Asian crisis threatens 'tidal wave' of bailout demands

Asian crisis threatens 'tidal wave' of bailout demands

WASHINGTON (AFP): Economic trouble in Asia could unleash a "tidal wave" of bailout demands which Washington should reject, a senior U.S. senator said Saturday as he urged officials to deny Indonesia a loan.

A week after the U.S. administration said it would give Indonesia up to three billion dollars in aid to help shore up its economy, hard hit by a currency crisis, Lauch Faircloth, chairman of a Senate banking subcommittee on financial institutions, introduced a bill to stop the loan.

Indonesia had requested a total of US$23 billion from a variety of sources.

The bill would ban officials from using the U.S. Exchange Stabilization Fund from providing more than $250 million to foreign countries without congressional approval.

"The fund was not designed to be the personal 'piggy bank' of the secretary of the treasury to bail out other countries whenever he desires," said Faircloth, a North Carolina Republican.

The fund was established in the 1930s to support the dollar.

"We are seeing a tidal wave of bailouts coming our way from Asia," he warned, adding demand was overwhelming the resources of the International Monetary Fund (IMF).

"The tidal wave has already started. The Philippines in July for one billion dollars. Thailand for 16 billion dollars in September. Now comes Indonesia for $23 billion in November. The price tag keeps getting bigger and we don't know where it is going to stop," he said.

"I think President (Bill) Clinton and (Treasury Secretary) Robert Rubin need to realize that Wall Street and Indonesia did not elect them -- the people of the U.S. did," he added.

Announcing the loan, Rubin had said it would be available "for a temporary period, if necessary, to supplement the resources made available by the IMF and Indonesia's own reserves."