U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

80–883 PDF 2013

EVALUATING U.S. CONTRIBUTIONS TO 

THE INTERNATIONAL MONETARY FUND 

HEARING 

BEFORE THE

SUBCOMMITTEE ON MONETARY 

POLICY AND TRADE 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

APRIL 24, 2013 

Printed for the use of the Committee on Financial Services 

Serial No. 113–17 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

GARY G. MILLER, California, Vice Chairman 

SPENCER BACHUS, Alabama, Chairman 

Emeritus 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

MICHELE BACHMANN, Minnesota 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

ROBERT HURT, Virginia 

MICHAEL G. GRIMM, New York 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

TOM COTTON, Arkansas 

KEITH J. ROTHFUS, Pennsylvania 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

GARY C. PETERS, Michigan 

JOHN C. CARNEY, JR., Delaware 

TERRI A. SEWELL, Alabama 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

PATRICK MURPHY, Florida 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

SHANNON MCGAHN, Staff Director 

JAMES H. CLINGER, Chief Counsel 

(III) 

SUBCOMMITTEE ON MONETARY POLICY AND TRADE

JOHN CAMPBELL, California, Chairman 

BILL HUIZENGA, Michigan, Vice Chairman 

FRANK D. LUCAS, Oklahoma 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. GRIMM, New York 

STEPHEN LEE FINCHER, Tennessee 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

ROBERT PITTENGER, North Carolina 

TOM COTTON, Arkansas 

WM. LACY CLAY, Missouri, Ranking 

Member 

GWEN MOORE, Wisconsin 

GARY C. PETERS, Michigan 

ED PERLMUTTER, Colorado 

BILL FOSTER, Illinois 

JOHN C. CARNEY, JR., Delaware 

TERRI A. SEWELL, Alabama 

DANIEL T. KILDEE, Michigan 

PATRICK MURPHY, Florida 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

April 24, 2013 ................................................................................................... 1 

Appendix: 

April 24, 2013 ................................................................................................... 23 

WITNESSES 

WEDNESDAY, APRIL 24, 2013 

Brainard, Hon. Lael, Under Secretary for International Affairs, U.S. Department of the Treasury ........................................................................................... 5 

APPENDIX 

Prepared statements: 

Brainard, Hon. Lael ......................................................................................... 24 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Clay, Hon. William Lacy: 

Letter to Speaker Boehner and Majority Leader Reid from the Bretton 

Woods Committee ......................................................................................... 28 

Letter in support of the IMF legislation ......................................................... 30 

Brainard, Hon. Lael: 

Written responses to questions submitted by Chairman Hensarling .......... 35 

Written responses to questions submitted by Representative Grimm ......... 37 

Written responses to questions submitted by Representative Royce ........... 41 

(1) 

EVALUATING U.S. CONTRIBUTIONS TO 

THE INTERNATIONAL MONETARY FUND 

Wednesday, April 24, 2013 

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON MONETARY

POLICY AND TRADE, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 2 p.m., in room 

2128, Rayburn House Office Building, Hon. John Campbell [chairman of the subcommittee] presiding. 

Members present: Representatives Campbell, Huizenga, Pearce, 

Mulvaney, Pittenger, Cotton; Clay, Peters, Foster, and Carney. 

Also present: Representative Royce. 

Chairman CAMPBELL. The Subcommittee on Monetary Policy and 

Trade will come to order. 

Without objection, the Chair is authorized to declare a recess of 

the committee at any time. And I will note that I am likely to be 

declaring a recess because we are estimating that votes are going 

to be called between 2:25 and 2:40 p.m.—we will recess while that 

vote series goes on. There should be no more than two or three 

votes, and then we will reconvene the hearing after that. 

Also, without objection, members of the full Financial Services 

Committee who are not members of this subcommittee may sit on 

the dais and may participate in today’s hearing. 

So, with that, I would like to turn to opening statements. And 

I will recognize myself for 5 minutes—I won’t use all of it—to recognize Under Secretary Brainard, and to thank you for being here. 

It is good to see you this afternoon. 

We are here to talk about the International Monetary Fund 

(IMF), and the potential transfer of money from the New Arrangements to Borrow, known as the NAB, to the quota for the IMF, 

which is an amount I will call $64 billion, since some estimate it 

at $63 billion and others call it $65 billion. So, I will call it $64 

billion. And apparently, the Administration is interested in this. 

But today, I think we have a lot of questions about this. And I 

don’t think that anyone up here, to my knowledge, has their mind 

made up one way or the other. 

But I do believe that we have a lot of questions. And amongst 

them are this is part of an agreement that the Administration 

made, it is my understanding, in 2010. But until the President’s 

budget came out this year, there was never any formal request for 

this transfer. So if this agreement was made in 2010, and if this 

is a priority for the Administration, why have there been no other 

2 

requests, nothing formal about this for 3 years until today, and 

even until last month. 

And even though there is something within the President’s budget, it could be argued that there still isn’t a formal request, and it 

could be argued to be a tepid request in one sort or another. 

Other questions that are raised are about why the money really 

is necessary: Why does the IMF need to expand the capital that it 

has? 

The IMF has nearly $400 billion of borrowing capacity available to it today. Does it really need another $500 billion when it is not 

using the $400 billion that it has? And if so, are there additional 

amounts that may be needed in the future beyond that amount as 

well? 

We have to look at all this in the context of our budget, of the 

budget of the United States Government. And we all know we have 

had a sequester. Some of us were late getting flights here because 

of that; whether that is justified or not is a matter of debate. But 

certainly the sequester is a matter of great discussion here in 

Washington and the Federal budget and reductions in the Federal 

budget, et cetera. And although this is often characterized as an 

exchange of assets, the United States’ contribution to the International Monetary Fund cannot be considered as a zero cost or a 

benign contribution, or something that has no impact whatsoever 

on the United States, on our budget, or on how much money we 

have to borrow through Treasury bills in order to finance things. 

So I think we have to look at all this in the context of the other 

things that we are doing now in the International Monetary Fund 

and that we are doing with the U.S. Government as well. Further, recently in the continuing resolution, there was $4.6 billion which wound up being appropriated for the World Bank. Now, 

this was an amount which had never been requested, there had 

never been a hearing, never any exposure whatsoever. I still don’t 

even, frankly, know entirely what it is because it never had any 

exposure or anything at all to this committee whatsoever and was 

merely stuck in by Senate Appropriators in the continuing resolution and then passed. That is not a correct way or a good way or 

a proper way to do this sort of appropriation, this sort of authorization with this sort of spending of U.S. taxpayer funds. So I would 

be remiss if I didn’t mention that seeing that thing go on in the 

last month or so has left some of us up here with a not particularly 

good taste in our mouth for what exactly are the Administration’s 

plans and why are they not being as forthcoming and as direct and 

as open with those plans as perhaps they could be. 

With that, I will now yield 5 minutes to the ranking member of 

the subcommittee, the gentleman from Missouri, Mr. Clay. 

Mr. CLAY. Thank you so much, Mr. Chairman, and thank you for 

holding this hearing entitled, ‘‘Evaluating U.S. Contributions to the 

International Monetary Fund.’’ 

Also, I want to thank Treasury Under Secretary for International 

Affairs Lael Brainard for appearing today to discuss the President’s 

Fiscal Year 2014 budget request. As we all know, the IMF was 

born at the Bretton Woods conference in 1944, post World War II, 

in the Great Depression, to address the concerns of allied nations. 

And the United States in the Bretton Wood Act requires congresVerDate Nov 24 2008 18:44 Jun 26, 2013 Jkt 080883 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\80883.TXT TERRI
3 

sional authorization to change the U.S. quota or shares in the Fund 

or for the United States to vote to amend the Articles of Agreement 

of the IMF or the World Bank. The U.S. Congress thus has veto 

power over major decisions at both institutions. 

Currently, the Administration has requested to authorize governance reforms at the IMF that increase U.S. quota share by $63 billion. Quotas are the primary national contribution to the IMF and 

are the foundation of country representation at the IMF. The country’s quota determines subscriptions, access to financing, and voting power. The total of all member countries’ quota subscriptions 

is $238 billion; special drawing rights, approximately $376 billion. 

In regards to voting power at the IMF, U.S. voting share is 16.75 

percent. The United States is the only country able to unilaterally 

veto major IMF decisions. And the functions of the IMF are surveillance of financial monetary conditions in its member countries in 

the world economy, financial assistance to help countries overcome 

major balance of payment problems, and technical assistance and 

advisory services to member countries. 

Due to the recent financial crisis, Congress has become more 

aware of world economics. There are many issues that Congress 

may want to consider including: should the IMF act as an international lender of last resort; are the resources of the IMF sufficient to meet its goal; and how can IMF surveillance be more effective? 

Again, Mr. Chairman, thank you so much for this hearing. I look 

forward to the witness’ testimony. 

Chairman CAMPBELL. Thank you, Mr. Clay. 

The gentleman yields back. I now recognize the vice chairman of 

the subcommittee, Mr. Huizenga from Michigan, for 5 minutes. 

Mr. HUIZENGA. Thank you, Mr. Chairman, and Ranking Member 

Clay as well for holding this hearing today. I know everyone recognizes the role that the IMF plays as far as global financial surveillance, technical assistance, and of course, as we have seen, lending, 

and a lot of it. And although the IMF membership is comprised of 

188 countries, the United States is a contributor of about 17 percent of its budget. 

There are a lot of us who fear that if there was a European default of some sort, it would put taxpayers on the hook for that 17 

percent. And, frankly, that is just not acceptable to me. It is not 

acceptable to my constituents in the Second District on the west 

side of Michigan. 

We simply have to look at the record. The IMF is—I would say 

most have recognized it as not always having its most shining moments in most eyes. Sixty-two percent of their total commitments 

are currently to Europe as a whole. Despite the IMF’s financial 

commitments to Europe, obviously stagnation has continued to constrain the European economy. Optimism that it was headed toward 

a recovery has been punctured by continued struggles in Greece, of 

course, Cypress, the botched bailout there, and the court ruling 

against the austerity measures in Portugal, and certainly a lot of 

political pushback on that. 

Most everyone believes that Europe certainly has the capacity 

and the capability to solve these issues on their own. But they simVerDate Nov 24 2008 18:44 Jun 26, 2013 Jkt 080883 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K:\DOCS\80883.TXT TERRI
4 

ply don’t seem to be willing to do that. And that is where I think 

so many people have that concern. 

Every dollar that the Congress sends to the IMF implicitly expands the IMF’s mandates from countries struggling to find that 

economic footing to nations in danger of squandering their inheritance. To be more direct, I believe the use of IMF as a backstop for 

advanced European countries calls into question whether the institution is becoming an enabling crutch instead of a helping hand for 

a lot of these countries which have gone through that. 

We simply have to look at what the Netherlands has done, and 

some of the other countries, contrasted with some of the other larger economies; some of those European countries have definitely put 

their financial house in order, and others are refusing to do so. 

As we know from our experiences in this country, guarantees can 

create moral hazards as well. And even for the most advanced nations, the freedom to succeed requires the freedom to fail and to get 

back up as well. 

What I don’t understand, and I know the chairman alluded to 

this as well, is if this funding is a priority for the Administration, 

I am a little surprised and, frankly, a bit confused as to why it has 

not been more directly budgeted up to this point. And we will see 

what the Under Secretary has to say as well with this current 

budget proposal. 

But, Mr. Chairman, I appreciate that, and Ranking Member 

Clay, I look forward to this discussion. It is a meaningful conversation on these topics, and I am looking forward to the responses. So 

thank you. I yield back. 

Chairman CAMPBELL. Thank you. The gentleman yields back. 

And now, I will yield 1 minute for an opening statement to the 

gentleman from Illinois, Mr. Foster. 

Mr. FOSTER. I hope not to use all of it. I just wanted to express 

my gratitude to Under Secretary Brainard for you making yourself 

available to me and my staff for a very good bipartisan meeting 

where I know that certainly I got all my questions answered and 

my staff was also completely satisfied. So I just want to thank you 

for really being, to my mind, very transparent and open about all 

the details that we had time to ask you. Thanks so much. 

Chairman CAMPBELL. The gentleman yields back. All opening 

statements have been completed. 

I would now like to welcome our distinguished witness, the Honorable Lael Brainard, Under Secretary for International Affairs at 

the U.S. Department of the Treasury. She served as Deputy National Economic Advisor and Deputy Assistant to President Clinton 

for International Economics; held the position of vice president and 

founding director of the Global Economy and Development program 

at the Brookings Institution; is a former associate professor of applied economics at the Massachusetts Institute of Technology’s 

Sloan School of Management; and was a former consultant for 

McKinsey and Company. She holds a bachelor’s degree from Wesleyan University, and a master’s and a Ph.D. from Harvard University in economics. I am exhausted just reading all that. 

But you will be recognized for 5 minutes to give an oral presentation of your testimony. Without objection, your written statement 

will be made a part of the record. I think you know all this, but 

5 

on your table, there is a light. It will start out green. When it turns 

yellow, you have 1 minute to sum up; and when it turns red, please 

suspend. And each member of the subcommittee will have 5 minutes with which to ask you questions once your testimony is completed. 

Under Secretary Brainard, you are now recognized for 5 minutes. 

STATEMENT OF THE HONORABLE LAEL BRAINARD, UNDER 

SECRETARY FOR INTERNATIONAL AFFAIRS, U.S. DEPARTMENT OF THE TREASURY 

Ms. BRAINARD. Chairman Campbell, Ranking Member Clay, and 

members of the subcommittee, thank you very much for taking the 

time to consider this important issue and for giving me the opportunity to discuss it with you today. On July 19, 1945, not far from 

this room, Congress provided, on a strong bipartisan basis, overwhelming support for U.S. participation as a founding member and 

key architect of the International Monetary Fund. 

Today, the President’s budget request for the IMF is vital to preserve that leadership of the United States in the IMF. The budget 

proposal will expand the core quota resources of the IMF with no 

net new U.S. financial participation in the IMF, while preserving 

the U.S. veto, the only veto, and enhancing the legitimacy of the 

institution. 

The President’s budget includes this commitment in a way that 

is fully offset and does not change the net U.S. financial participation in the IMF. We are open to working with you and other Members of Congress on any viable option to get this enacted expeditiously. 

Our participation in the IMF is an exchange of equivalent assets. 

And our claims on the IMF are fully secure. The IMF has a strong 

balance sheet, with a value of reserves and gold holdings in excess 

of total credit outstanding. As the world’s preferred creditor, the 

IMF has an excellent repayment record with no history of default. 

The IMF has the unique ability to leverage strong economic reform 

conditions as a precondition for extending credit. 

We are the only country with a veto to shape major IMF governance and resources decisions. We should carefully steward this 

privilege, especially as emerging economies, like China, seek greater influence in the coming years. 

Let me touch very briefly on the three ways the IMF promotes 

American core interests. First, the IMF is the world’s financial firefighter. When financial conflagrations strike beyond our shores, the 

IMF provides firebreaks to limit contagion, while helping our trading partners stabilize and heal their economies. By sheltering our 

economy from headwinds abroad, the IMF helps to cushion the impact on U.S. jobs, business investment, and household savings for 

college and for retirement. 

In Europe, the IMF has encouraged European leaders and the 

ECB to put in place a joint strategy backed by a strong European 

firewall which has enabled countries undertaking tough necessary 

reforms to clean up bank balance sheets and ensure ample liquidity. The IMF is now calling for a European strategy to boost demand and combat unemployment, which is important to our recovery here in the United States. 

6 

Second, the Fund’s work as peace builder helps prevent and mitigate the economic stresses that foster instability, extremism, and 

violence. In the Middle East, the IMF is helping to address longstanding impediments to sustainable and inclusive growth that are 

essential in securing democratic transitions in Arab Spring countries, such as Tunisia and Yemen, and to anchor economic stability 

in Jordan and Morocco. The United States has successfully advocated for the IMF to support spending for poor people in its lowincome country lending arrangements and to eliminate Haiti’s entire outstanding debt to the Fund, following its devastating earthquake, at no cost to the United States. 

Third, and finally, the IMF is a key global economic standard 

setter, setting standards for the open-market-based system of international trade and finance that is core to U.S. prosperity. When 

countries join the IMF, they sign up for important obligations that 

help maintain open markets and avoid beggar-thy-neighbor policies. The IMF releases public assessments of member policy frameworks to strengthen market discipline. The Fund helps investors 

better assess risks by setting international standards for the quality, timeliness, and consistency of national data reporting. Countries face censure when they fail to meet those reporting obligations, as was the case in Argentina recently. G-20 leaders committed to implement the quota and governance reforms late, by the 

end of last year. Today, only U.S. approval is necessary for these 

important reforms to go into effect. 

The IMF is one of the great triumphs of international cooperation, forged in the ashes of war in order to strengthen the foundations of peace. At its founding, the United States had more influence on the IMF’s design and operations than any other country. 

Today, it is vital we safeguard that historical legacy in the face of 

rapid shifts in the global economy. Thank you. 

[The prepared statement of Under Secretary Brainard can be 

found on page 24 of the appendix.] 

Chairman CAMPBELL. Thank you, Secretary Brainard. 

The Chair recognizes himself for 5 minutes for questioning. 

Let’s first talk about what this costs. You talked about an exchange of assets, suggesting that perhaps there is little or no taxpayer risk or no cost to this. We are not the CBO. But my understanding is that if we move this $64 billion from the NAB account 

to the quota, it requires a quarter of that to be paid in capital, 

which actually requires a check from the U.S. Treasury. Is that inaccurate? 

Ms. BRAINARD. The IMF quota reserve tranche position is an exchange of assets. So we have a reserve position at the IMF, which 

is fully liquid and encashable. It is viewed as a one-for-one exchange of assets, and has been for the decades that Congress has 

supported U.S. participation in the IMF. 

Chairman CAMPBELL. Okay. I understand. But we do have to 

have 25 percent paid in capital for the quota. I understand what 

you are saying, an exchange of assets. But technically, if I buy this 

table, it is an exchange of assets, cash for the table. So every transaction, in a sense, is an exchange of assets. But we do actually 

have to send roughly $16 billion there, which will have to be borrowed. Isn’t that correct? 

7 

Ms. BRAINARD. The way it operates is that we have access to our 

liquid assets that sit at the IMF. And, in fact, we have drawn on 

them in the past. So, in that sense, it really is truly an exchange 

of liquid encashable assets. And it is been viewed for decades by 

Congress as something that for those reasons does not warrant outlays. 

Chairman CAMPBELL. Okay. I really have a hard time—I guess 

it must be this 25 percent paid in capital because you haven’t actually answered that particular question. But assuming that is correct, it is hard for me to sit here and say, all right, this is a $64 

billion investment that somehow doesn’t take any cash, doesn’t 

take anything, and there is absolutely no risk to the U.S. taxpayer. 

Gosh, why don’t we send them a trillion dollars, then? I don’t think 

that is something that passes the smell test, frankly. 

Ms. BRAINARD. So the way that this has always been treated, 

with one exception in 2009, by Congress, is, because it is quite a 

unique arrangement, because the IMF reserve tranche of the 

United States is a liquid encashable part of our reserves, it has always been treated as not necessitating outlays of any kind. 

Chairman CAMPBELL. Okay. Let me go on to something else, 

then. We may be disagreeing on that. 

It is also my understanding that the IMF right now has $400 billion in available lending capacity. I believe with the U.S. interests 

and then the other countries’ interests, it would increase their capacity by about another $500 billion. Why does the IMF need more 

money to lend when they aren’t lending the money they have? 

Ms. BRAINARD. I would say, first of all, that while this is a very 

modest expansion of the overall resources of the Fund, it is primarily a transfer from the standing backstop, the NAB, to the core 

quota resources of the Fund. And we view that as important because it is in the core quota resources of the Fund that we have 

our veto and that is the core central operations of the IMF. 

Chairman CAMPBELL. Okay. But why does it need it there potentially to loan more? Because there is a different threshold for loaning money out of the quota than there is out of the NAB. 

Ms. BRAINARD. For the purposes of the IMF voting shares, of 

course, it is the core quota resources of the Fund that we think are 

critically important. The second thing you asked about, the overall 

size of the Fund, the size of the Fund in relation to the world economy has actually slipped pretty considerably from closer to 1 percent of world GDP to approximately half of a percent of world GDP 

today. So our sense is that for the reasons that we all believe 

strongly, because the IMF is a crucial financial firefighter that protects our jobs, because the IMF protects U.S. national security, and 

because the IMF helps to ensure open and transparent international financial markets, we think it is important that the Fund 

be adequately resourced relative to the size of the global economy. 

Chairman CAMPBELL. Thank you, Under Secretary Brainard. I 

want to keep myself and everybody else on time, if we can. 

Mr. Clay is recognized for 5 minutes. 

Mr. CLAY. Thank you, Mr. Chairman. 

Madam Secretary, before I get into the contributions to the IMF, 

as you know, our neighbor to the south, Haiti, experienced a devastating earthquake on January 12, 2010, that killed more than 

8 

300,000 people, left over 1 million homeless, and crippled the ability of the Haitian government to provide security and deliver services. In the wake of the disaster, the American people and the global community rallied in solidarity with the Haitian people to provide one of the largest relief efforts in history. As the Center for 

Economic and Policy Research points out in a recent report, despite 

billions of dollars pledged to build back better in Haiti, more than 

350,000 Haitians remain internally displaced, and it is unclear 

what sustainable impact our funds have had. Congress has a responsibility to ensure that relief and reconstruction funds in Haiti 

are effectively spent to maximize long-term impact. Can you tell us 

about the status of efforts in Haiti or provide this committee in 

writing a report on the progress in Haiti since the disaster? 

Ms. BRAINARD. Let me just speak briefly about the parts of that 

effort that Treasury is responsible for overseeing. As you say, Haiti 

experienced a devastating earthquake, and there was strong bipartisan support here in Congress and certainly in the Administration 

for helping Haiti to build back better from that. Through the IMF, 

that led to full debt relief for Haiti, which we think was extremely 

important. Also, through the multilateral development banks, 

working hand in hand with our bilateral assistance windows 

through the U.S. Agency for International Development (USAID), 

we put a great emphasis on moving quickly to help Haitian families recover and rebuild. And the Inter-American Development 

Bank (IDB), in particular, we were able to secure agreement 

around debt relief there that released $200 million annually for 10 

years of cash assistance, of grant assistance to Haiti. And we are 

in the third year of that funding today. That funding has gone toward helping to create more private sector employment, and trying 

to help rebuild devastated communities. We are frustrated, as you 

are, that those efforts are as difficult as they are, but we are very 

committed to continuing the hard work that needs to be done. 

Mr. CLAY. Would you be able to supply this committee with 

something in writing assessing the progress that has been made in 

rebuilding? 

Ms. BRAINARD. I would certainly be happy to do so, again, with 

regard to the parts of our assistance efforts for which Treasury has 

responsibility. 

Mr. CLAY. Going back to the budget request, do you believe that 

United States involvement is required to help play a role in balancing the world economy? Just a general question. Let me hear 

your thoughts on that, please. 

Ms. BRAINARD. The IMF is absolutely core to advancing American values and interests around the world. It is designed in a way 

that I think gives us disproportionate influence in the way that 

countries prevent and respond to financial crises. And, again, helping sustain the international system of trade and finance that is so 

vital to our economic system. I think if the United States were to 

walk away from this agreement, it would lead to other countries 

finding alternative arrangements and a devastating loss of U.S. influence in the international financial system. 

Mr. CLAY. With the uncertainty of global economic status and the 

results of the recent financial crisis, please explain why the U.S. 

involvement with the IMF is necessary. 

9 

Ms. BRAINARD. I think it is a illustrative period in history. In the 

wake of the financial crisis, which led to unprecedented collapses 

in trade around the world, in 2009, the G-20 leaders came together, 

and they asked the IMF to do more. And they had very strong bipartisan support from Congress in helping ensure that the IMF 

would have adequate resources to do that. As a result of the efforts 

through the IMF and through the other multilateral development 

institutions, trade was restored quickly, financial flows, which were 

collapsing in many emerging market countries were reversed— 

Chairman CAMPBELL. Secretary Brainard, if I could ask you to 

wrap up? 

Mr. CLAY. My time is up, and I yield back. 

Chairman CAMPBELL. The gentleman yields back. 

They have called the votes. I think we will do one more set of 

questions here, and then we will recess at that time for this series 

of votes, and then we will come back and continue with Mr. Foster. 

So, right now, I will recognize the gentleman from Michigan, Mr. 

Huizenga, for 5 minutes. 

Mr. HUIZENGA. Thank you, Mr. Chairman. 

Under Secretary Brainard, do you believe the IMF has been successful? 

Ms. BRAINARD. I think the IMF has been successful in advancing 

core economic interests and values and that the right way to assess 

the value of the IMF is the extent to which we have seen rapid rebounds from major financial crises abroad and the extent to which 

we have managed to shelter jobs and investment savings here at 

home from those events. 

Mr. HUIZENGA. And that would be sort of your definition of success? 

Ms. BRAINARD. We have a broader set of interests. As I stated 

earlier, the IMF was critically important, for instance, when countries like Poland came into the community of market democracies 

after many years. The IMF has been extremely important in helping advance our national security. And today, it is playing a role 

helping to provide economic foundations for the political transitions 

currently underway in Arab Spring countries and, of course, again, 

in helping to ensure an open international financial and trade system. 

Mr. HUIZENGA. But we know most of their activity is not in the 

Arab world, it is not in Haiti, it is not in these other places. The 

sixth largest commitments and/or loans that are out there are 

Greece, Ireland, Portugal, Mexico, Poland, and Colombia. You can 

make the argument that at least four of those should be able to do 

this just fine on their own. With Colombia and Poland, as you point 

out, there might be some issues. 

But I am concerned because it seems to me that their operations 

really ought to be grouped, and I think I talked about this in my 

opening statement, technical assistance, surveillance of what is 

happening, and then the lending part. 

So it is one of three. And I think if we look at the surveillance, 

with the IMF monitoring the economic and financial policies of its 

member countries to identify possible risks to financial stability 

and offer advice on policy adjustments. Just look at Europe. It 

seems to me that is a failing grade there. 

10 

Technical assistance: The IMF provides technical assistance and 

training to help its member countries strengthen their capacity to 

design and implement effective policies. And whether it is assistance in monetary and financial policies, fiscal policy and management, statistical data compilation, economic and financial legislation, I haven’t seen that out of there either. 

It is the third thing, the lending, that you are pointing to as the 

definition of success. And, to me, that is a part of that definition. 

It would seem to me that they need to be doing all of the others. 

I am sure that they are surveilling this and monitoring it, but I 

have not seen much success, by that definition. 

Ms. BRAINARD. I think it is very important that we do not define 

the IMF primarily as a lending institution. It is extremely important. 

Mr. HUIZENGA. But didn’t you just do that? 

Ms. BRAINARD. I believe, in fact, that the emphasis I have tried 

to place in the discussion here today, and certainly in our engagement in the Fund, is very much on the activities of standards setting and surveillance of implementation of those standards. 

Mr. HUIZENGA. Have they been successful on that? 

Ms. BRAINARD. Just recently, the IMF censured Argentina for not 

releasing public data according to internationally acceptable standards. 

You mentioned commitments to Mexico, Poland, and Colombia. I 

think it is important to recognize those are conditional commitments. And, in fact, none of the three countries has drawn a cent 

from those three conditional commitments. They are really intended as a certification of the really outstanding policies, economic 

policies those countries— 

Mr. HUIZENGA. Just a moment. You can’t have it both ways. And 

here is how you are trying to have it both ways. In this particular 

instance, you are saying, well, this really doesn’t cost anything. It 

is just a commitment. It is really nothing that needs to be accounted for. Yet we are hearing, from this request, no, no, we need 

this additional money in because we can’t subject this to phantom 

accounting. And it seems to me that you are being inconsistent on 

that particular point. 

Ms. BRAINARD. Let me just read you a quote; I think it is a really 

good quote: ‘‘The IMF is not foreign aid and the requested funds 

are not being given away. We will have additional drawing rights 

in that amount from the IMF. The sum we are asking Congress to 

approve does not increase our budget. The IMF and its programs 

help keep Americans at work.’’ 

That is a quote from President Ronald Reagan in 1983. 

The emphasis that we are placing today on the IMF and the way 

that we are asking for bipartisan support for this very important 

commitment is absolutely consistent with bipartisan leadership, 

both in the Executive Branch and in the Congress, over the many 

decades the IMF has helped strengthen the world’s economy and 

our economy. 

Chairman CAMPBELL. Thank you, Madam Secretary. 

The gentleman from Illinois, Mr. Foster, wants to try and 

squeeze in a question before the vote. So I will recognize you for 

5 minutes, and hope you don’t take it all. 

11 

Mr. FOSTER. That is my plan. Could you briefly walk us through 

the sequence of events that could, in principle, lead to a taxpayer 

loss from this commitment and highlight any differences before and 

after the proposed transfer from the NAB to the quota? 

Ms. BRAINARD. Yes. I think the record is pretty compelling in 

this regard. Since 1945, there has been no taxpayer loss on the 

IMF. The IMF has a very unique balance sheet. The IMF’s reserves 

and gold outstanding exceed total credit outstanding. Again, the 

way this has traditionally always been viewed, and it is viewed in 

every other country, is an exchange of assets, where the U.S. position in the IMF is fully liquid and encashable. And when the IMF 

itself—again, we are not exposed directly to borrowing countries; 

we are exposed to the balance sheet of the IMF. But when the IMF 

extends credit, it is quite unique in being able to set the policy 

framework in which the lending takes place so that there has never 

been a default on an IMF— 

Mr. FOSTER. I understand the historical record. But if you are to 

be infinitely skeptical, can you define a series of events, a bunch 

of unwise lending by the IMF followed by a sovereign default or 

whatever it is, what sequence of events might in principle lead to 

a taxpayer loss? And would there be any differences before and 

after the proposed transfer? 

Ms. BRAINARD. So for all the reasons that I suggested—the rock 

solid balance sheet, the nature of our claims—it is very difficult to 

specify circumstances under which the U.S. taxpayer might actually lose money. And, again, these are commitments that we ourselves have access to in times of liquidity duress. 

With regard to differences, the NAB is a permanent standing 

backstop. So, in that sense, it is simply a transfer from one window 

of the IMF to another. The only difference in the way that the two 

mechanisms operate is that there is a reserve position associated 

with a quota. We earn interest on that. It is part of our set of liquid assets to which we have access. 

Mr. FOSTER. I understand. I was just fishing for any scenario— 

so you are saying that there is not any scenario that you could— 

Ms. BRAINARD. I couldn’t rule out hypothetically— 

Mr. FOSTER. Just describe one scenario. 

Ms. BRAINARD. It is difficult because of the number of safeguards 

to see that kind of a scenario coming to pass. 

Mr. FOSTER. Okay. Thank you. I yield back. I have to go vote 

now. 

Chairman CAMPBELL. Thank you, Mr. Foster. 

The subcommittee will now be in recess until after these votes. 

[recess]. 

Chairman CAMPBELL. The subcommittee will reconvene. 

I thank Under Secretary Brainard very much for your indulgence 

during these votes. 

And I will recognize the gentlemen from New Mexico, Mr. 

Pearce, for 5 minutes. 

Mr. PEARCE. Thank you, Mr. Chairman. 

And thank you, Madam Secretary, for your presence here today. 

One of the things that I continue to hear no matter who is testifying about the IMF is that we have never had a bad loan. Have 

any of the terms ever been changed on any of the loans? 

12 

Ms. BRAINARD. There has never been a restructuring of the 

loans, although, of course, programs do change as macroeconomic 

conditions evolve and— 

Mr. PEARCE. So, you are saying we have never had a change in 

loan terms? Have we ever written down any loans? 

Ms. BRAINARD. Loans have not been written down at the IMF. 

Mr. PEARCE. Okay. And have we ever extended maturity dates? 

Ms. BRAINARD. Normally, what would happen is you might have 

a new program coming in, and that would be the more normal way 

of doing things at the IMF. 

Mr. PEARCE. Yes. Since that doesn’t translate to New Mexico 

talk, I will just say that it sounds like we probably have. And 

Christine Lagarde was here sitting out there right where you are, 

except it was a very small gathering, kind of intimate, quiet, after 

hours, no press, and she said absolutely that loan terms have been 

changed, that loan amounts have been written down, they extended 

maturity dates, all to avoid default. 

And so when I hear that the taxpayers never lost a dime, that 

is kind of a curious position, because when I think, has a taxpayer 

ever lost a dime, we have never asked for the money back? And so 

it is like the money I have loaned my brother through the years 

and I never get it back, but I haven’t technically lost it. I suspect 

I could go and squeeze him and maybe get part of it, but I can’t 

declare it a loss. And I get the feeling that our defensible position 

here is that we have never asked for money back and so we have 

never really—we have put a lot of money in. 

So this idea that Greece is going to make good on its loans, 

maybe in 100 years, maybe not. They are not paying their taxes. 

That is the reason they are having problems. 

And my difficulty is I have to go back and explain to people who 

make $31,000 a year, on average, in New Mexico—we are 47th per 

capita in income—why they are going to pay taxes to bail out 

Greece when its own citizens won’t pay taxes to bail out Greece. 

So, that is a pretty hard sell. And, likewise, Ireland—go ahead. 

Ms. BRAINARD. I was just going to say, you won’t need to make 

that sell. The arrangements that we have with the IMF are with 

the IMF. And so, in fact, U.S. taxpayers are not making loans— 

Mr. PEARCE. That is funny, because I see a $63 billion request 

here in the President’s budget. Is that correct, that we are going 

to send $63 billion? The fact that they may get it back someday, 

I might get my money back that I lent to my family, but maybe 

not also. 

Ms. BRAINARD. Yes. No, it is not a bank. We have a reserve position in the IMF. We have a one-for-one exchange of reserve assets. 

And, in fact, we have a liquid position in the IMF that we can and 

have drawn on, and so it is quite a different kind of institution. 

And the reality is that if every loan from the IMF were to default 

tomorrow, the gold and reserves position at the IMF is more than 

adequate to completely cover all of that. So it is a very different 

kind of institution. 

And, again, the history here is that because of the IMF’s preferred creditor position, unique preferred creditor position, because 

of the strength of its balance sheet and because it sets program 

13 

conditions, we have never had countries that actually borrow from 

the IMF default. 

Mr. PEARCE. If I could reclaim my time— 

Ms. BRAINARD. So it is a very different kind of institution. 

Mr. PEARCE. —because it is winding down pretty quickly. I suspect that if we, the American taxpayer, went back and asked for 

our money back, all the money we have sent through the decades, 

I suspect that we could not get our money back no matter how 

strong the balance sheet is. I suspect—I remember, in 2008, we 

were sitting in this body and we were told that we needed to bail 

out Fannie Mae and Freddie Mac, that they are actually pretty 

solid, but we just need to guarantee those loans, and if we guarantee them, we won’t have to do them. We are about $200 billion 

deep into that pool right now. I remember a firm called AIG. I remember the four rating agencies and the insurance firms that had 

less than $1 for every dollar that they insured, and they collapsed 

right in front of our eyes. 

And so, when I am telling the New Mexico taxpayer that we are going to send $63 billion, forget whether they actually are giving 

it to them or not, we are going to write a check, and they wrote 

a check to make that happen, I have a really hard time selling 

that, because they are worried about what we are going to do in 

this country to keep us afloat. 

Thank you, Mr. Chairman. I yield back. 

Chairman CAMPBELL. Thank you. 

I now recognize the gentleman from Delaware, Mr. Carney, for 

5 minutes. 

Mr. CARNEY. Thank you, Mr. Chairman. 

Thank you, Ms. Brainard, for being here with us today. 

I was at that meeting, the informal meeting we had with Christine Lagarde as well, with the gentleman, Mr. Pearce, and I remember her saying that the member nations had never experienced a loss as well, consistent with what you said today. 

But Mr. Pearce asked a pretty relevant question, and that is, 

what is the relevance of the IMF to ordinary Americans? I think 

you touched on it a little bit in some of your opening comments, 

particularly when you talked about it being a firewall in protecting 

U.S. commerce and U.S. workers. 

Could you talk about that a little bit, why you think that this 

investment and our involvement in the IMF is important for U.S. 

workers? 

Ms. BRAINARD. I think the history at the IMF has been that 

there has been strong bipartisan support from Presidents from both 

parties, and Members on both sides of the aisle in recognition that 

we created this institution in part because we thought it was vital 

to both U.S. national security and economic interests. 

When there are massive financial conflagrations abroad, the 

IMFs ability to go in and to create a fire break to help countries 

to stabilize their economies and to grow means that the financial 

contagion is limited, and as a result, Americans don’t suffer risk to 

their college savings, and their retirement savings. Business investment here falls much less than it would otherwise and our jobs 

are preserved. And we saw that in 2009 when Congress had the 

foresight to support the new arrangements to borrow, and we have 

14 

seen that repeatedly in the Asian financial crisis, in Latin America, 

with Italy and the U.K. in the 1970s during the oil crisis. 

Mr. CARNEY. Somebody mentioned earlier today—I think it was 

Mr. Huizenga—that the six largest loans were Greece, Ireland, Portugal, Poland, Colombia, and I don’t know what the others were. 

Please briefly comment on the protection that those loans might 

be providing for U.S. workers and commerce here in the United 

States. 

Ms. BRAINARD. We need to distinguish between Poland, Mexico, 

and Colombia, which just have credit lines with the IMF. 

Mr. CARNEY. Okay. 

Ms. BRAINARD. And, in fact, that reflects their really outstanding 

macroeconomic performance. They haven’t drawn a penny from 

those lines. 

In the case of Greece, Portugal, and Ireland, as you will remember, just as our economy was starting to gain strength, financial 

stress in Europe began to transmit to our financial markets, and 

we saw that equity values fell, and we saw that funding markets 

were also stressed here, until the IMF, working with the euro area, 

came in and helped these countries put in place programs to stabilize their economies. 

Mr. CARNEY. So, in some ways, this is like a hedge against contagion or against negative impacts on our own economy, which 

would affect the men and women in my district who make $40,000, 

and the men and women in Mr. Pearce’s district and other districts 

who make middle-income wages. Would that be your view? 

Ms. BRAINARD. Exactly. It is a cushion. We help to cushion our 

economy from negative impacts from abroad through the IMF. 

Mr. CARNEY. So why is the Administration supporting this particular change? Could you speak on that briefly? 

Ms. BRAINARD. Yes. 

Mr. CARNEY. My time is running short, but— 

Ms. BRAINARD. This is no net new financial participation on the 

part of the United States. We think this is important because it 

strengthens the core of the IMF, which is where our veto sits, and 

it will help strengthen the core resources of the IMF and also make 

sure that our veto remains secure. Again, we are the only— 

Mr. CARNEY. Does that mean we have more say over what our 

funds, what our investments or how our investments are being 

used or— 

Ms. BRAINARD. We are the only country in the world that can 

veto changes in governance or in resources, the only country in the 

world. And secondly, we do have, through the quota, outsized influence on the policies of the IMF that we, I think, would see slip 

away if we did not step up and act. 

Mr. CARNEY. So the consequences of not approving this could be 

that we would lose influence or— 

Ms. BRAINARD. Yes. I think the consequences of not going forward and supporting this change in the IMF, again, no net new financial participation by the United States, would be to lead to 

more arrangements going outside of the quota, the IMF would 

spend more time raising bilateral loans from members that— 

Mr. CARNEY. Where we have less say. 

Ms. BRAINARD. We would absolutely have less say. 

15 

Mr. CARNEY. Thank you very much. My time is up. 

Chairman CAMPBELL. Thank you. The gentleman yields back. 

Now, I would like to yield for a moment to the ranking member 

for a unanimous consent request. 

Mr. CLAY. Thank you, Mr. Chairman. I ask unanimous consent 

to submit into the committee record two letters: one from the 

Bretton Woods Committee, with a list of signees; and another letter 

stating their support for the Administration’s request. 

Chairman CAMPBELL. Without objection, it is so ordered. 

Now, I yield 5 minutes to Mr. Mulvaney, the gentleman from 

South Carolina. 

Mr. MULVANEY. Thank you, Mr. Chairman. 

Secretary Brainard, I would like to go back to a question that I 

thought was well-phrased by my friend, Mr. Foster, before we took 

the break, which was, can you foresee circumstances under which 

taxpayers would be on the hook for IMF loans? I think your answer, and I don’t want to put words in your mouth, was that it 

would be difficult. I would respectfully suggest to you that doesn’t 

answer the question. Can you foresee circumstances under which 

the taxpayer would be on the hook for these loans? 

Ms. BRAINARD. Again, let me just say if all the credit outstanding 

today were to go into default—of course we have never seen a default—today, the reserves and the gold holdings of the IMF would 

be more than sufficient to completely cover all of those claims. So 

for that reason, it is extremely hard to envision circumstances 

where the U.S. taxpayer would be in any way at risk. And, in fact, 

again, the IMF is for us a—we have a liquid claim on the IMF 

where if we needed to do so, we would have access to those resources as well. 

Mr. MULVANEY. Okay. Let’s move on to another part of your testimony, which was—and I may have misheard it, so I had them actually take a look at the transcript during the break, because either I heard it wrong or you and I are saying different things about 

different parts of the IMF, which is that you said it is in the core 

resources of the Fund that we have our veto. 

My understanding was that we have a veto on the NAB account 

in terms of new activities, activating the account. If we are going 

to lend money out of the NAB, we have a veto there, but that our 

veto in the quota account, what I think you called the core account, 

exists mostly to do with the governance of that account and the 

paid-in shares, the quotas, and that a loan out of the quota account 

is not subject to our veto. Do I have that correctly or not? 

Ms. BRAINARD. That is right. Loans from both the NAB and the 

IMF are subject to majority votes. 

In the case of bilateral loans, however, because we don’t participate in bilateral loans, and as you know, the IMF has recently 

amassed $460 billion of bilateral loans, because the quota had not 

been fully put in place, we don’t have any kind of veto in that 

arena of activities. 

Mr. MULVANEY. So if we move the $64 billion out of the NAB account into the core account, what I am calling the quota account, 

we would not have veto rights over the subsequent lending of that 

$64 billion out of the quota account? Is that a true statement? 

16 

Ms. BRAINARD. We will have a veto on governance and resources, 

but not on each individual loan, as has always been the case. 

Mr. MULVANEY. Right. So if the IMF decides to take the $64 billion, along with all the other contributions from the other countries 

under this same program, and lend that out, we will not have a 

veto over that particular process? 

Ms. BRAINARD. We will have—that is right. It is a majority vote. 

And we have a 17, slightly above 17 percent share on those. So it 

is— 

Mr. MULVANEY. All right. I want to go to—again, I am struggling 

with why we are doing this. I may have just hit upon it, because 

now essentially we won’t have a veto right over the loan in the future, but your testimony is interesting. It says this deal that we 

are talking about will also allow the United States to accept an 

amendment to the IMF articles of agreement facilitating changes 

in the composition of the IMF executive board while preserving a 

U.S. board seat and veto. 

By the way, just coincidentally, this morning Jack Lew said almost exactly the same thing. He said the legislation will allow, et 

cetera, et cetera, preserve the U.S. board seat. He didn’t mention 

the veto in his testimony this morning. 

I ask you, why are we doing this, and why can’t we preserve our 

U.S. board seat and our veto without doing this? 

Ms. BRAINARD. We will maintain our board seat and our veto, 

but we will be the only country not to move forward with an agreement that we believe to be in the U.S. interest. And we will, I believe, by doing that, contribute to the erosion of that core voting arrangement, core resources of the IMF, which is and has been at the 

center of the International Monetary System and— 

Mr. MULVANEY. Fair enough. Tell me, then, why— 

Ms. BRAINARD. —will undermine U.S. leadership. 

Mr. MULVANEY. And I am sorry to cut you off, but you know we 

are under these tight time constraints. 

Tell me why it is in our best interest, when we could loan money directly out of net—we could loan the $64 billion. Again, I know it 

is a number that may not be accurate, but we could loan it out of 

the NAB. We have done it in the past. Okay? We could loan it out 

of there today subject to our veto. Once we move it into the quota 

account, we won’t have that veto. Why is it in our interest to move 

that $64 billion essentially into an account that we no longer have 

unilateral veto over? 

Ms. BRAINARD. I think it is important to say that the veto that 

you are talking about, the NAB, is only on activation. 

Mr. MULVANEY. Correct. 

Ms. BRAINARD. It is not on—it is not any different in that sense, 

then, in the core resources of the Fund. It is only on activation; it 

is not on the individual program decisions. So I think that distinction is not there. 

It is in our interest because for us, the quota is the core governance mechanism of the IMF. The IMF is a quota-based institution. 

And to the extent that we want to continue to have the IMF be at 

the center of the system and not have our influence eroded by ad 

hoc arrangements like bilateral loans, it is very important for the 

United States to sustain— 

17 

Mr. MULVANEY. But we have made loans out of— 

Ms. BRAINARD. —and support international agreements around 

the world. 

Mr. MULVANEY. We have made loans out of the NAB account in 

the past without running them through the quota account, correct? 

That ability is available to us? 

Ms. BRAINARD. The additional piece that I am referring to is bilateral loans directly to the IMF from other countries that the 

United States did not request and is not participating in. 

We think it is very much in our interest to shift back to the 

model of the IMF as focused on its core quota resources. And this 

agreement will do that, again, at no net new financial participation 

on the part of the United States. 

Mr. MULVANEY. Thank you. 

Chairman CAMPBELL. The gentleman’s time has expired. 

The gentleman from North Carolina, Mr. Pittenger, is now recognized for 5 minutes. 

Mr. PITTENGER. Thank you, Mr. Chairman. 

Madam Secretary, thank you for being with us. Tell me, in what 

developing countries in Africa and also in the Arab world, Arab 

Spring countries, has the IMF played a role? 

Ms. BRAINARD. The IMF is very actively engaged with all of the 

Arab Spring countries and other important Arab countries in the 

region that we think are vital to our strategic interests and vital 

to the future stability of that region. 

Mr. PITTENGER. Could you kindly outline those? 

Ms. BRAINARD. Yes. The IMF has concluded and is currently active on a very important program with Jordan. The IMF has negotiated an important program with Morocco. The IMF has negotiated an important program and is in ongoing discussions with Tunisia. And, of course, as you know, today discussions between 

Egypt and the IMF are ongoing. We think Egypt’s discussions with 

the IMF are vitally important for successful transition in that context. And, of course, the same has also been true in Yemen, where 

the IMF has negotiated an agreement. 

Mr. PITTENGER. Madam Secretary, are there political and governmental structure parameters, philosophies that are required for 

IMF funding? 

Ms. BRAINARD. The IMF, when it engages with its members, focuses on the macroeconomic policy framework, so that they are 

generally engaged in designing programs that create investor confidence, where private sector capital plays the dominant role. It is 

also very important that IMF agreements command broad legitimacy in the system, and so they will often, before completing a negotiation, make sure that opposition as well as current government 

representatives have participated in discussions so that the conditions of the overall program are ones that are broadly accepted in 

society. 

Mr. PITTENGER. Are American interests part of the purview of 

those who represent us in the IMF, particularly as it relates to any 

measure or role we play that could also be counterproductive? 

Ms. BRAINARD. I think the United States has always played, both 

directly through its large shareholding position and indirectly because of our leadership position, an active engagement with the 

18 

IMF, a disproportionate role in terms of where the IMF is active 

and also how it moves forward, for instance, ensuring that its programs are broadly legitimate, that they lead to market-based 

growth. As I noted earlier, the IMFs function of ensuring that 

countries publish accurate, timely data in accordance with IMF 

standards is critically important for investors and for the broader 

international trade and financial system. IMF members take on obligations to maintain open trade accounts and not to engage in beggar-thy-neighbor policies. And the IMF publishes reports on every 

member every year to that set of obligations. 

So we believe it is very much advancing our interests, and so do 

the many former Treasury Secretaries and Secretaries of State and 

Presidents, both Republican and Democratic, who have testified on 

behalf of the IMF. 

Mr. PITTENGER. We have had, I think you would acknowledge, a 

history of foreign aid and military assistance that has ultimately 

become counterproductive. Would you agree with that? 

Ms. BRAINARD. I think it is important to distinguish—and earlier 

I read a quote from Ronald Reagan, who said this even more directly: The IMF really is not foreign aid. 

Mr. PITTENGER. I understand that. No. I am just making that 

connection. 

Ms. BRAINARD. Yes. 

Mr. PITTENGER. I am saying we have been proactive in areas, 

well-intended, that had incompatible conclusions that were not 

what we had purposed to have achieved. 

Ms. BRAINARD. That may well be true. I think with reference to 

the IMF and its current programs, again, we have had a great deal 

of influence, and we believe that they support our national interests. 

Mr. PITTENGER. Thank you. 

Chairman CAMPBELL. The gentleman yields back. 

And I believe our final person to ask questions—we had asked 

unanimous consent earlier for Mr. Royce, who is not a member of 

this subcommittee, but is a member of the full House Financial 

Services Committee and, more importantly, is the chairman of the 

House Foreign Affairs Committee. So Mr. Royce, the gentleman 

from California, is recognized for 5 minutes. 

Mr. ROYCE. Chairman Campbell, thank you. Thank you very 

much for doing that. And thanks for this hearing. 

I did want to ask a question about IMF governance. The United 

States has the largest quota at the IMF. We are no longer the largest IMF contributor, because of the big increase in bilateral borrowing agreements, but the IMF now has bilateral agreements 

with 20 countries, including China, France, Germany, and Saudi 

Arabia that exceed $400 billion. And the continued reliance on borrowed funding has an effect, and in a way it threatens the longterm legitimacy of the quota-based IMF. 

Many argue that countries with the largest bilateral agreements 

with the IMF have the most influence, and the decisions are being 

made with those countries behind closed doors rather than being 

made transparently at the executive board. 

So I would just ask your view. Do you think that the bilateral 

agreements are undermining U.S. influence at the IMF? Is the 

19 

United States losing ground on policy issues, such as how the IMF 

treats currency manipulation, capital controls, fiscal policy? That is 

primarily my interest here. 

Ms. BRAINARD. I will say that I share your concern that if the 

IMF were to move in a direction where bilateral loans became the 

predominant mechanism for funding, that would be a concern, and 

that is the reason we think it is extraordinarily important to have 

bipartisan support for the agreement we negotiated at the IMF, 

which will put the focus back on the core quota resources. 

The areas that you cited, currency manipulation and capital markets openness, responsible fiscal policies, those are the core areas 

where we think the IMF’s influence is extremely important to us, 

to our national interests, and we think the quota-based center of 

IMF governance should continue to be the dominant arena, which 

is, again, why we would like to see Congress move forward on this. 

Mr. ROYCE. Yes. One of the difficulties is that on these very 

issues, we do not necessarily have the same perspective as those 

countries with growing influence who have a very different take on 

fiscal policy, certainly a different take on capital controls, right, 

currency manipulation. In a way, we have the fox guarding the hen 

house on some of these issues. 

Let me ask you another question, and that is about alternative 

institutions that are developing. The Europeans created the European Financial Stability Facility, and then the European Stability 

Mechanism, which have already been tapped by Cyprus and by 

Greece, by Ireland and Portugal. Separately, as an alternative to 

the World Bank, Brazil, Russia, India, China, and South Africa are 

all in joint discussions about creating their own development bank. 

How does the creation of alternative institutions impact the IMF 

and the World Bank, and maybe from a perspective of our global 

leadership? 

Ms. BRAINARD. I think we are very mindful that these institutions were created at a moment of unique power and influence of 

the United States in the world and the global economy, and that 

today, we continue to enjoy privileges that were associated with our 

being there as the architect and the leading proponent of their creation, and we think that it is extremely central in America’s interest to continue making the IMF and the World Bank the center of 

the international financial system. 

I would distinguish in the case of the European Stability Mechanism, that is working hand in glove with the IMF. And, of course, 

we encourage the Europeans to be the primary source of funding 

to defend their own monetary union. They have the capacity, and 

we thought it was extremely important for them to demonstrate to 

markets that they were going to stand behind their monetary 

union. So the IMF is a minority funding partner in those programs. 

It is only about $1 to $5 of European funding for every $1 of IMF 

funding, but I will say the IMF is an equal partner when it comes 

to design of programs. And we think that is extremely important. 

But I agree with you that as emerging markets talk about creating alternative financing arrangements completely outside the 

purview of the global institutions that we were so central in creating, it should give us pause, and we should recommit, I think, to 

20 

the institutions that we, on a bipartisan basis, have spent so much 

time strengthening. 

Mr. ROYCE. Mr. Chairman, if you could indulge me, there is one 

thing I don’t know the answer to, and I was just going to ask, do 

either of those European institutions, those new institutions, have 

any access by way of a call on the IMF? Is there a backstop in any 

way? 

Ms. BRAINARD. No. The European member states are members of 

the IMF in their own right. And then the European Stability Mechanism and its predecessor were euro-area financed mechanisms. 

Mr. ROYCE. But neither de facto nor— 

Ms. BRAINARD. There is no direct call on the IMF. And we would 

not have supported such a call. 

Mr. ROYCE. Madam Secretary, thank you. 

Thank you very much, Mr. Chairman. 

Chairman CAMPBELL. Chairman Royce’s time has expired. 

And so now Mr. Peters, the gentleman from Michigan, is recognized for 5 minutes. 

Mr. PETERS. Thank you, Mr. Chairman. 

And Under Secretary Brainard, it is nice to have you here discussing the IMF. I think I have some questions just related a little 

bit to the history of the IMF, which will put some things in perspective for me in my mind as we work through these issues. And 

if you would be so kind as to discuss maybe some of the precedents 

for Europe and other developed countries when they had to borrow 

from the IMF, and particularly in periods of global crisis? 

Ms. BRAINARD. Yes. As you know, the IMF was originally created 

to help strengthen our European partners in the wake of World 

War II and to help ensure that they would be strong, healthy democracies. There is ample precedent for developed countries drawing on their claims on the IMF. In particular, we saw that during 

the 1970s, during a period of balance of payments difficulties associated with oil price increases. 

Mr. PETERS. Could you discuss any differences in how—if we 

looked back to the fairly recent global crisis in 2008, would things 

have played out differently if the IMF were either undercapitalized 

or did not exist? What may have been different in this recent crisis 

that we unfortunately still remember all too well? 

Ms. BRAINARD. I think the role of the IMF was extraordinarily 

important in the global recovery from the very severe financial crisis of 2008. As you recall, leaders, G-20 leaders came together in 

2009 and agreed to increase the resources of the IMF by $500 billion. Congress acted very quickly to support U.S. participation in 

that. And we saw that trade and capital flows that had been plummeting turned around more quickly, we believe, than they would 

otherwise have done. And, of course, it is those funds that we are 

talking about, taking a portion of those funds from the permanent 

backstop, and then transferring them over to the core quota resources today. 

Mr. PETERS. You talk about trade picking up much quicker than 

it would otherwise. I come from Michigan, and manufacturing is a 

big deal in my State, and is certainly a big deal for the entire country. So can we assume that manufacturing, which certainly was imVerDate Nov 24 2008 18:44 Jun 26, 2013 Jkt 080883 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 K:\DOCS\80883.TXT TERRI
21 

pacted, would have been impacted to a considerably greater extent 

had it not been for the IMF? 

Ms. BRAINARD. I think there is ample evidence. You saw an absolute collapse of trade volumes, a collapse of trade finances. You will 

recall very sharp reversals of capital flows from emerging markets 

that have become important customers of ours. And, of course, the 

same has been true more recently with Europe accounting for 20 

percent of U.S. exports and a very large percent of investment into 

the United States. Had financial instability really been uncontained in Europe, I think it would have led to a much more difficult 

recovery here in the United States. 

Mr. PETERS. It seems to me, too, as I have watched the IMF and 

policies here on the Hill over the years, that there has always been 

a lot of bipartisan support from Congress and certainly from Administrations in the White House no matter who was in the White 

House, no matter the political party. 

Could you discuss—kind of look back a little bit about the support that the IMF has received from both Republicans and Democratic Administrations over the last few decades? This has been one 

area in which people have come together to support because folks 

understand the importance of the IMF to make sure that the global 

economy is sound. If you could speak to that, I would appreciate 

it. 

Ms. BRAINARD. When the IMF was originally founded, there were 

very strong bipartisan votes in both Houses of Congress. And if you 

look at the last few capital increases, you have seen President 

Reagan successfully coming to Congress with arguments which are 

very similar to the ones you have today, that this is really what 

protects American jobs. You saw President George Bush coming in 

the early 1990s at the time of transition of the Eastern European 

economies into market democracies. More recently, President Bush 

came to Congress for a quota reallocation in 2008, and ultimately 

Congress acted on that in 2009, along with a request from President Obama, and then, again, we saw, in 1999, President Clinton. 

So you can see there is a track record there of absolutely bipartisan 

support. And you will also see that, if you look at President George 

Bush back in 1991, the U.S. quota increase for the IMF was specifically assumed in the budget agreement and does not require an 

outlay. This same treatment has been applied by Presidents on 

both parties over many decades. 

Mr. PETERS. Thank you. I yield back. 

Chairman CAMPBELL. The gentleman’s time has expired. 

Seeing no additional Members who wish to speak, I would like 

to thank Secretary Brainard for coming and for your testimony 

today. 

The Chair notes that some Members may have additional questions for this witness, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to this witness 

and to place her responses in the record. Also, without objection, 

Members will have 5 legislative days to submit extraneous materials to the Chair for inclusion in the record. 

And without objection, this hearing is adjourned. 

[Whereupon, at 3:54 p.m., the hearing was adjourned.] 

(23) 

A P P E N D I X 

April 24, 2013 

24 


80883.001

Written Testimony before the Honse Financial Services Snb-Committce 

Oil Monetary Policy and Trade 

Treasury Under Secretary for International Affairs Lael Brainard 

April 24, 2013 

Introduction 

Chairman Campbell. Ranking Member Clay, and Members of the Sub-Committee: thank you 

for the opportunity to discuss U.S. in the International Monelary Fund (IMF) and 

the President's Fiscal Year 2014 Request. 

On July 19, 1945, not far from this room, Congress provided strong bipartisan support for U.S. 

participation in the founding of the IMF. As then U.S. Treasury Secretary Fred Vinson said at 

the time, "[Olurs is a mission of. .. concrcte action. designed to establish the economic 

foundations of peace on the bedrock of genuine international cooperation." 

The IMF's core mission of building the economic /(lUndations ill!' peace and stability has been 

closely connected to American security and in every decade since--helping our 

European and Japanese partners rebuild and recover World War ll, standing with our 

UK and Italian partners as they confi"ontcd financial crises in the 1970s; working with our Latin 

American neighhors to address indebtedness and instability in the 1980s; helping Eastern Europe 

transition to market democracy in the 1990s; containing the impact of the Asian crisis in the late 

1990s; and working with our European allies to strengthen their monetary union today. 

IMFRcform 

Our interest in a strong and effective IMF has only grown as our economic fortunes have become 

ever more closely linked to our partners around the world. The President's budget request for 

the IMF is vital to preserve U.S. leadership in the IMF so we can continue to shape the nonns 

and practices that ensure an rcsilient glohal economy. This budget proposal will expand 

the core quota resources IMF-with llO net new U.S. financial commitment to the IMF-· 

while preserving the U.S. veto and enhancing the legitimacy (lfthe institution. 

At the height of the financial crisis in 2009, Congress provided critical leadership by approving 

the Administration's request for a permanent increase in U.S. pmticipation in the New 

Arrangements to Borrow, or NAB-a standing IMF hackstop to safeguard the stability of the 

international monetary system. This strategy worked: it arrested a steep fall in trade and a sharp 

reversal of capital tlows in many emerging markets. As global tinancial conditions eased, we 

worked with our international partners in 2010 to secure an agreement on quota and governance 

refonns that would expand core quota resources and enhance IMF legitimacy, while requiring no 

new resources from the United States and preserving our unique veto. 
25 


80883.002

Congressional approval of these reforms will maintain the U.S. leadership in the IMF. and 

restore the primacy of the IMF's quota-based capital structure. Tbe proposal will reduce U.S. 

participation in the NAB by Special [)rawing Rights 40,871,800,000 (approximately $63 billion) 

and simultaneously increase the size ofthc U.S. quota in the IMF by an equal amount. It will 

also allow the United Statcs (0 an amcndment to the IMF Articles of Agreement 

facilitating changes in the of the IMF Executive Board while preserving the U.S. 

board seat and veto. 

The President's Budget Request includes this commitment in a way tbat is 

not change the net U.S. financial participation in the IMF. We are open to with 

Congress on any viable option to get this enacted quickly. I look fi)rward to working with you 

and your colleagues on this legislation. 

Our participation in the IMF is an exchange of equivalent assets alld our claims on the IMF are 

fully secure. The IMF has a uniquely strong balance sheet: the value of the IMF's reserves and 

gold holdings exceed total credit outstanding. Moreover, the IMF is treatcd by all of its members 

as the world's preferred creditor. The IMF has an excellent repayment record with nq history of 

default And. finally, the lMF has the unique ability to leverage strong economic reform 

conditions as a condition tilr extending credit. 

As the world's largest economy, we arc the only country with a velo to shape major IMF 

governance and resource decisiolls. We should carelli/ly steward this privilege to shape the rules 

oftbe global economy, especially as emerging economies, like China, seck greater intluence in 

the coming years. 

U.S. leadership in the IMF promotes American core interests in three ways: as the first 

responder when financial crises abroad threaten jobs and growth at home, strengthening our 

national security. and designing rules for an open global trade and financial system. 

Protecting American Jobs and Growth 

This recovery has shown the close links that tie American jobs and to financial 

conditions abroad. When financial conflagrations hit beyond our tbe IMF provides 

firebreaks to limit contagion while helping our trading partners stabilize and heal their 

economies. By sheltering our economy from headwinds abroad. (he IMF helps us to enshion the 

impact on U.S. jobs, business investment. and household savings for college and retirement. 

For the past three years. (he IMF has been active in helping our European allies combat linancial 

instability and strengthen the foundations of monetary union. We have been closely engaged 

through our leadership at the IMF and bilaterally ill encouraging European leaders and the lOCB 

to put in place a joint strategy backed by a strong firewall to enable countries to undertake 

necessary refonTIs while cleaning up bank balance sheets and ensuring ample liquidity. The IMF 

is now calling for Europe to a to boost demand and combat unemployment. 

which is important not only lor Europe but also recovery in the United States and the world. 
26 


80883.003

Strengthening OUi' National Sccnr-ity 

The lMF is an important partner in strengthening our national security ~bLlilding the economic 

foundations for peace. The Fund's work on the ground helps and mitigate the economic 

stresses and conditions that foster instahility, extremism, and 

The lMF is now helping to anchor economic stability in the Middle Fast-~in Jordan, Morocco, 

Tunisia, and Yemen-~by providing critical advice and financial support to help seeure the 

political gains of the Arab Spring. Avoiding crisis during this delicate period of 

regional transition will help avoid more destabilizing political upheavals. 

The United States has successfully advocated for the IMF to protect and support spending for 

poor people in its low-income country lending arrangements. And. in response to U.S. urging, 

the IMF eliminated Haiti's entire outstanding deht to the Fund from the IMF's own internal 

resources for low-income countries following Haiti's devastating earthquake at no cost to the 

United States. 

The United States was successful in persuading the IMF to use the $3.8 billion it earned in 

windfall profits from gold sales to support lending in the world's poorest countries. In 2009, the 

IMF agreed to more than double the resources available 10 low income countries by as much as 

$17 billion through 2014, and just recently, with strong U.S. backing, the IMF extended zero 

percent interest rates for all concessionallending for another two years through 2014. These 

actions come at no cost to the United States. 

Setting Standards for an Open, Resilient International Trade and Financial System 

The IMP plays a central role in setting nonns and standards for the smooth functioning of the 

market-based system of international trade and finance that is at the core of U.S. prosperity and 

stability. 

When countries join the 1MI', they sign up !,x important obligations that help maintain open 

markets and avoid beggar-thy~ncighbor policies. The IMF sets strong standards in areas such as 

fiscal, monetary, and financial policy and releases public assessments of member policy 

frameworks in an effort to strengthen market discipline. 

The Fund helps investors better assess risks by setting international standards for the quality, 

timeliness, and consistency of national data publication. The IMP holds countries to these high 

standards. When a country fails to meet its reporting obligations, as was the case in Argentina, 

they are censured. The United States has been and will remain a leader in forcefully advocating 

Jor the IMF's commitment to transparency, 

We will continue to encourage the Fund to toughen its analysis and oversight of members' 

exchange rate policies. The IMF is now providing much greater coverage of exchange 

rates, as well as related analysis on reserves, current account imbalances, and capital measures. 

We will continue to urge the IMF to actively exercise its oversight role in this area. 
27 


80883.004

Acting Now to Safeguard our Leadership 

0-20 Leaders committed to implement the quota and governance reforms by October 2012. The 

vast majority ofthe lMF membership has now acted, and only U.S. approval is necessary for 

these important reforms to go into effect. 

Honoring our commitments will preserve our active leadership position and unique veto power 

and allow us to continue to promote U.S. values and interests around the world without any new 

U.S. financial commitment to the IMF. 

The 1MF is one of the great triumphs of international COIJD(,ratlon~-t()rged 

order to strengthen the foundations of peace. At its 

influence on the IMF's design and operations than any another country. Today it is vital we 

safeguard that historical legacy in the face of mpid shifts in the global economy. 

Thank you. 
28 


80883.007

THE BRETTON WOODS COMMITTEE \726 M S'TREET, N.W" SUITE 2.00 

WASHINGTON, D.C. 200:';,6 

~9NQRARY CO-CHAIRMEN 

PRf.:SiOSNT C.C;ORGf.: aUSH 

1 EL£PHONE 3.31·16!6 

FAX 12021 785-9423-

EMAIL info@brottonwooOs.Qrg 

GIi:RAL;) R 

HC:NR¥ H FOWl€R 

Hf.:NR'( (,)Wl':N 

PAUl- A VOLCKCR 

March 5, 2013 

Dear Speaker Boehner and Majority Leader Reid: 

vVe write to express 

maintain the current, overall U ,S, 

the Administration's to 

the U.S, quota in the IMP and reducing 

The IMP has always been a valuable too! for u.s. national interests from. 

navigate the Latin of the ]980s to 

advice, technical assistance, and financial 

crisis, the IMF intensified support for affected and 

maintain growth, It is that the United States support 

brings to our nation going 

Arab Spring today with 

the recent, unprecedented financial 

to stabilize their economies and 

Fund, becallse of the retums it 

Advancing U.s. Economic Interests at Home and Bnsiness Opportunities Abroad 

The Fund promotes a agenda, based on markets and 

macroeconomic structural With risks still threatening economic 

IMF lessens the fallout and financial instability of affected economics, 

advances interests of business and workers of companies that trade and invest in 

these countries, and supports American jobs and expons, 

Promoting National Security Interests 

Economic and 

Sustaining Globa! and Influence in lbe IMF 

Continued support will ensure U,S: ability to UOVCIUUII1Clll dollars 

and ensure its oIl-going influence on the 1l\1F to areas we deem such 

improving govcmance, privatization, and strengthened financial systems. 

RespectfuUy yours, 

and global interests, We would 

support of the International 
29 


80883.008

Lee Hamilton 

If· 

Lawrence Summers 
30 


80883.009

March 11, 2013 

Congressman John Boehner 

Speaker of the House ofU,S, Representatives 

1011 Longworth H,O,B, 

Washington, DC 20515 

Speaker Boehner: 

We write to nrge enactment of proposed International Monetary Fund legislation, The 

signatories of this letter are former Senate-confirmed appointees who oversight 

responsibilities for the IMF and the World Bank, as well as academics and policy professionals, 

Many of U$ have testified before Congress regarding these institutions, Regardless of our policy 

preferences for the IMF, we all agree on the importance of this institution to the United States. 

The legislation would maintain the current U,S, financial commitment to the IMF, by doubling the 

U.s. quota (akin to eqUity shares in the IMF), and commensurately reducing the U.S. commitment to 

lend to the IMF's New Arrangements to Borrow, In essence, the legislation seeks authorization to 

transfer funds within the IMF that the U,S, Congress has previously approved, The legislation 

would also approve an amendment to the IMF Articles of Agreement to implement associated 

governance reforms to realign representation on the IMF executive board. 

The IMF is the leading international institution dedicated to promoting U.S. objectives of advancing 

global growth, financial stability, and sound ecol1omic policy, The IMF has played a crucial role in 

the global approach to recent financial crises and in navigating the world economy through severe 

threats. While the United States is on a path to recovery, threats remain, Uncertainty in Europe 

continues; Japan's growth outlook is sluggish; growth even in big emerging market economies is 

slowing, In times like these, a tInaocially strengthened and reformed IMF is in the U,S. interest. 

Additional quota resources for the IMF are essential to preserve its central role in a global financial 

system that benefits the United States. Realignment of 1MI' quota shares, while preserving U,S, 

influence in the IMF, will enable the IMF to respond to shifts in the global economy, involving 

emerging powers more deeply in the institution and avoiding their disengagement. Positive action 

by the U,S, Congress on both elements will also unlock financial contributions from other countries, 

Congressional enactment of the proposed IMF legislation will sustain U,S, leadership in global 

financial matters, Failure to act would diminish the role of the United States in international 

economic policy-making and undermine U,S. efforts to promote growth and tlnancial stability. 

We urge you to enact the proposed IMF legislation, 

cc: All Senators and Representatives 

Signatures (Affiliations are for identification purposes only) 

Name 

Tim 

Bishop 

Tam¥eer 

Leslie Elliot 

Adams 

Akolgo 

Akram 

Armijo 

Former Under Secretary of the US Treasury 

Executive Director, Integrated Social Development Centre 

ING Investment Management 

Portland State University 
31 


80883.010

Marcel 

Anders 

john 

Martin 

Navin 

C. Fred 

Thomas 

Nancy 

Christina 

Paula 

Jack 

Barry 

jamesH, 

Colin 

Deborah 

Lawrence 

Ralph 

Coralie 

Deborah 

Henzie B, 

Isaac 

Faith 

Richard N, 

Nathan 

Giovanni 

SamY, 

E, Whitney 

Alan 

Cinnamon 

Martin 

Barry 

Jessica 

Mahinour 

Anthony 

Seamus 

Tony 

Joseph 

Mirvari 

Peter 

Anna 

Arsenault 

Aslund 

Bailey 

Baily 

Beekary 

Bergsten 

Bernes 

Birdsall 

Blanc 

Boland 

Boorman 

Bosworth 

Boughton 

Bradford 

Brautigam 

Broz 

Bryant 

Bryant 

Burand 

Chinn 

Cohen 

Colligan 

Cooper 

Coplin 

Cornia 

Cross 

Debevoise 

Derman 

Dornsife 

Edwards 

Eichengreeu 

Einhorn 

El Badrawi 

Elson 

Finn 

Fratto 

Gagnon 

Gahramanli 

Gakuuu 

GeJpern 

CEO, Real Capital Solutions 

Peterson institute for International Economics 

Professor of Government and Foreign Service, Georgetov.'n University 

Brookings Institution and former Chairman Council of Economic Advisers 

Former Head Anti-Corruption Comrnlssion and 

Juridical Studies at George Washington UniverSity 

Senior Fellow and Director Emeritus at Peterson Institute for international 

Economics God former assistant secretary of the US Treasury 

Center for lnternational Governance Innovation 

Center for Glohal Development 

International Union of Anthropological and Ethnologica! Studies 

United Nations Association of the N3tiooal Capital Area 

Former Special Advisor to the Managing Director and Director of the Policy 

Development and Review Department at the IMF 

Brookings Instihltion 

Former Historian of the IMF 

Brookings Institution 

School of Advanced International StmHes, John Hopkins 

University of California 

Brookings Institution 

American University School oflnternationaI Service 

University ofHichigan 

University of Wisconsin, Madison 

Former Director UNECLAC Washington Office 

Sislers of Charity Federation NGO 

Harvard University and former Undersecretary of State for Economic 

Affairs 

New Rules for Global Finance 

University of Florence 

Former US Executive Director at the International Honotary Fund 

Arnold & Porter LLP and former US Executive Director at the World Bank 

John C. Whitehead School of Diplomacy and International Relations, Seton 

Hall University 

University of California, Berkeley 

Former Dean at School of Advanced International Studjes, John Hopkins 

University 

Egyptian Center for Economic & Social Rights 

Duke University Center for International Development 

Hissionory Oblates of Hary Immaculate 

Former Assistant Secretary of the US Treasury and former Deputy 

Assistant to the President 

Peterson Institute for International Economics 

Oil Workers' Rights Protection Organization Public Union 

Former Executive Dirt'ctor at the IMF 

American University Washin.brton College of L3W 
32 


80883.011

lohn 

Morris 

Matthew 

Ilene 

10 Marie 

John 

Eva 

Valerie 

Ricki Tigert 

Randy 

Barry 

iohnM. 

NancyP. 

Harold 

Olivier 

Karen 

Joseph P. 

Adam 

Jacob 

Steven 

Gary 

Donald 

Jim 

Gawain 

John 

MalyAnn 

Terra 

Eric 

Dennis 

John 

Domenico 

Clay 

Nora 

David 

Timothy!. 

Warwick 

Bessma 

Mick 

Scott 

Todd 

David 

Tara 

(;ershman 

Goldstein 

Goodman 

Grabel 

Griesgraber 

Griesgraber 

Hanfstaengl 

Heinonen 

Helfer 

!lenning 

Herman 

Herrmann 

Jacklin 

James 

Jeanne 

Johnson 

Joyce 

Kanzer 

Kirkegaard 

Klees 

Kleinman 

Kohn 

Kolbe 

Kripke 

Langmore 

Larkin 

Lawson-Remer 

LeCompte 

Leech 

Lipsky 

Lombardi 

Lowery 

Lustig 

McCormick 

McKeown 

McKibbin 

Momani 

Moore 

Morris 

Moss 

Mulford 

Nath Danai 

Robert F. Wagner Graduate School of Public Service, New York UniverSity 

Peterson Institute for International Economics 

Former Director for international Economics, National Security Staff 

losef Korbel School of International Studies, University of Denver 

Executive Director New Hules for Global Finance 

Director. Social lustice in Global Development 

Dominican of Hope, Mercy Investment Services, Inc., Ursuline 

Sisters of Tildonk 

former Chairman FDIC and Independent Consultant 

Peterson lnstitute for International Economics and American University 

The New SchooL New York 

Former Special Assistant to the President for International Trade, Energy. 

and Environment 

Former US Executive Director at the International Monetary Fund 

Princeton University 

John University and Peterson Institute for International 

Former Director, Division of International Finance, federal Res(,:rve Board 

of Governors 

Wellesley College 

Domini Social Investments LLC 

Peterson Institute for InternatiDnal Economics 

University of Maryland 

Member, Bretton Woods Committee 

Brookings Institution and former Vice Chair of Federal Reserve Board 

Oxfam America 

UniverSity of Mejhourne 

Council on Foreign Relations 

Executive Dirpctor, Juhilp(~ USA Netv,mrk 

University ofVvarwick 

School of Advanced international Studies, John Hopkins University 

Brookings Institution 

Fonner Assistant Secretary of the US Treasury 

Department of Economics, Tulane 

Former Under Secretary of US Treasury 

Security Advisor 

University of North Carolina, Chapel Hill 

Brookings Institution 

Brookings Institution and Cellter for International Governance Innovation 

CEO, International Centre for Tax and Development 

Center for Global Development 

Center for Global Development and fonner State Department ofl]cial 

Pormer Under Secretary of the US Treasury for international Affairs 

Forum 
33 


80883.012

Anirudra 

Rob 

Akbar 

Seamus 

Sister Ann 

Ilro. Steven 

Christopher A. 

George 

Lynda 

Saurav 

Vijaya 

Elida 

Douglas 

Sister Ann 

Robert 

Riordan 

Kenneth 

Andrew 

Namig 

jan Aart 

john 

Jeffrey R. 

Alexander 

Faryar 

Prem 

Ruth E. 

Jorge 

Rohert 

David 

Richard 

jean 

Jonathan 

Arvind 

Marat 

Hung 

James 

Edwin 

Angel 

Timothy 

James G. 

John 

Neupane 

Nichols 

Noman 

O'Clcireac3il1 

Oestreich IHM 

O'Neil, SM 

Padilla 

Perry 

Pickhourn 

Raj Pant 

Ramachandrzm 

Reci 

Rediker 

Remson 

Richter 

Roett 

Rogoff 

Rose 

Rzayev 

Scholte 

Sewell 

Shafer 

Shakow 

Shirzad 

Sikka 

Smith 

Soe1ro 

Solomon 

Spencer 

Stern 

Stoner 

Strand 

Subrarnanian 

Tazahekov 

Tran 

Trowbridge 

Truman 

Ubide 

Wan 

Wallar 

Weeks 

Freedom Forum 

Former Assistant Secretary of US Treasury 

lnitiativE' for Polley DialoguE', Columbia University 

Columbia University 

Sisters of the Holy Cross 

Marianists International 

Under Secretary of Commerce for International Trade 

Brookings institution 

Professor of Economics, Keene State College 

J£11ne5 Volontaires pour l'Environment~Nepal 

Center for Glahnl Development 

Former Director of Ministry of Finance, Albania 

Peterson Institute for lnternational Economics and former member of the 

IMF Executive Board 

Carmelite NGO 

Producer, The Money Lenders 

School of Advanced International Studies, John Hopkins University 

Harvard University 

ue Gerke ley-Haas School 

University of Warwick 

Former President of the Overseas Development Council 

Princeton University and former Undersecretary of the US Tre3.sury for 

international Affairs 

Former lJSAlD Assistant Administrator for Policy and Former Executive 

Secretary, World Bank/IMP Development Committee 

Former Deputy National Security Advisor 

Centre for Global Accountability, Essex Business School 

Brookings Institotion 

Director, Cities Centre, University of Toronto 

Sisters of NDtre Dame de Namur 

University of Nevada, Las Vegas 

Peterson Institute for InternaUonal Economics and Center for Global 

Development 

Economic Policy Institute, Kyrgyzstan 

Institute for International Finance 

New Rules for Global Finance 

Petersol1Institute for International Economics and and former Assistant 

Secretary of the US Treasury for International Affairs 

Institute for International Economics 

retlre:senttative to iraq, the EU, Afghanistan, Russia. 

Professor Emeritus, SOAS, University of London 
34 


80883.013

Steven R VVeisman 

Olin Wethington 

MarinJ v.N, Whitman 

John Williamson 

Arthur Wilmarth 

Distributed by New Rule for Global Finance 

Contact: 

Nathan Coplin 

Email: ncoplJn@new~ru!e.s.on:: 

Phone: (810) 348-3165 

Peterson InstiLute for International Economics 

Former Assistant Secretary for US Treasury 

Universily of Michigan and Conner member of President's Economic 

Advisors 

Executive Director, Center for Law, Economics & Finance, George 

Washington University Law Scbool 
35 


80883.005

Questions for the Record suhmitted hy Chairman ,Jeh Hensarling 

Committee on Financial Services 

Subcommittee on Monetary Policy and Trade 

Hearing on "Evaluating U.S. Contrihntions to the International Monetary Fund" 

Hearing Date: April 24, 2013 

Witness: The Honorable Lae! Brainard, Under Secretary for International Affairs, United 

States of the '1'.,,,,,,,, .. ,,, 

Qnestion #1: 

Absent any further economic difficulty thau EU conntries already face, wonld the 

Administration still advocMe raising the US's [MF quota'? Why and by what standard? 

An effective and well-rcsoureed IMF is strongly in the U.S. interest. When financial turbulence 

occurs beyond our shore, the IMP firebreaks to limit contagion. while helping our 

trading partners stabilize and heal economies. By helping to shelter the global and U.S. 

economies from headwinds abroad, the IMP helps us to cushion the impact on the United States 

and support and protect U.S. jobs, exports, and the savings of American households. It is also 

essential for the continuing credibility and of the institution that IMI' quota shares 

evolve to bcttcr represent countries' weights the global economy. If the IMI' is out of step 

with changes in the global economy, it will be a less effective institution and thus it will be more 

difficult to achieve U.S. interests through the 1MI'. The U.S. quota increase will be matched by 

an equal and permanent reduction in u.s. financial participation in the New Arrangements to 

Borrow (NAB), for no net change in overall U.S. financial participation in the 1MI'. This change 

in the composition of U.S. financial participation in the IMI' is necessary to protect the strong 

U.S. leadership position in the institution, which is a function of our quota share. 

Question #2: 

Why would the Administration advocate for having this money as a part of the US's quota 

rather than as part of the NAB'! 

The IMF's tinancial and governance structures are based on quotas. U.S. influence in the IMF, 

and veto power over major institutional decisions, is a function of our quota share. The United 

States derives unique benelits from its privileged position in the 1MI'. This includes our ability 

to veto key decisions such as changes to the 1MI" s Articles of Agreement as well as the 

infonnal influence we wield as the country with far and away the largest quota share. It is 

important to ensure the IMF's basic capital structure is strong to avoid IMP reliance on 

borrowed bilateral resources from other countries and dilution of U.S. influence. 

The NAB is the IMF's financial backstop to supplement the IMF quota resources if needed to 

respond to systemic stresses that threaten the stability of the intemational monetary system. 

However, the IMI"s financial backstop is currently larger than the IMF's core capital. 

Implementation of the 2010 quota reform will restore the primacy of the IMI"s quota,based 

capital structure and preserve the U.S. leadership position. 
36 


80883.006

Question #3: 

Would the Administration SUppOI't or advocate for raising the US's IMF quota in future 

reform negotiations beyoud the quota increases proposed in December 2010? Why and by 

what standm'd,? 

The Administration's priority is to work with Congress on legislation to implement the 20 I 0 

IMF quota and governance reforms as as possible. Enactment of this legislation will 

enable the United States to fullill an international commitment to strengthen the IMF and 

maintain U,S. leadership and inl1ucnec. without adding one new dollar to our overall financial 

patiieipation in the 1MI'. The Administration has not taken a position on future IMF quota 

reform discussions at the IMF Executive Board and will consult with the Congrcss on a 

bipartisan and bicameral basis before doing so. 
37 


80883.014

Questions for the RecOI'd submitted by Rep. Grimm 

Committee on Financial Services 

Snbcommittee on Monetary Poliey and Trade 

Hearing on "Evaluating U.S. Contributions to the International Monetary Fund" 

Hearing Date: April 24, 2013 

Witncss: Thc Honorable Lad Brainard, Under Secretary for International Affairs, United 

States of the 

Question #1: 

Undersecrctary Brainal'd, thc IMF has a takcn a firm stand so far 011 the economic 

misbehavior of Argentina. We on the snhcommittee commend that stand, as it's critical to 

send a message that defying international norms and the rnle of law should not be 

tolerated. 

The IMF action-which follows equally resolute positions by the World Bank and the Paris 

Clnb-highlights that there is still at least one multilateral institution that is still enabling 

Argentina's bad behavior. I refer to the Inter-American Development Bank, which 

continnes to lend to Argentina despite Argentina's record of failing to meet its obligations. 

Since yon help oversee the US relationsbip with the lOB, I was hoping yon could answer 

this question: 

Do yon believe that the IDB's AAA credit rating is potentially in danger if it continues to 

lend to Argentina? Obvionsly, a domestic financial institution would be harshly jndged by 

the market if it continued-alone among its peers-to lend to poor credit risks. Is the US 

concerned that IDB could he downgraded as an institution for its "bnsiness as usnal" 

attitude to Argentina? And would the loss of IDE's AAA rating have the effect of raising 

borrowing costs for other nations in the hemisphere that arc highly dependent on IDB 

lending-the Caribbean nations, fo,' example? 

I have expressed concerns to IDB senior management ahout the IDB's continued lending to 

Argentina, and the need for the lOB to address the potential risk posed by its large Argentina 

lending portfolio, We will continue to use our leadership position in the IDB to press for sound 

financial practices, 

Argentina's failure to honor its international commitments is a matter of ongoing concern, 

have pressed Argentina to abide by its international obligations and to normalize its relationship 

with the international financial community and investors, including by honoring its 

international obligations to provide accurate data to IMF, paying amounts that are past due to 

the United States and other Paris Club members. and final International Centre for the 

Settlement of Investment Disputes (ICSID) arbitral awards in of US companies, 

Because of these concerns about Argentina, since 2011 Treasury has opposed all lending to 

Argentina by the multilateral development banks (MDBs). with an exception for those loans that 
38 


80883.015

benefit the poorest and most vulnerable. I and other senior officials at Treasury have engaged 

extensively with other donor countries and management at the MDBs on this policy stance. The 

World Bank has made no new commitments to Argentina since 2011. At the IDB, almost all 

other donors have joined the United States in opposing proposed loans to Argentina. This level 

of disapproval by other donors against the proposed loans any single country is unprecedented 

in recent memory. 

We supported the lMF's decision to censure Argentina for data. In addition, 

President Obama suspended Argentina's eligibility for trade m{'tprp{·1/'.{'< under the Generalized 

System of Preferences (GSP) program. 

Treasury will continue to work actively to press Argentina to honor its international obligations. 

Question #2: 

No discussion of the IMF can he complete these days without a sidebar referencc to the 

alarming situatiou tbat continues to develop in Argentina. 

As the Argentine government chooses to engage in the most egregious violations of both 

U.S. and International laws and as tbe Kirchner Regime pnrsues its confiscatory and 

isolationist policies to the exil'eme detriment of its own citizens the precipitous decline in 

fortunes for our neighbors in the Sonthern Hemisphere is a sad spectacle to witness. 

We grieve for the Argentine populace, while condemning the actions of its Kirchner 

government; the misery that reigns in Argentina is a direct result of the Kirchner 

government's many had choices. But tbey ARE choices, and as snch, can be reversed. 

The Kirchner government can choose at any timc to comply with international law, and to 

engage in honest and ethical dealings with thc International commnnity, with America, and 

with its own people. 

Until snch time as the Kirchner government makes those choices, America and the world 

commnnity can exert pressnre upon it to do the right thing. The decision by the 

International Monetary Fnnd to censnre Argentina for not providing accurate economic 

statistics was one such pressnre point. So, too, has becn tbe Administration's efforts to 

deny loans to Argentina in the multilateral development banks. 

That latter policy should be applanded; it's akin to denying drngs to a drng addict. Can 

yon assnre ns this committee, the American pnblic, the international community, and the 

Argentine people - that TreasuF)'-'s the Administratiou's policy to oppose international 

financial institntion loans to Argentina will remain unchanged? Will yon continne to build 

an alliance of other leading governments to join in this opposition vote? And, can you offer 

any other policy ideas that might help to pressure the Kirchner regime into complying with 

established law, and restoring some commonsense to its governance? 
39 


80883.016

Argentina's failure to honor its international commitments is a matter of ongoing concern. I 

have pressed Argentina to abide by its international and to normalize its relationship 

with the international financial community and foreign including by honoring its 

international obligations to provide accurate data to the IMP. paying amounts that are past due to 

the United States and other Paris Club members, and honoring tlnal International Centre t()r the 

Settlement of Investment Disputes (ICSIO) arbitral awards in favor of U.S. companies. 

Because of these concerns about Argentina, since 20 I 1 Treasury has opposed all lending to 

Argentina by the multilateral development banks (MOBs), with an exception for those loans that 

bendit the poorest and most vulnerable. I and other senior ot1icials at Treasury have engaged 

extensively with other donor countries and management at the MOBs on this policy stance. The 

World Bank has made no new commitments to since 201 L At the IDB, almost all 

other donors have joined the United States in proposed loans to Argentina. This level 

of disapproval by other donors against the proposed loans to any single country is unprecedented 

in recent memory. 

We supported the IMPs decision to censure Argentina for misreporting data. In addition, 

President Ohama suspended Argentina's eligibility for trade preferences under the Generalized 

System of Preferences (GSP) program. 

Treasury will continue to work actively to press Argentina to honor its international obligations. 

Question #3: 

The U.S. Administration is pushing for Argcntina to normalize its relations with U.S. 

creditors and honor the adverse rulings issned by the arbitration tribunal of the World 

Bank (ICSID). Argentina has shown time and again it will not abide by international laws 

and rulings. Specifically, Argentina has refused to oblige by the decision of the U.S. Secoud 

Circuit Court of Appeals, which has demanded that Argentina repay debt owed to U.S. 

bondholders. At the same time, the V.S. Department of .Justice lIlay throw a wrench into 

the jndicial process by filing an amicus curae brief in the case of NML v. Argentina, 

encouraging the Supreme Conrt to hear the casc, This action sends the signal that 

Argentina is absolved from its obligations to U.S. bondholders and can continue to act with 

impunity. Overall, the Obama Administration has been supportive of U.S. interests - from 

voting against multilateral development bank loans to AI'gcntina to removing Argentina's 

preferential trade statns. How will the different executive branches of government 

coordinate to put pressure on Argentina to meet its obligations to lJ.S. citizens and 

normalize relations with its creditors? 

The U.S. Department of Justice (DO.!) submitted amicus briefs in a COUlt case involving efforts 

by holdout creditors to collect on defaulted bonds from the Republic of Argentina. DOJ 

submitted these briefs because of public policy issues of vital importance to the United States 

that extend beyond the facts of this case. In particular. the Administration has expressed 

overarching policy concerns about a U.S. appeals court interpretation of a common legal 
40 


80883.017

provision in sovereign debt contracts that runs counter to longstanding U.S. efforts to promotc 

orderly debt restructuring and could undercut New York's role in global capital markets. 

This broad policy concern should in no way bc taken as condoning Argentina's treatment of its 

creditors. In fact. the United States continues to make clear its serious concerns regarding 

Argentina's policies. including its failure to honor its international obligations to provide accurate 

data to the IMF, paying amounts that are past due to the United States and other Paris Club 

members. and honoring tinal International Centre for the Settlement of Investment Disputes 

(lCSID) arbitral awards in Javor of U.S. companies. Because of these concerns, Treasury 

opposes lending to Argentina by the multilateral development banks (MOBs). Moreover, 

'rrcasury suppmied the IMF's recent censure of Argentina. In addition, President Obama 

suspended Argentina's eligibility under the Generalized System of Preferences (GSP) program. 

Question #4: 

Today, $15 billion of bond debt remains in arrears to private crcditOl's worldwide - $3.5 

billion of which Argentina owes to U.S. creditors. As South America's 3rd largest 

economy, Argentina has the means to immediately repay its debts. The conntry touts its 

economic growth and currently has over $40 billion in reserves. Yet it remains locked out 

of international capital markets due to its scofflaw behavior, U.S. Court judgments against 

the country and the political dccision to not negotiate with holdout creditors. 

Do you agree with comments in the April 2013 Capitol Highlights report hy the [nstitute of 

International Finance (IIF), which remarked in its April 2013 Capitol Highlights report 

that "Argentina finds itself in this complicatcd sitnation hy its own behavior, evidenced hy 

more than a decade of nnilateral treatment of its creditors"? 

It is in Argentina's own interest to abide by its international obligations and to normalize its 

relationship with the international financial community and foreign investors. including by 

honoring its international obligations to provide accurate data to the IMF, paying amounts that 

arc past due to the United States and other Paris Club members, and honoring final International 

Centre for the Settlement of Investment Disputes (lCSlD) arbitral awards in favor of U.S. 

companies. 

Treasury will continue to work actively to press Argentina to honor its international obligations. 
41 


80883.018

Questions for the Record submitted by Rcp. Ed Royce 

Committee on Financial Services 

Subcommittee 011 Monetary Policy and Tl'ade 

Hearing on "Evaluating U.S. Contributions to the International Monetary Fund" 

Hearing Date: April 24, 2013 

Witness: The Honorable Lael Brainard, Under Secretary for International Affairs, United 

States Department of the Treasury 

Question 1 

The administration committed to IMF governance and qnota reforms back in 2010 yet only 

forwarded the request for congressional approval this month April 2013. With 

negotiations starting Oil the next ronnd of reforms in 2014, Congress is being squeezed ou 

the timing. Why didn't the administration request approval earlier'! 

Although the broad contours of the reloTIns were agreed by G-20 Leaders in Seoul in November 

2010. the specifics of the agreement had to be hammered out in the International Monetary and 

Financial Committee (lMFC) and IMF Board before we approached Congress with a request. 

Agreement on the details of the New Arrangements to Borrow (NAB) rollback was expected in 

September 2011. However. several NAB participants questioned whether the NAB rollback 

should go forward at all in light of events in Europe at the time and attempted to re-open the 

2010 deal. This led to protracted discussions among NAB participants. Agreement on the NAB 

rollback was not achieved until December 2012. 

Question 2 

In the last round of reform negotiations, the "Europeans agreed to give up two Executive 

Board seats. Have those seats been transferred to other countries yet'! Why or why uot'! 

A significant outcome was to secure a reduction in overrcpresentatiol1 hy small advanced 

European countries in the IMF Executive Board. 

As described in Board of Governors' Resolution 66-2, advanced European countries committed 

to reduce by two board scats their representation on the IMF Executive Board once the 20 I 0 

rcfoTIn becomes effective. This resolution may be found on the IMF website: 

The 2010 quota and governance reforms are a package and will only enter into efteet after 

Congress approves the reforms. which will allow the United Slates to provide its consent to the 

IMF. 

The advanced European countries have made progress toward consolidating their representation 

at the Executive Board-Belgium, for example, will share an Executive Board seat with the 

Netherlands-but they stillnced to take additional steps to reach their commitment. 
42 


80883.019

Questiou 3 

The Internet is expected to be thc foundation for a signilkant portion of futur'c economic 

growth. Does the IMF have a policy position on Intcrnet freedom and/or governance'? 

Have they addressed Internet freedom and/or governance in an of the policy reforms that it 

has recommended? 

The 1MI' has no formal role or policy on the issue of Internet freedom and/or 

govemancc as this issue falls outside scope o1'tl1e IMF's mandate. Other intemational and 

regional organizations are addressing this important issue. 

Question 4 

Is there anything in the [MF Articles that allow for the bilateral alTangemcllts outside of 

thc quota structurc that have hecu rccently utilized? If yes, please identify what text 

justifies the use of bilateral arrangements. 

IMF members' quotas are the Fund's main source of lInancing for !ending operations. However. 

the IMF Articles of Agreement provide that the Fund can supplement its quota resources through 

borrowing. 

Article VIL Section I (i), states that the Fund is authorized to borrow in order to replenish its 

holdings of currencies that are needed in connection with its lending transactions. 

Consistent with the Article, the IMF 

IMF borrowing. 

http://www . im f.org/extcrna !lUll bs/ft! sdli ndex .asp ?dcc i s i OfF 9 81i.;s,12l!l2§2 

As the IMF's quota resources have been drawn down in response to lIn3ncial crises, the IMF has 

sought to borrow additional resources hilaterally from other countries outside the IMF's core 

quota-based capital structure, where the United States has the most influence. Bilateral 

borrowing erodes the U.S. leadership position as these countries seek to enhance their standing 

outside the IMF's core quota structure. This is a key reason we strongly support prompt passage 

of the IMF quota and govemance reforms. 

The vast majority of other IMF member countries do not score their IMF contributions as 

budgetary expenditure. Further, the United States is virtually alone among the G-20 countries in 

seeking budgetary appropriations for IMF participation. Most other countries treat their lInancial 

participation in the IMF as an exchange of equivalent reserve assets, whether tor bilateral 

arrangements or core quota resources, so they do not need to seek budgetary appropriations. 

o