Banks and the Debt Rescheduling Process
Mexico was the first major Third World country to have its commercial bank debt rescheduled in the 1980s, but it was soon followed by a plethora of other nations both large and small. Banks have negotiated and implemented the reschedulings through special groups, called bank advisory committees that they formed in the wake of the crisis. The bank advisory committees have been the cornerstone of the banks’ efforts to deal with the Third World debt crisis. The US money center banks have been particularly dominant, accounting for more than half of the seats on important committees throughout most of the rescheduling years. The committees by and large managed to keep the stream of interest payments flowing from the debtor nations, which enabled the banks to continue to report profits on their Third World loans. The Bank for International Settlements, the European central bank, similarly helped rescue a number of nations at the outset of the crisis by providing bridge financing.