Are OPEC Financial Holdings a Danger to U.S. Banks or the Economy?

EMD-79-45: Published: Jun 11, 1979. Publicly Released: Jul 16, 1979.

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Concern exists that the Organization of Petroleum Exporting Countries' (OPEC) financial holdings, both U.S. Government securities and deposits in U.S. banks, might be a threat to the United States due to their size or the possibility of their rapid liquidation.

These holdings do not constitute an immediate danger to U.S. banks or the economy; however the implications of a long-term withdrawal of these funds from the United States and U.S. financial institutions could be adverse. Prior to 1974, statistics for OPEC countries in Asia and Africa were published individually. Since then, however, statistics for the Asian and African OPEC countries have been aggregated, making it difficult to identify individual OPEC accounts and holdings. Disaggregated financial data are currently published for most countries; among major countries of the world, only data for individual OPEC countries are suppressed. Similarly, the data on export and import services for OPEC countries are not individualized. The arguments cited by Government officials for aggregating the financial data were unconvincing. The evidence suggests that the withholding of these data may have come about as a result of understandings reached between former Department of Treasury officials and the countries involved; special commitments of financial confidentiality may have been made in exchange for their purchases of U.S. securities. It has continued for foreign and other policy reasons.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: The Congress should consider establishing a mechanism to facilitate the sharing of this data under appropriate safeguards with the Executive branch. If such an accommodation is not possible, the Congress should remove any doubt that the statutes do not limit congressional access to such information. The Subcommittee on Commerce, Consumer and Monetary Affairs, House Committee on Government Operations, should require the Departments of the Treasury and Commerce, and the Federal Reserve Board, to justify separately the aggregations of the financial holdings and transactions, and of the bank deposits and loans of individual OPEC countries. The Subcommittee should (1) analyze the validity of these justifications, with particular attention to the degree of sensitivity of OPEC statistics; (2) determine the appropriate disclosure of these data; and, if necessary, (3) require such disclosure by the agencies.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretaries of the Departments of the Treasury and Commerce, and the Chairman of the Federal Reserve Board (FRS), should explain fully to the House Subcommittee on Commerce, Consumer and Monetary Affairs, the policy reasons for aggregating information on: (1) the financial holdings and transactions of individual OPEC countries in the United States; and (2) deposits and loans of individual OPEC countries in domestic and foreign branches of U.S. banks. In their explanations, Treasury and FRS should pay particular attention to why they aggregate this information since they publish it for all other countries. Although particular OPEC accounts in individual U.S. banks need not be identified, GAO believes that Treasury and FSR should publish information on OPEC deposits and loans in domestic and foreign branches of U.S. banks by country. The Bureau of Economic Analysis, Department of Commerce, should review its reporting services for imports and exports to include regular and more detailed breakdowns of country data.

    Agency Affected:

 

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