The financial agreement that freed the hostages seized by Iran was not a special deal worked out to favor American banks, although banks fared better under the agreement than other companies with claims against Iran, according to a House Banking, Finance and Urban Affairs Committee analysis of the hostage release agreement.
It was the banks that carried on the only substantive dollar-and-cents negotiations with Iran during the first 11 months of the hostage crisis -- negotiations that occurred with the knowledge of U.S. officials.
Committee Chairman Fernand J. St Germain (D-R.I) said the negotiations "involving draft after draft of settlement language and documents, centered on settlement conditions knowingly more advantageous to U.S. commercial banks than to nonbank claimants . . . When comparing settlement conditions providing for immediate payoff of certain bank debts with the potential for future payments of their debts, the nonbank claimants may have felt lost in the shuffle," he said.
But the report noted it was Iran, not the U.S. banks or the U.S. government, that finally came forward with the proposal on Jan. 15 that broke the impasse.
While "the U.S. government appeared to be less concerned with resolving the problems of nonbank claimants than those of the banks," there were several factors that made banks claims easier to deal with, the report said.
For one thing, bank claims were easily quantifiable while contract claims were subject to dispute.Also, companies with contract claims against Iran were a more diverse group.
"All of these elements undoubtedly influenced the outcome of the agreement, but there is no reason to believe either that chicanery was involved in structuring the deal or that the interests of nonbank claimants as a whole were not fairly protected in the agreement," the report concluded.
The report also found no evidence that either Chase Manhattan Bank or its president, David Rockefeller, attempted to persuade the U.S. government to impose a freeze of Iranian assets "nor did they have control over the timing of the freeze or any advance knowledge of the freeze other than by means of inferences they may have drawn from government inquires on the status of Iran's assets just before the freeze."
But the report suggested that in the future steps be taken within the executive branch to prevent "bureaucratic precedents, turf battles and constituencies from affecting the outcome of financial settlements" under the International Emergency Economic Powers Act.
According to the report, invoking those powers was under consideration by the Carter administration nine months before the hostages were seized in November 1979. The act allows the president to take extraordinary actions in the face of political, national security or economic jeopardy.
The report said invoking the IEEPA was justified on the first two grounds but probably not on economic grounds. Using that justification, however, placated other Organization of Petroleum Exporting Countries that might have feared for themselves if the powers had been invoked on political grounds alone.
Congress should provide future administrations with clearer guidlines about what constitutes an economic emergency under the act, the report recommended.
The report noted that U.S. negotiators were often dealing with the wrong groups in Iran, trying to deal with secular authorities whose power had been supplanted by clerical leaders.