At today’s Financial Services Committee hearing with Treasury Secretary Jack Lew, Ranking Member Maxine Waters (D-CA) continued to express her disappointment with the Republican refusal to ratify the International Monetary Fund (IMF) quota reform package. In her remarks, Waters underscored the importance of approving the package, and laid out the harmful impact delaying these reforms will have on global stability.
Waters delivered these remarks during today’s hearing on “The State of the International Financial System.”
Her full remarks are below.
“Thank you and welcome, Mr. Secretary.
After four failed attempts by the Obama administration to win congressional approval of quota and governance reforms for the IMF, we may have to recognize a new and difficult reality.
The case for approving reforms supported by both Republican and Democratic administrations – in which the U.S. retains its unique veto power and Europe loses two seats on the executive board – would seem open and shut.
But the Fund’s most vociferous critics -- Congressional Republicans -- don’t agree. They argue that the quota change would put more taxpayer dollars at risk and weaken America’s influence within the Fund. Both claims are wrong.
In fact, the U.S. would retain its veto power and its share of the quota increase would be fully offset – resulting in almost no new costs to taxpayers.
The real risk to the U.S. lies in continued Congressional inaction, which has infuriated many of the Fund’s other member countries. In fact, last year, the G20 group of leading economies issued an ultimatum to the U.S.: approve the 2010 quota deal by year’s end or the IMF would begin to weigh options for moving forward without the U.S. In early January, the IMF’s board began to study its options.
The failure by Congress to ratify the IMF reforms is seen as a weakening of the U.S. commitment to multilateralism, spurring doubt about our leadership on global economic issues.
In response, a number of developing countries, led by China, have begun to act independently to challenge western dominance in the world economy.
Last year, the BRICS nations announced plans to launch a Shanghai-based Development Bank of their own, which they hope will rival the influence of the World Bank.
And China is also moving forward to create an Asian Infrastructure Investment Bank, to rival the Asian Development Bank.
A world in which countries such as China and Russia are increasingly acting outside the established multilateral system is one that could easily drift beyond control.
It’s ironic that some of the reasons Republicans have stated for not supporting the IMF quota package have now become the actual consequences of not supporting the package.
But the more immediate question is whether the U.S. voice will resonate within the IMF at a time when we alone have allowed a fundamental governance reform to languish in the institution.
I look forward to hearing more from you about just what is at stake.