March 6 (Bloomberg) -- The U.S. House passed a measure to allow $1 billion in loan guarantees sought by the Obama administration to help restore financial stability in Ukraine.
The House voted 385-23 today under an expedited process to let the government guarantee private-sector loans to Ukraine. The bill, H.R. 4152, would allow previously appropriated funds to be used to cover the cost of the guarantees.
The vote is a first step in Congress to assist Ukraine, which has been rattled by political crisis and a Russian military siege of Crimea. President Barack Obama said today the U.S. and its allies will keep raising pressure on Russia to back down in Ukraine.
“We are well beyond the days when borders can be redrawn over the heads of democratic leaders,” Obama said at the White House.
His administration today restricted visas for Ukrainian officials and others, including Russians, who it says threaten Ukraine’s sovereignty. Obama also authorized financial sanctions, clearing the way for escalating pressure.
Russian President Vladimir Putin is “counting on the United States to sit back and watch him do and take whatever he wants,” House Speaker John Boehner, an Ohio Republican, said today at his weekly news conference. “The best thing that we can do is work with the administration, strengthen their hand to deal with what is a very difficult situation.”
Senate leaders support the loan guarantees though the chamber hasn’t scheduled a vote on the issue. Robert Menendez, chairman of the Senate Foreign Relations Committee, said today his panel would craft legislation to “endorse” the loan guarantees next week.
Representative Ed Royce, a California Republican who leads the House Foreign Affairs Committee, said he’s working with his Senate counterparts, Menendez, a New Jersey Democrat, and Bob Corker, a Tennessee Republican, to assemble an additional aid package for Ukraine as well as possible sanctions.
Secretary of State John Kerry said March 4 that the U.S. is working with the International Monetary Fund and other international partners to put together an assistance package to help restore financial stability in Ukraine. Kerry said that the plan would include $1 billion in U.S. loan guarantees.
The measure passed by the House would provide only loan guarantees, not direct U.S. loans, to the government of Ukraine.
Under U.S. law, direct loans and loan guarantee costs must be calculated based on, among other factors, the probability of default. The budget authority that would be required for a guarantee is the sovereign lending equivalent of a risk reserve in the private sector.