October 24, 1986
I am withholding my approval of S. 593, a bill for the relief of the Merchants National Bank of Mobile, Alabama. The enrolled bill would authorize the payment of $809,609 to the Merchants National Bank in settlement of its claims against the United States relating to certain government loan guarantees.
The compensation would be for losses the Bank claims were caused by the issuance and cancellation of a loan guarantee and the subsequent reissuance on different terms of a second loan guarantee. The need to renegotiate the terms of the loan guarantee originally extended to the Merchants National Bank of Mobile was regrettable. However, the Bank's claim that it was injured as a result of the change is not supported by the facts.
While the terms of the two guarantees were different, the second loan contained some provisions that were more advantageous to the Bank than those that were included in the first guarantee, and the Bank's losses did not result from the need to cancel the first guarantee and the issuance of a second guarantee. Under the circumstances that existed at the time the second guarantee was negotiated, this guarantee was not less advantageous to the Bank than the first, unauthorized guarantee.
I must, therefore, withhold my approval of S. 593 in order to prevent payment to the Bank of an unsupportable gratuity.
Ronald Reagan
The White House,
October 24, 1986.
Note: The memorandum was released by the Office of the Press Secretary on October 25.