Word: triffin
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...estate of America's dollar in world markets distresses nobody so much as Economist Robert Triffin, who expressed some far-reaching opinions about it in a talk with TIME Senior Editor Marshall Loeb. His report...
Political Pressures. To keep this flood of cash moving and to make a profit, U.S. banks have been lending these funds to LDCs. But, Triffin believes, in taking on this responsibility the banks are making themselves too vulnerable to pressures from their oil-rich depositors. In any disagreement with U.S. policy, a bloc of OPEC nations could quickly withdraw its deposits, possibly leading to a dangerous disruption in the foreign exchange market...
...addition, Triffin believes, U.S. monetary authorities-including the Federal Reserve Board and the Comptroller of the Currency-should use their influence to persuade major U.S. banks to rein in the particularly openhanded lending policies of their foreign branches, especially in places like the Cayman Islands and the Bahamas. At present these branches are subject to few of the checks that the Government places on banks located...
...Triffin's views are echoed by other critics. Congressman Henry Reuss, the influential Wisconsin Democrat who heads the House Committee on Banking and Finance, argues that the IMF should take over more of the burden of lending to LDCS from private U.S. banks. FRB Chairman Arthur Burns called on American banks to take a hard look at their overseas lending policies. Burns spoke of borrowings "that are uncomfortably large in relation to the debt-servicing capabilities of many countries...
Such arguments do not persuade those critics. If the attitudes of Burns, Reuss and Triffin are any indication, the pressure to put more restraints on the banks' foreign lending policies can only grow in the months ahead...