Republicans Demand Block Of US IMF Funding To Bail Out Europe
In an odd coincidence, we were just updating the notional amount of FX swaps that the Fed has conducted with Europe in the past week, when we noticed that the GOP has finally made it an issue to fill in the gray area void of whether or not the US will be required to fund the IMF bailout of Europe. Tangentially, the Fed's USD swaps - an indicator of dollar-denominated last resort liquidity - just hit a 2012 high of $84.5 billion, increasing by $2 billion from the $82.5 billion in the prior week which makes us scratch our heads just how is it that Europe is "getting better" if instead of declining, usage of USD swaps is increasing confirming interbank liquidity is non-existence. This merely confirms that 4 weeks after peaking at a multi-year high of $85.4 billion in the last week of December, the European liquidity situation has once again started to deteriorate. It also means that the "self-reported" to the BBA 3M USD (but it's 'declining') is and continues to be about as worthless as any data out of the NAR. Finally, it disproves that statement under oath that Bernanke made to Congress that he would not bail out Europe. However, while Bernanke does not have any direct checks and balances-type supervision (the private Fed is merely beholden to its bank supervisors - just note the Class A directors on the FRBNY's Board) and does not have to concern himself too much with the nuances of perjury, the same can not be said about the US Secretary of the Treasury, for at most another 11 months, Tim Geithner, who doesn't have very powerful interests watching over him. It is Tim Geithner who would ultimately be the person responsible for permitting any IMF (of which America is the largest quota member, and thus, funder) capital transferm in which US taxpayer capital is used to rescue the lost cause known as Europe.
Which is why we were delighted that after months of modest confusion on the topic, the Congressional Committee on Financial Services (including subcommittee chairman Ron Paul), have demanded that not only Geithner make his stance on a US-funded IMF bailout of Europe crystal clear, but that they are openly opposed to "American taxpayer dollars being used to bail out Europe...through additional contributions to the IMF." We are curious to see just how Geithner will weasel his way out of responding to this: perhaps the only logical stall tactic is to reply that he will be busy helping Mitt Romney in his tax "revisions" over the next several months.
Incidentally, the House Committee on Financial Services may want to also ask the Fed Chairman how he reconciles his "no European bailout" statement with the chart below:
The press release issued by the "Republican Leaders." We are confused why Democrat Leaders are also not interest in the SecTres' response on the question of whether and how much US citizens will be bailing out the Italians and French with.
Washington, Jan 25 - Republican leaders of the House Financial Services Committee are seeking assurances from the Obama Administration that U.S. taxpayers will not bear the burden of bailing out debt-ridden European governments.
In a letter sent Wednesday to Treasury Secretary Timothy Geithner, Chairman Spencer Bachus, Vice Chairman Jeb Hensarling and the chairmen of the Committee’s six subcommittees ask for confirmation that the Administration will not use taxpayer funds to subsidize Europe’s financial programs through additional contributions to the International Monetary Fund (IMF).
The IMF has requested up to $500 billion to respond to the Eurozone debt crisis. The U.S. is the IMF’s largest member country.
“The European Union includes four of the ten wealthiest countries in the
world. European countries have the ability to implement austerity measures to reduce their countries’ debt over the long term and they also have the means to restore confidence to markets,” Chairman Bachus and the other Committee Republicans said.
In addition to Chairman Bachus and Vice Chairman Hensarling, the letter was signed by:
Rep. Scott Garrett, Chairman of the Subcommittee on Capital Markets and Government Sponsored Enterprises
Rep. Ron Paul, Chairman of the Subcommittee on Domestic Monetary Policy and Technology
Rep. Shelley Moore Capito, Chairman of the Subcommittee on Financial Institutions and Consumer Credit
Rep. Judy Biggert, Chairman of the Subcommittee on Insurance, Housing and Community Opportunity
Rep. Gary Miller, Chairman of the Subcommittee on International Monetary Policy and Trade
Rep. Randy Neugebauer, Chairman of the Subcommittee on Oversight and Investigations
And the full letter to Geithner: