(Reuters) – The United States would oppose International Monetary Fund bailout packages to countries that are not likely to repay them under a measure passed by the U.S. Senate on Monday.
The 94-0 vote came amid widespread concern that the United States is indirectly supporting a $40 billion IMF bailout approved for Greece earlier this month as that country struggles to rein in its debt.
A series of unprecedented U.S. bailouts to stem the 2008-09 economic crisis has angered many Americans and lawmakers have said they are unwilling to bailout foreign countries, as well.European leaders have asked the IMF to stand ready to provide up to $310 billion as part of a $1 trillion package of loans and guarantees to prevent Greece’s financial woes from spreading to other euro zone countries with big budget deficits, such as Portugal and Spain.
The United States is the IMF’s largest contributor and has veto power to block decisions, although has never used it. The United States’ stake in the IMF is roughly worth $54 billion in subscriptions.
The measure, proposed by Republican Senator John Cornyn, would direct the United States’ executive director at the IMF to determine whether there is likely to be repayment of loans to countries whose public debt exceed their gross domestic product.
If the director determines that the loan is not likely to be repaid, the executive director would be obligated to vote against it.
The measure was added to a sweeping rewrite of financial regulations that could clear the Senate this week. It would have to be reconciled with a similar bill that passed the House of Representatives in December before President Barack Obama could sign it into law.
Senator Christopher Dodd, the Democrat overseeing the financial-reform bill, said he supported the IMF clause but added that it might be modified in coming weeks to satisfy others’ concerns.