Treasury Secretary James A. Baker summoned the chief executives of the nation's largest banks to a meeting last night to discuss a new U.S. plan to ease economic pressure on developing countries that have been struggling for three years to repay massive debts.
Willard C. Butcher, chairman of Chase Manhattan Bank, told reporters after the meeting that the bank executives and Baker "examined the debt situation" and looked at how well the strategies for solving it "are working today."
He said they talked "about possible alternatives for the future to assure more growth in the world economy." Butcher said the Treasury talked about "moving to the next stage" in dealing with the debt crisis during the hour-long meeting.
Butcher, who heads the nation's third-largest bank, declined to be specific. It "was not our meeting," he said, but "we are all in the same boat."
Baker plans to unveil the U.S. plan at the annual meeting of the International Monetary Fund and World Bank next week in Seoul.
Treasury and State department officials, who have been working on the plan for months, have been tight-lipped about discussing the new program. But administration sources have said that the Treasury and State departments are concerned that social and political pressure could explode in Latin America especially.
The debtor countries have introduced tough measures to husband their dollars to pay their debts. Those policies have caused severe recessions that wiped out nearly all their economic gains of the late 1970s.
Paul A. Volcker, chairman of the Federal Reserve Board, attended the session, along with key bankers, including Citibank Chairman John Reed, whose bank is the nation's biggest, and Leland Prussia, president of Bank of America, the nation's second-biggest.
In recent weeks, Reagan administration sources have talked vaguely about a new effort to ease the debt crisis -- one that would involve an increase in lending by commercial banks and more involvement on the part of the World Bank.
Baker acknowledged in a meeting with businessmen yesterday morning that the plan would involve increased bank lending to developing countries such as Mexico and Brazil. He said he called the meeting with the bankers because "it clearly will involve them."
Commercial banks have lent Latin American debtor nations about $230 billion of the $360 billion these nations owe foreigners. The rest of the Latin American debt is owed mainly to other governments and to official lending institutions such as the World Bank, the IMF and the Inter-American Development Bank.
The International Monetary Fund has taken the lead in managing the crisis, which was triggered in August 1982 when Mexico announced that it had run out of money and no longer could pay its debts on time. But the IMF's focus is primarily short term, and top officials at the Treasury and State departments apparently are convinced that the longer-term solutions are necessary.
Apparently the administration hopes to use the World Bank to develop ways of reducing the risks to commercial banks of making new loans to countries the banks already feel have too many commercial-bank loans.
The United States reportedly hopes to get the World Bank to be a partner with private banks in some loans and to guarantee repayment of portions of loans made to debtor countries by private banks.
The World Bank already has made some joint loans and has agreed to guarantee a portion of a loan made to Chile by commercial banks this year.
But Treasury officials say the World Bank -- whose focus is supposed to be development lending -- has not been aggressive or creative enough in trying to come up with ways to funnel long-term money to Latin America and other regions that desperately need fresh money if they are to grow and modernize their economies.
Meanwhile, the key bank lenders to Mexico announced yesterday that they would postpone for six months a $950 million payment from that country that was in two installments -- one yesterday and the other on Nov. 4. Mexico requested the postponement Monday because of the severe earthquake that struck Mexico City on Sept. 19.
The $950 million represented a partial repayment of a $5 billion loan Mexico received from commercial banks in 1983. According to Citibank executive William R. Rhodes, chairman of the bank committee that negotiates with Mexico, the debtor country said it would remain current on the interest payments it owes banks