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Congress Gears Up For IMF-Funding Debate

© Bryan Johnson

[ Editor's Note: Some time ago, I presented a series analyzing the Bretton Woods system. One article dealt entirely with the International Monetary Fund (see "Recent Articles" at the bottom of the page). That article dealt with the emerging debate sweeping Congress over whether to increase funding for the IMF. In the article, I presented arguments from both sides, as well as links to studies making their case. This article revisits the IMF issue, as it relates to the current debate in Congress. I will follow up with future articles that the issue warrants - BTJ]

The General Oversight and Investigations Subcommittee of the House Banking and Financial Services Committee held a hearing on the IMF on April 21. The hearing was called by Rep. Spencer Bachus (R-AL), Chairman of the committee, and Rep. Bernard Sanders (I-VT), ranking member, to question Clinton Administration officials and other IMF experts on the Administration's request to increase funding for the IMF. The call for such a hearing set in motion a series of events that illuminates the current obstacles facing such a request.

Originally, Chairman Bachus requested that the United States Executive Director to the International Monetary Fund testify before the hearing. The Treasury Department, which has jurisdiction over the executive director informed the committee that they would not allow Karin Lassakers to testify. On April 3, Rep. Bachus and Rep. Sanders sent a letter to Treasury Secretary Robert Rubin imploring him to reconsider Treasury's refusal to have Lissakers testify.

In the letter dated April 3, Bachus and Sanders write: "We are writing to express our frustration and disappointment at the refusal of the Treasury Department to permit Ms. Karin Lissakers...to testify...The Administration is currently lobbying Congress to increase the quota for the IMF by $18 billion, bring the U.S. quota to almost $50 billion, and total IMF quotas to nearly $300 billion. We consider it irresponsible for Congress to provide this extraordinary amount of taxpayer dollars to the IMF without adequately considering the manner in which the U.S. Congress can protect the interests of the American people...Your refusal to allow the Executive Director to appear before the Oversight Subcommittee does little to assuage the concerns expressed by our colleagues that the IMF operates behind a veil of secrecy."

Shortly after Rubin received the letter, he reversed his decision and allowed Lissakers to testify. The outcome of that hearing reveals why Rubin was hesitant to put Lissakers up to testify. The main reason the committee wanted Lissakers to testify was to question her on the execution of U.S. laws requiring her to vote against specific IMF loans if certain issues remain unresolved. This has become a major issue before Congress because proponents of IMF funding are arguing that the problem of the IMF's secrecy can be overcome by passing laws making the IMF more transparent.

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