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ATFA Applauds Rep. Connie Mack for Introducing Bipartisan Legislation to Address the Claims of U.S. Lenders to Argentina
Press Release
May 09, 2011

Coalition of 40 Diverse Organizations Commends Rep. Mack, Chair of Subcommittee on the Western Hemisphere, and Rep. Russ Carnahan for Bipartisan Leadership on H.R. 1798, Judgment Evading Foreign States Accountability Act of 2011

WASHINGTON--(BUSINESS WIRE)--American Task Force Argentina (ATFA), a coalition of more than 40 taxpayer, investor, educator, Latino and agriculture organizations, today commended Representative Connie Mack (R-FL) for introducing legislation to impose penalties on wealthy and middle-income countries which, like Argentina, chronically refuse to honor U.S. court judgments ordering them to repay debts to U.S. creditors.

Rep. Mack currently serves as the chairman of the Foreign Affairs Subcommittee on the Western Hemisphere. He is joined as lead cosponsor by Rep. Russ Carnahan (D-MO), the ranking member on the Foreign Affairs Subcommittee on Oversight and Investigations.

The Judgment Evading Foreign States Accountability Act of 2011, H.R. 1798, would bar from U.S. capital markets any nation that has been in default of U.S. court judgments totaling more than $100 million for more than two years. The legislation also would require the U.S. government to consider the default status of these countries before granting them aid.

"Argentina continues to ignore $3.5 billion in obligations to U.S. creditors and billions more to private creditors worldwide despite more than 100 U.S. court judgments ordering them to do so," said ATFA Executive Director Robert Raben. "Argentina offered bondholders, some who have waited over a decade for fair restitution, three 'take-it-or-leave-it' offers to swap their debt, that would have resulted in huge losses to our investors and taxpayers. This isn't the way a G-20 nation should behave. This bill would hold Argentina accountable to the rule of law and help set it on a path to rejoin the community of responsible nations."

Every branch of the U.S. government Judicial, Executive and Legislative publicly supports the efforts U.S. creditors are making to satisfy these claims. In addition to court judgments and the legislation announced May 6, Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner have said that encouraging Argentine to normalize relations with its creditors public and private is a priority.

In 2001, Argentina defaulted on $81 billion in obligations to investors the largest sovereign debt default in history. In 2005, Argentina offered bondholders 27 cents on the dollar for their outstanding debt, far below the international norm for sovereign debt restructurings. Next, Argentina repudiated its debts to those who declined the offer, including more than half of their foreign lenders. Subsequent debt swaps in June and December 2010 also failed to resolve Argentina's outstanding debts, and $3.5 billion remains outstanding to U.S. creditors and $16 billion to private creditors worldwide.

U.S. courts have ruled in favor of these bondholders in numerous cases, but the Argentine government has refused to repay its debts.

"Argentina is holding $54 billion in Central Bank reserves, the most in their history, so the issue isn't their capacity to pay," said Raben. "The issue is President Kirchner's consistent practice of claiming she will pay these debts, then refusing to do so. Every branch of the U.S. government has weighed in on behalf of our creditors. It's time for Argentina to close this sorry episode, pay its debts and move on."

The legislation introduced May 6 is intended to encourage responsible lending, support the rule of law and improve international accountability by:

- Denying access to U.S. capital markets to foreign states such as Argentina that have been in default of U.S. court judgments exceeding $100 million for more than two years;

- Denying access to U.S. capital markets to domestic corporations of such judgment evading foreign states that remain in default for more than three years;

- Requiring the U.S. government to consider the default status of countries before granting them aid from the U.S. government or recommending that assistance be granted by an international organization; and

- Requiring the Secretary of the Treasury to issue annual reports naming these states and analyzing the impact of their behavior on the U.S. economy.

The legislation would not affect poor nations, including those eligible for International Development Association financing or relief through the World Bank's Heavily Indebted Poor Countries (HIPC) Initiative or the Multilateral Debt Relief Initiative.

Also introducing the legislation were Representatives Peter King (R-NY), Carolyn Maloney (D-NY) and Loretta Sanchez (D-CA).

Made up of an alliance of organizations, ATFA's leadership includes Executive Director Robert Raben, a former Assistant Attorney General at the U.S. Department of Justice, and is co-chaired by The Honorable Robert J. Shapiro, former Under Secretary of Commerce for Economic Affairs in the Clinton Administration, and Ambassador Nancy Soderberg, Ambassador at the U.S. Mission to the United Nations in New York from 1997 to 2001.

For additional information, please visit our website at www.atfa.org, or contact media@atfa.org, or +1-888-662-2382.

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