Photo: AP Images
Dominique Strauss-Kahn’s allegedly wild weekend at a Midtown New York City hotel shook up the Executive roster at the IMF.For the immediate future, the title of The IMF’s Managing Director will fall to former First Deputy Director John Lipsky, a former JPMorgan exec.
As for whom, if not Strauss-Kahn, will take over the Fund next, here are some of the names getting tossed around:
- Former Turkish finance minister Kemal Dervis (No direct experience at the IMF)
- Pimco CEO Mohammed El-Erian (El-Arian spent 15 years at the Fund from 1984 through 1999)
- Other names that have surfaced include South Africa’s Finance Minister Trevor Manuel
- Central Bank of India headman S. Sridhar
- French finance minister Christine Lagarde
- Even former UK Prime Minister and Chancellor of the Exchequer Gordon Brown has been proposed (and sabotaged by current PM David Cameron).
But until Strauss-Kahn formally resigns (if he ever does), the main focus is on DSK’s immediate stand-in, John Lipsky.
Not surprisingly, the new boss is already getting some peremptory criticism.
Here, we answer some of those questions.
Question #1: “Who is John Lipsky and can he do the job?”
Answer: He’s from Iowa and yes, all signs point to, he can.
The 64 year-old Lipsky was born in Cedar Rapids, Iowa and attended top schools like Wesleyan University and Stanford Business School (from which he received a PhD. In Economics). He has a career chock full of international experience including two years of service as the IMF’s representative in Chile and three years as Salomon Brothers’ Director of European Economic and Market Analysis Group.
Question #2: ” Lipsky is American, but usually a European runs the IMF, right?
Answer: Correct and yes.
The quasi-formalized tradition of having a European run the IMF while putting an American at the head of The World Bank is simply that, an unofficial tradition.
While we want to steer clear of patriotic breast beating, it seems ludicrous to suggest that a proven, globally respected economic voice like Lipsky’s should be muted by a “power-sharing” agreement that allowed an accused sexual predator to head the world’s most influential macroeconomic organisation.
In addition to the professional “bona fides” listed above, Lipsky has been married to his Hungarian-born wife Zsuzsanna Karasz, for over 30 years so his familiarity with Europe is both professional and personal.
Question #3: “Lipsky planned to leave his position as Deputy this August. Does he even want this job?”
Answer: Maybe not.
Lipsky surprised almost everyone last Friday by announcing his intention to resign his post at the end of August. Even more people were caught off guard the very next day when Strauss-Kahn was arrested for an alleged sexual attack on his hotel maid.
But perhaps Lipsky’s desire to step aside signifies a type of humble self-awareness that the IMF should be looking for in its new helmsman.
However even if Lipsky is courted by the Fund, he might still retire as his family is still based in Brooklyn, New York and the grind of the job might not appeal to a man who has served for a sum total of almost two decades and made a tidy sum of money in the years that bisected his IMF stints.
Question #4: “What is the IMF and do we even need it?”
Answer: Perhaps more than ever, and no one would know better than John Lipsky.
With the global financial crisis still being felt acutely around the world and an impending food crisis looming on the horizon, a strong case can be made that the IMF’s mandate to regulate the exchange rates of 186 currencies will be vital to the recovery of smaller world financial markets and will be even more critical to regulating the cost of commodities like grain, should hunger reach epidemic proportions in Third World nations.
An economist like Lipsky, with an intellect that has led to his being hailed as “one of the top [economists] in the world right now,” and a long, intimate history with the IMF and its inner machinations, would seem to be an ideal person to create an IMF that will make its efficacy felt in the years to come.
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