House

GOP drafts bill to prevent Geithner from voting for IMF loans to EU members

by Molly K. Hooper - 05/11/10 10:51 PM ET

House
Republicans are drafting a bill that would force Treasury Secretary
Timothy Geithner to vote against IMF loans to European countries.

The
legislation is a response to the European Union and International
Monetary Fund’s bailout of Greece, and possible future aid to other
debt-ridden European countries.

The
IMF and EU have agreed to create a nearly $1 trillion fund that would
offer loan guarantees to any country that needs the help. The idea is
to prevent turbulence in financial markets and currencies given the
wariness with which traders are viewing Europe.

{mosads}The
U.S. has not offered any direct assistance to Europe, but House
Republicans say the U.S. should stand against IMF assistance as well.
The U.S. has a nearly 17 percent voting share in the IMF based on its
annual contributions.

Republicans question whether the bailout will work, and stress that U.S. tax dollars should not be wasted.

President
Barack Obama’s administration has supported the EU-IMF effort, and over
the weekend Obama made it clear that a larger support program was
necessary to ensure the Greek crisis didn’t cause more severe global
economic problems.

Some
have worried that if the crisis is not contained, it could cause a
resurgence in the global recession the U.S. is now emerging from.

Republicans
have seized on the issue to argue that the administration should not be
supporting an IMF bailout of Greece when the U.S. and several
individual states have their own budget problems. They’ve compared the
EU bailout to the unpopular $700 billion bailout of banks, other
financial institutions and auto companies known as the TARP.

Rep.
Mike Pence (R-Ind.), who is working on the GOP legislation, said
Tuesday that the U.S. doesn’t have the money to bail out the European
Union. He estimated the U.S. share of loan guarantees from the IMF is
at least $6 billion.

“Those
are American dollars being put at risk as part of a global TARP, all
with the ascent, the support and encouragement of this administration,”
the number three ranking House Republican said.

He
said the GOP bill would force Geithner to vote against any proposed IMF
“loans to any nation using the Euro as its primary currency.”

Pence also said that many members of the EU are “outright socialist countries.”

Pence
said that the time has come “to exercise tough love on Greece” and
other struggling EU members. “It’s time to make tough choices,” he
added.

Last
Friday, President Obama said that he spoke with German Chancellor
Merkel on the economic developments in the 16-nation European Union.

The
president said he “made clear that the United States supports these
efforts and will continue to cooperate with European authorities and
the IMF during this critical period.”

Tags Barack Obama