House Banking Approves IMF Spending Bill

The House Banking Committee on Thursday approved legislation authorizing $18 billion in additional spending for the International Monetary Fund.

The 40-9 vote moves the bill to the House Appropriations Committee; the legislation is expected to reach the House floor next month.

In an all-day markup, the committee narrowly adopted - but later watered down - an amendment that would have required private-sector lenders to take a hit on Asian loans before the United States could extend more money to the IMF.

That amendment, by Reps. Bernard Sanders, I-Vt., and Spencer Bachus, R-Ala., would have required banks to write off bad debts or extend more credit to Asian borrowers.

But the provision was later changed to simply call for "appropriate burden-sharing" by the private sector "so that investors and creditors bear more fully the consequences of their decisions," according to a release by Banking Committee Chairman Jim Leach.

The legislation now nudges private lenders "to avoid consequences of 'moral hazard' while simultaneously re-establishing market confidence and allowing solutions to short-term debt obligations," according to a release from Rep. John J. LaFalce, D-N.Y.

The $18 billion includes $14.5 billion to replenish the IMF's reserves and $3.5 billion for an emergency line of credit.

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