Rep. Cathy McMorris Rodgers (R-WA), the Vice Chair of the House Republican Conference, released a statement Monday saying that she would oppose any effort increase funding for the International Monetary Fund to be used to bailout European banks.
Responding to news that the IMF is looking to increase the size of the European Financial Stability Facility (EFSF) tenfold, to as much as $4 trillion as The Telegraph reported, the fourth-highest ranked Republican in the House of Representatives said the U.S. should have no role in bailing out European banks no matter the cost.
“At a time when the federal government is borrowing $5 billion every day on top of a $14 trillion national debt, we should not be funelling billions of dollars through the IMF to bail out Greece, Portugal, Ireland, and other wealthy European countries,” McMorris Rodgers said.
“The European Union was set up to be an economic competitor to the United States, and therefore, any bailout funds should come from the E.U., not the U.S. The global debt crisis was caused by too much spending and borrowing and that crisis will not be solved by more spending and borrowing. We cannot take the ‘too big to fail’ philosophy to a global level. The only thing ‘too big to fail’ is America itself.”
IMF Managing Director Christine Lagarde said the EFSF is just too small to deal with the crisis, The Telegraph reported
“The fund’s credibility, and hence effectiveness, rests on its perceived capacity to cope with worst-case scenarios,” she said. “Our lending capacity of almost $400bn looks comfortable today, but pales in comparison with the potential financing needs of vulnerable countries and crisis bystanders.”
Treasury Secretary Tim Geithner pressured European governments to increase the size of the EFSF at last weekend’s IMF meeting in Washington, though no decision on expanding the fund has been announced, and the administration has not disclosed what the U.S. contribution to that expansion would be.
The United States currently contributes 17.7 per cent of the IMF’s funding — the largest share of any single nation.
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