It was widely interpreted as a ban on new loans but not the rolling over of existing loans, and appeared to have been imposed particularly on medium-size banks that have been among the most aggressive lenders.
That was the impression on Wall Street this week after the IMF's decision to offer Brazil a new $15 billion loan package, while merely accelerating $1.2 billion of existing loans for Argentina.
Sarbanes-Oxley, among other things, bans company loans to executives and extending the terms of existing loans.
In early 2007, when the current crop of bad loans were being made, less than one-third of 1 percent of existing loans were delinquent.
They noted that because the World Bank depends on repayments of existing loans to have money for new loans or for the grants, it would encounter a shortfall and have less money to use under Mr. Bush's proposal.
Mr. Javitz explained that in the past two years or so, about 75percentt of mortgage loans have been refinancings of existing mortgages while about 25percentt have been new loans.
IMF disbursements have also been suspended for ten months as negotiations on a new IMF programme have dragged on.If the World Bank loan isn't repaid within 30 days of the due date, no new loans will be forthcoming and there can be no interest-rate reductions on existing loans; if the government remains in default for 60 days, all disbursements of existing loans will stop as well.
At a hearing held by the House Committee on Education and the Workforce on Wednesday, Robert Shapiro, an economist at the Brookings Institution, estimated that over the life of existing loans, taxpayers would pay $14 billion to $104 billion to subsidize the loans, depending on how high interest rates climb in the coming decades.
It has also put back the repayment of existing loans of £30.6m owed to Veronis Suhler Stevenson to 12 July.
If no repayment is made within the next 30 days, all disbursements of existing loans will stop.
