Last week we pointed out a very troubling statement by the head of IMF's policy-steering committee, Youssef Boutros-Ghali who said that the IMF is essentially insolvent in its current form of being the go to backstop for a European bailout. "If we are going to start including funds made available to Europe, then the IMF is not properly resourced." Finally, someone in Washington is waking up over the most recent bottomless moneyhole, now affectionately known as Euro-TARP, and the hundreds of billions this will cost US taxpayers.
From the just released statement by Rep. Cathy McMorris Rodgers (R-WA):
McMorris Rodgers Responds to Statement by IMF Leader Suggesting that European Bailout Will Cost U.S. Taxpayers $100 Billion or More
“Obama Administration Needs to Stand Up for U.S. Taxpayers”
Washington, DC – Rep. Cathy McMorris Rodgers (R-WA), Vice Chair of the House Republican Conference, called a statement by one of the leaders of the International Monetary Fund (IMF) suggesting that American taxpayers would be forced to spend $100 billion to help bailout Europe “extremely troubling.”
On Friday, June 4, the chairman of the IMF’s policy committee, Youssef Boutros-Ghali, said the IMF’s financial reserves would have to rise “very significantly” in the wake of the IMF’s $335 billion commitment to bailout Greece and the European Union. "If we are going to start including funds made available to Europe, then the IMF is not properly resourced," said Mr. Boutros-Ghali, while adding that IMF members were talking of doubling the amount of Special Drawing Rights (SDRs). In 2009, the IMF increased its SDR allocation from $34 billion to $318 billion. To help facilitate this process, the U.S. Congress – over the objection of most House Republicans – increased America’s commitment to the IMF by $100 billion. If the SDR allocation needs to be doubled – as Mr. Boutros-Ghali claims – that would mean U.S. taxpayers would probably be on the hook for an additional $100 billion, if not more. [emphasis ours]
“This should give pause to Treasury Secretary Geithner and others who boasted that the IMF’s bailout bonanza wouldn’t cost U.S. taxpayers a dime,” said Rep. McMorris Rodgers. “In truth, the cost to U.S. taxpayers goes up every few weeks. After the Greek bailout, it stood at about $7 billion; after the EU bailout, it stood at about $60 billion. Now – based on Mr. Boutros-Ghali’s comments – we’re talking at possibly $100 billion or more. This has got to stop.”
Growing concerns about U.S. involvement in the European debt crisis have sent stocks sharply lower and raised fears of a double-dip recession. After the $900 billion EU bailout was announced on the evening of May 9, the Dow Jones rose to 10,880.14 in the first hour of trading the next day. But since then, growing doubts about the wisdom of the bailout have rattled financial markets. At the close of trading on June 4, the Dow stood at 9,931.97. May 2010 was the worst May for the Dow Jones since 1940.
On May 18, Rep. McMorris Rodgers and Rep. Mike Pence (R-IN) introduced a Congressional Resolution, H. Con. Res. 279, opposing U.S. participation in the European bailouts.
“Every Member of Congress should go on record – either ‘yay’ or ‘nay’ – on whether or not U.S. tax dollars should go to a Euro-TARP,” said Rep. McMorris Rodgers. “Should Congress approve our resolution, it will send a powerful signal to the Obama Administration that we cannot take this ‘too big to fail’ philosophy to a global level. The only thing ‘too big to fail’ is America itself.” [emph. ours]