The Treasury's order that banks should send $2.2 billion in Iranian assets to the government for eventual transfer to Iran came as no surprise. It was part of the agreement that freed the U.S. hostages last January.
Still, bankers are a bit edgy.
Nearly all those assets are under some form of court attachment to cover claims by U.S. citizens and businesses against Iran.
As a result, bankers said today that unless the Supreme Court should rule by June 19 (the date the Treasury said the banks should transfer the funds to the New York Federal Reserve Bank) on what the banks have to do, both bank and government lawyers will have to go to the courts to ask that the attachements against the Iranian deposits be dissolved.
"We all want a Supreme Court ruling," said an officer of a major New York bank. "Otherwise we could be put in the uncomfortable position of having to choose whether to violate an attachment order or the new regulations."
Two federal appeals courts have upheld the president's right to dissolve all court-ordered freezes of Iranian assets and require U.S. citizens and companies with claims against Iran to submit to a special arbitration panel. Iran has agreed to put $1 billion of the $2.2 billion it is supposed to receive July 19 (a month after the Treasury wants the banks to give up the money) into an escrow account in a third country's central bank, probably the Bank of England, which served as the go-between in earlier assets transfers to Iran.
Electronic Data Systems has asked the Supreme Court to listen to its claim against Iran, but bank officials say that because EDS obtained the attachment before President Carter froze Iranian assets in the United States, a court decision might not solve the banks' problems.
Dames & Moore, a West Coast consulting firm, said it plans an emergency appeal to the Supreme Court concerning its claims against Iran. Bankers said a Supreme Court ruling on the Dames & Moore case would define whether they are bound by the Treasury ruling or the court attachments.
Bankers were unwilling to talk for attribution about Thursday's Treasury ruling because of what they say is the sensitive nature of the issues. But no banker objected to paying Iran the money.
"There's no question about it. It is Iran's money," said the top legal officer of a giant bank.
The $2.2 billion in question represents the amount of money Iran has on deposit in domestic offices of U.S. banks. Another $8 billion in gold and deposits in foreign branches of U.S. banks was released at the time the hostages were freed.
Although the U.S. government and the banks agreed to send the $2.2 billion to Iran (half of it will go to a special escrow account to cover U.S. claims against Iran) five months ago, busineses and individuals with claims against Iran have convinced the United States to attach those assets to insure the claims are paid.
At last count, U.S. courts had ordered about 300 attachments totaling $7 billion, bankers said. But they added that the actual amount of U.S. claims against Iran will be slightly less than $2 billion. In many cases companies have attached assets in more than one place to satisfy a single claim, and in other cases the actual amount of the claim will be damages determined by a court. Many times the amount of assets attached is well in excess of the expected damage award.