auditing and accountability practices.
