Clinton’s Mexico Aid Proposal Shaken by Demand for Inquiry : Congress: House votes 407 to 21 to request documents. Party leaders pressured by critics of loan program.

The $20-billion U.S. financial aid program for Mexico became endangered Wednesday when the House voted overwhelmingly to demand Clinton Administration documents about the arrangement.

The leaders of both parties reluctantly agreed to the vote in hopes it would head off a further protest by rank-and-file members angered by the Administration’s decision to sidestep Congress and provide loan guarantees from a fund under the President’s control.

“We have had to fight a war in this chamber to even get a vote,” said Rep. Marcy Kaptur (D-Ohio). The resolution of inquiry was approved by a lopsided margin of 407 to 21. “Let me remind my colleagues this is a first vote,” said Kaptur, one of the leaders of the forces who hope to scuttle the aid package.

Intensifying the debate, a House subcommittee chairman promised an investigation of a potential conflict of interest by Treasury Secretary Robert E. Rubin, the author of the bailout plan and the man who will disburse the funds to Mexico. Rubin was the former chairman of brokerage giant Goldman, Sachs & Co., which marketed more than $5 billion in Mexican securities between 1992 and 1994.

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Rubin should have avoided any involvement because “you can’t forget who you are or where you came from,” Rep. Spencer Bachus (R-Ala.), chairman of the oversight subcommittee of the House Banking Committee, said Wednesday. He promised a hearing by the end of the month.

In Mexico City, the Mexican Stock Exchange’s key index fell 31.88 points to 1,517.96 on Wednesday, even though interest rates on Mexican treasury bills auctioned Wednesday came down somewhat from last week’s stratospheric levels.

Still, rates are around 50%, reflecting the crisis of confidence in the Mexican economy and the government. The general disarray was heightened by Tuesday’s arrest of the brother of former President Carlos Salinas on charges that he ordered and planned the assassination of a key ruling party official last year.

Bachus and other Republicans are defying their party’s leadership, which agreed with President Clinton on the need for the aid package to help Mexico--whose economy cracked in late December under the weight of a severe trade deficit and a sudden devaluation of the peso.

The Administration argued that fears over Mexico could jeopardize the ability of many other fast-developing nations to raise capital.

The GOP dissidents will force a vote at today’s Republican conference on their demand that their party bring the issue to a vote on the House floor. They want a vote on a bill that would block the Administration from providing funds without prior Congressional approval.

If the critics are successful at the Republican conference, the full House will get a chance to express itself on the idea of financial aid for Mexico. Many members, upset at the political difficulty of cutting popular domestic programs, will be reluctant to cast a vote for what would be perceived as unpopular foreign aid.

When it became clear earlier this year that it would be a hard fight to get Congressional approval of a financial package, the Administration decided to dodge Congress by using the exchange stabilization fund, cash normally used to calm currency fluctuations.

Wednesday’s vote by the House was a resolution of inquiry.

“It is of a fact-finding nature . . . and nothing (in it) jeopardizes the stabilization package itself,” said Rep. Jim Leach (R-Iowa), chairman of the House Banking Committee and a supporter of aid to Mexico.

But a supply of Treasury documents dealing with the Administration discussions with Mexican officials seems unlikely to satisfy many skeptics in both parties.

Treasury Secretary Rubin, who is in charge of the loan guarantee program, was defended vigorously on Wednesday as a man of integrity by Leach and several Democratic members. They were angered by criticisms from Bachus and other Republicans about the potential conflict of interest or appearance of a conflict.

Rubin left Goldman Sachs, where he had served as co-chairman, to join the Clinton Administration, and placed his assets in a blind trust.

Goldman Sachs was the lead underwriter for Mexican securities, arranging the sale of $5.7 billion worth of issues between 1992 and 1994. Goldman Sachs’ own holdings of Mexican securities currently are less than $100 million, comparatively minuscule compared with the firm’s assets of $130 billion, according to knowledgeable sources.

Treasury ethics officials gave Rubin a ruling that it would be permissible for him to become involved in the Mexican issue.

The Mexican stock market has continued to plummet in recent weeks, reflecting fears that the U.S. aid plan either won’t work or will be rescinded entirely by partisan politics in Congress.

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The Mexican Stock Exchange index has slumped from 1,898.90 on Jan. 30, the day before the aid package was announced, to 1,517.96 now, a 20% decline. Since the Mexican crisis began on Dec. 20 the stock market has lost 33% of its nominal value, but the peso’s 40% devaluation against the dollar has meant much deeper real losses for U.S. investors in Mexican securities.

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Staff writer Tom Petruno in Los Angeles contributed to this story.

* MEXICAN TURMOIL

Salinas strikes back. A1