Chairman Henry S. Reuss (D-Wis.) of the House Banking Committee said yesterday that the Carter administration is promoting arms sales aborad by lending money to foreign governments at bargain rates.
He said he wrote Defense Secretary Harold Brown last week recommending that this "promotional financing of arms sales" be stopped to conform to President Carter's announced policy of curbing wwapons trafficking.
Reuss said that Treasury's Federal Financing Bank (FFB), established in 1974, is authorized to make loans guaranteed by the Pentagon or any other federal agency.
Until the FFB was established, Reuss said in a statement issued yesterday, foreign arms purchasers sometimes had to pay 2.5 per cent more in interest than the bank would have charged.
"The FFB provides easy financing at rates just above Treasury's own cost of money," Reuss complained. "At least 14 countries that have received dictatorships that have violated th e human rights of their citizens."
The bank's lending for arms, the committee chairman continued, is putting U.S. borrowers "at a competive disadvantage."
He said the "FFB was not established to play this role in the arms traffic. Not a word was said about financing arms sales" when Congress debated the FFB Act, Reuss said.
As of Jan. 31, the bank was committed to loan 27 countries $2.3 billion to buy American weapons, even though the amount of money owed was $1.7 billion Reuss said.