U.S. Members of Congress Introduce Legislation on Argentine Debt and Court Defaults

/PRNewswire / -- American Task Force Argentina (ATFA), a coalition of more than 40 taxpayer, investor, educator, Latino and agriculture organizations, today commended members of the U.S. House of Representatives for introducing legislation imposing stiff penalties on wealthy and middle-income nations that, like Argentina, refuse to honor obligations to U.S. creditors.

The effort is being led by Representative Eric Massa, a Democrat from New York State who was raised in Argentina while his father served as U.S. Naval Attache in Buenos Aires. Also introducing the legislation were Representatives Paul Tonko (D-NY), Robert Wexler (D-FL), Timothy Bishop (D-NY), Carolyn Maloney (D-NY), Dan Maffei (D-NY), and Mike McMahon (D-NY).

The bill, H.R. 2493, called the Judgment Evading Foreign States Accountability Act of 2009, 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 would also require the U.S. government to consider the default status of these countries before granting them aid.

"Argentina is ignoring billions of dollars in U.S. court judgments, which has hurt not just U.S. citizens, but also Argentine citizens," said ATFA Executive Director Robert Raben. "U.S. taxpayers are still waiting to be repaid money they lent to Argentina in good faith. At the same time, Argentina is saddled with the reputation of a deadbeat because their government defaults on court judgments. This legislation should pave the way for a fair resolution for both countries."

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 outstanding debt, far below the international norm for sovereign debt restructurings. Argentina repudiated its debts to the 50 percent of foreign lenders who declined the offer. U.S. courts have ruled in favor of these "holdout" bondholders in numerous cases, but the Argentine government has refused to repay its debts, choosing to default on those judgments.

"President Kirchner has said several times she's prepared to negotiate with bondholders, but we've seen no action whatsoever," Raben said. "Argentina has $45 billion in reserves and can afford to pay its $3.5 billion in debts to U.S. bondholders many times over. It's time to resolve this issue for the benefit of both nations."

A team of Argentine economists concluded in 2006 that Argentina's default status causes the nation to lose more than $6 billion in foreign direct investment every year. The U.S. State Department warned in February 2009 that Argentina's unresolved debts, and the resulting court judgments, have created a risky climate for U.S. investors.

Argentina's refusal to resolve its outstanding debts may be setting a precedent in the region. Ecuador in recent months defaulted on more than $3.8 billion in obligations to foreign investors, citing Argentina as a model.

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

-- Denying Argentina and other foreign states that have been in default
of U.S. court judgments exceeding $100 million for more than two years
access to U.S. capital markets;
-- Denying domestic corporations of such judgment evading foreign state
that remain in default for more than three years access to the U.S.
capital markets;
-- Requiring the U.S. government to consider the default status of
countries before granting them aid; 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.

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American Small Business League: Obama to Create Loopholes for Venture Capitalists

/PRNewswire-USNewswire/ -- The following was released today by the American Small Business League:

President-elect Barack Obama is preparing to create significant changes in federal contracting law that will allow some of the nation's wealthiest investors to receive federal contracts earmarked for small businesses. Under the banner of "increasing access to capital" for small businesses, the policies will allow firms controlled by individual venture capitalist and even large venture capital firms to participate in federal small business contracting programs.

The Obama Administration's new pro-venture capital policy could virtually repeal the Small Business Act for legitimate American small businesses by modifying the longstanding federal definition of a small business as "independently owned."

Under the proposed Obama Administration policy, "independently owned" will be changed to include firms that are not independently owned, but are actually controlled by wealthy investors and possibly some of the nation's largest venture capital firms.

Opponents of the new policy say it appears to be designed more to increase wealthy venture capitalist access to billions of dollars in federal small business contracts as opposed to "increasing access to capital" for legitimate small businesses.

If the policy is successfully implemented it could force the average American small business to compete head-to-head with firms controlled by wealthy investors for even the smallest government orders for goods and services. Thousands of middle class jobs could be lost as billions of dollars in federal small business contracts are diverted to a small number of venture capitalist controlled firms.

The plan will likely include a provision that would exempt the venture capitalist owned firms from capital gains taxes. The Obama-Biden Transition Team website, www.change.gov mentions such a proposal.

The appointment of multi-millionaire venture capitalist Karen Mills to head the Small Business Administration (SBA) is the latest indication that President-elect Obama is moving forward with his plans to divert government small business contracts to venture capital controlled firms.

The National Venture Capital Association (NVCA) and its members have been lobbying for the new loophole in federal contracting law for more than two years. The NVCA and its members have contributed millions of dollars to Obama and key Democratic leaders in Congress such as Nancy Pelosi, John Kerry, Joe Lieberman and Hillary Clinton. (http://www.maplight.org/map/us/interest/F2500)

"The easiest and quickest way to stimulate our nation's failing economy is for the government to spend infrastructure funds with America's 27 million small businesses that create all the new jobs and employ most Americans," American Small Business League President Lloyd Chapman said. "This new Obama policy will do just the opposite and will push our economy closer to a depression by diverting billions of dollars in federal funds away from middle class America and into the hands of small number of wealthy investors that backed Obama."

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