[stop-imf] Reason No. 5 to Come to DC for A16: The IMF Bails Out Big Banks

[Robert Weissman]

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This is one in a series of one pagers on "Reasons to Come to DC for April
16." A version formatted in MS Word is attached. Please spread these
widely, and feel free to lift from them for your own use.

For more on the demonstrations, go to www.a16.org.

Robert Weissman
Essential Information			|   Internet:	rob@essential.org

Essential Action
P.O. Box 19405 Washington, D.C.  20036
TELEPHONE: 202-387-8030  o  FAX: 202-234-5176  o  E-MAIL: ACTION@ESSENTIAL.ORG


Reason Number 5 to Come to DC on April 16:
The IMF Bails Out Big Banks

IMF-orchestrated bailouts of countries in financial crisis -- assistance to
countries whose exchange rates are plummeting -- provide money primarily so
that developing countries can pay off their foreign creditors, including
private banks.

In 1995, the IMF contributed almost $18 billion to a Clinton administration
bailout of the Wall Street interests which stood to lose billions with the
peso devaluation in Mexico.

The same thing happened with the Asian financial crisis. U.S. banks had
approximately $20 billion in outstanding debt in South Korea alone, with
BankAmerica, Citibank, J.P. Morgan, Bankers Trust, the Bank of New York and
Chase Manhattan the major banks with heavy exposure in South Korea. With the
loans threatening to go bad, the IMF swooped in, pushed the government to take
on the debts of failing private sector companies, and provided tens of
billions of dollars to the government to pay off the debts owed to the private lenders.

The Korean bailout was particularly noteworthy for the conditions which
accompanied it: South Korea was required to open its financial sector to
foreign investors -- meaning the banks and international financiers who
directly contributed to the financial crisis received a double benefit. Not
only were they bailed out, they were given the right to penetrate the Korean
financial sector.

The IMF went on to repeat the fiasco in Russia, where its August 1998
multi-billion dollar loans immediately left the country -- some directed to
foreign creditors, much of it stolen and deposited in foreign bank accounts.

There are substantial costs to these bailouts. Not only do they waste taxpayer
money, they encourage future imprudent loans by private lenders. Knowing that
they can earn high returns on risky loans without fear of losing their money
if the investments go bad, lenders and investors are encouraged to direct
money to unworthy sources -- making future bailouts that much more likely.

FOR INFORMATION ON THE APRIL 16 PROTESTS IN DC, GO TO WWW.A16.ORG

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