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

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.


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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.”