Clinton signs steel loan plan
By Staff -- Purchasing, 10/7/1999
President Clinton has signed into law a government-backed loan program worth $1 billion for steel companies who claim they have been hurt financially by low-priced and unfairly traded imports in 1998 and earlier. Steel companies will be able to tap into the loan fund and borrow between $25 million and $250 million at market interest rates. The federal government would not actually provide the loans; instead, it guaranteed lenders that the government would repay loans if the borrowers defaulted. Still, it will cost taxpayers an estimated $270 million to back the loans.Sen. Robert Byrd, D-W.Va., chief proponent of the steel loan program, says the help will provide financial help to steel communities and companies that have suffered from low-priced imports. "These loan guarantees will provide important access to capital for U.S. steel companies," he says. "It is time to stanch the damage and give the domestic steel industry a chance to recover." Rep. Ralph Regula, an Ohio Republican, adds that "the loan program is not a federal giveaway, but rather a tough self-help program, and it does have protections for the U.S. taxpayer."
Opponents contend that U.S. taxpayers will have to support companies and banks that have made bad business decisions. House Banking Committee Chairman Jim Leach, an Iowa Republican, says the federal government should not interfere in the marketplace and warns that companies still might default on their loans, forcing taxpayers to foot the bill. "It opens the way for boondoggles," agrees House Ways and Means Committee Chairman Bill Archer, a Texas Republican.
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