Yet concerns about moral hazard can be taken too far, says the story. Once a crisis strikes, moral hazard seems rather theoretical. Suddenly, what matters are the international economic or political consequences of failing to respond. The chances are that the Bush team will be very interested in the report of the Meltzer Commission, published last March, which recommended a dramatic scaling back of the activities of both the IMF and the Bank. There is much to commend in the report, says the story.
Sharper focus is an aim that both institutions share.
In the end, though, the new US team may be more pragmatic than some fear, or others hope. Pragmatism goes with the territory. It is politically impossible to stand aloof and insist that national governments sort out their own troubles when the stability of the whole international financial system is at stake, or when America's vital interests are threatened. The main threat to the institutions probably comes not from the White House or the Treasury but from Capitol Hill. Congress has little regard for the Fund and the Bank.