By Brandon Moseley
Alabama Political Reporter
In a press release, Congressman Spencer Bachus (R) from Vestavia announced that he and all of the Republican subcommittee chairmen on the House Financial Services Committee had sent a letter to U.S. Treasury Secretary Timothy Geithner asking the Treasury Department and the President not to commit the U.S. to financing a bail out of the European economy.
The letter follows an International Monetary Fund (IMF) economists report that the IMF needs an additional $500 billion now to create a fund to attempt to prop up European banks and governments that are on the verge of unraveling, likely taken a major global currency, the Euro, with them.
In the letter, Chairman of the House Committee on Financial Services Spencer Bachus and the rest of the Republican Financial Services leadership wrote: “We write because we are opposed to American taxpayer dollars being used to bail out Europe and ask that you confirm the Department of the Treasury’s position that taxpayer funds will not be used to subsidize Europe’s financial programs through additional contributions to the International Monetary Fund.”
The IMF requested the funds for them to create a “firewall” to prevent failing European economies from collapsing and “spillovers” to the United States and other countries.
José Viñals, the IMF’s Financial Counselor and Director of the Monetary and Capital Markets Department announced IMF’s recommendations in a press conference on Tuesday, January 24. Director Vinals said, “urgent policy action is needed on several fronts. First in the euro area, the firewall needs to be sufficiently large and convincingly built to avoid abnormally high funding costs for sovereigns and banks. To do this it will be important to strengthen in advance work on the European Stability Mechanism, the ESM, as soon as possible. Action by the European Central Bank to provide the necessary liquidity support to continue stabilizing bank funding and sovereign debt markets will also be essential. Beyond the euro area at the international level, the IMF aims to raise up to $500 billion in additional lending resources to create a global firewall which would further help not only regain confidence in the euro area but also address potential spillovers.”
Chairman Bachus and the other Republican leaders wrote that Europe is big enough to solve this crisis without American money. They wrote, “The European Union includes four of the ten wealthiest countries in the world. European countries have the ability to implement austerity measures to reduce their countries’ debt over the long term and they also have the means to restore confidence to markets”
Chairman Bachus and colleagues wrote that they wanted clarification on the Obama Administration’s position. “The IMF has requested additional financing of up to $500 billion to respond to the Eurozone crisis. If it is the intention of the administration to request additional resources from the Congress, then it should be clearly communicated to the American people, Congress, and our international partners.”
In addition to Chairman Bachus, the letter was also signed by Rep. Jeb Hensarling, Rep. Scott Garrett, Rep. Ron Paul, Rep. Shelley Moore Capito, Rep. Judy Biggert, Rep. Gary Miller, and Rep. Randy Neugebauer.
Congressman Spencer Bachus represents Alabama’s sixth congressional district. He is seeking his eleventh term in the United States Congress Rep. Bachus is opposed in the March 13 Republican Primary by Alabama State Senator Scott Beason, tea party activist Al Mickle, Tuscaloosa businessman Stan Pate, Blount County Probate Judge David Standridge, and Justin Barkley. Retired U.S. Air Force Colonel Penny Huggens Bailey and attorney Bill Barnes are running for the seat as Democrats, while Terry Reagin is running as an independent.