Word: braziller
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Dates: during 1980-1989
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...equity. Chase Manhattan has loans totaling $2.5 billion to the two countries, 77% of stockholders' equity, and New York's Citicorp, which refuses to confirm the exact figures, has a reported $4 billion, or 85%. On top of that, Citicorp is a very big lender to Brazil, with an estimated $5 billion in total loans. Altogether, the nine largest U.S. banks have loaned out about 130% of their equity to Mexico, Brazil and Argentina. These banks have set aside a total of $3.6 billion in loan-loss reserves, but that amounts to only 12% of their
...boosted world interest rates to new postwar highs, while declining inflation in the U.S. and a rush of foreign money into the country strengthened the dollar. No longer could loans be paid off with ever less expensive greenbacks. Quite the contrary. Moreover, since the biggest borrowers-Argentina, Brazil, Mexico and South Korea-carried floating interest-rate tags (which change with prevailing rates) on most of their loans, servicing costs climbed out of sight. Between 1976 and early 1982, the London Interbank Offered Rate (LIBOR), against which most international borrowing is set, zoomed from 6% to 15%. Each 1-point rise...
...approved a Mexican adjustment plan and would extend a new credit of $3.9 billion. But the commercial banks were not happy over the IMF's conditions that they increase their lending by 7%, or $5 billion. Before agreement could be reached, increasingly worried bankers began to realize that Brazil, long regarded as most creditworthy, was also in deep trouble. Meanwhile, in December, shortly after the U.S. Government came up with a $1.2 billion short-term bailout loan for Brazil (where U.S. institutions carry $18.9 billion of a total debt of $87 billion), several large U.S. banks combined forces...
...delegation came close to walking out. Recalls a U.S. diplomat: "They balked at paying a service fee on the money. They said they were seeing imperialism in action and threatened to take the next plane home. That would have meant default." In the end, the U.S. conceded. During the Brazil operation, a New York banker roused Volcker out of his sleep one night to plead for a $500 million Federal Reserve contribution to that salvage attempt. Volcker came up with the money. In either case, there was no margin for failure...
...about $4 billion of the needed extra $5 billion already pledged. The biggest banks, which have been masterminding the complex operation, were said to be confident that everything could be pulled together successfully, even though some smaller lenders in the U.S. and Western Europe were still seeking further assurances. Brazil's request for a new jumbo loan of $4.4 billion remained under consideration at New Year...