Donald Trump’s ambitious plan to rescue Argentina with a staggering $40 billion bailout is hitting an unforgiving wall of financial skepticism. The grand idea—half a $20 billion currency swap from the U.S. Treasury and another $20 billion in loans led by major banks—has quickly run into the hard reality that these institutions won’t just hand over billions without some serious assurances.
According to a detailed Wall Street Journal report, heavyweight banks like JPMorgan Chase, Bank of America, and Goldman Sachs are struggling to get comfortable with the risks involved. The banks are being asked to put up half the loan, but they want concrete collateral or federal backing before committing.
The bailout proposal comes at the behest of Trump, aiming to bolster Argentine President Javier Milei’s troubled government. Yet, as the Journal highlights, “While banks normally arrange these types of rescue facilities on their own, Treasury has been controlling the broader package and banks feel they can’t act without backing from Washington, some of the people said.”
That backing isn’t coming easily. The banks’ uncertainty is no surprise considering Argentina’s history. The country has been “shut out of the international capital markets for years,” and, more alarmingly, has “already been the recipient of 20 bailouts from the International Monetary Fund (IMF) since the 1950s.” Such a track record makes lenders wary of digging into what looks like a bottomless pit.
The deal isn’t even close to being finalized. The Wall Street Journal stresses that “The loan facility hasn’t been finalized and might not come together if the banks’ collateral question isn’t resolved, they said.”
Beyond the banks’ hesitation lies a more subtle but serious risk to the U.S. Treasury itself. The currency swap portion of the deal would have the Treasury exchanging $20 billion for roughly the same amount in Argentine pesos. But those pesos are losing value fast.
Brad Setser, a former Treasury official under Obama, put it bluntly: “The risks from these operations are unusually large. Should the peso depreciate, which many think is not only likely but necessary, the Treasury would be left holding assets that have fallen in value.”
In other words, if Argentina’s currency tanks—as many expect it will—the U.S. government stands to lose a significant chunk of that $20 billion. That’s not a small gamble, especially when you consider the banks don’t want to be left holding the bag either.
Trump’s push to aid Milei’s government may run aground unless Washington steps up with guarantees that satisfy Wall Street’s risk appetite. Until then, the brakes are firmly on this $40 billion dream.
