US banks reporting foreign-loan defaults
Shareholders in United States banks are getting an added set of figures in the banks' annual reports. Last year, the Securities and exchange Commission began requiring the banks to disclose cases where foreign-country loans (or other types of similar investment) had become temporarily delinquent. The new regulation included situations where debt-repayment problems within a single country totaled 1 percent of the bank's all-country outstanding credit.
Not all governments having loans with US banks have shown a need for temporary relief or for long-term restructuring payments. But Argentina, Mexico , and Brazil all found it necessary to make renegotiation arrangements in 1982.
US government agencies, apprehensive about possible foreign-loan defaulting and its potential effect on the banking community, are intent on spotlighting future liquidity problems when they are first apparent. According to officials of the Federal Reserve Board, new regulations may be issued soon which would require banks to write off part of any new foreign-country loan as soon as that nation first defaults.