Arnold Kling  

IMF to Investigate the U.S. Financial System?

Cowen and Simon... Goldin and Katz...

A reader forwarded me this story.

Officials with the International Monetary Fund (IMF) have informed Bernanke about a plan that would have been unheard-of in the past: a general examination of the US financial system. The IMF's board of directors has ruled that a so-called Financial Sector Assessment Program (FSAP) is to be carried out in the United States. It is nothing less than an X-ray of the entire US financial system.

The gist of the story is "how the mighty have fallen," that the Fed and other regulators would have to submit to this. Another spin might be that it is the IMF that has suffered the biggest decline in relevance and status over the last several years, and this is a desperate ploy by bureaucrats to try to justify their existence.

COMMENTS (6 to date)
Matt writes:

Hopefully their examination will include government accounting, which is deliberately fraudulent.

Unit writes:

I wonder, is the IMF doing this because they're about to loan the US some money?

And what if the IMF concludes that our government is spending to much and social security and Medicare are unfunded liabilities?

Patrick writes:

I think Unit has it...

If the author of this blurb (Kling) actually read this I'm surprised all he got was IMF wants recognition. I suppose it could be so, however when it also states that they've been asking for the entire BUSH term, it raises some more questions beyond - IMF wants relevance.

What is interesting to boot is the results won't be released until after Bush is gone. Back to Unit, who is spot on I believe, in that we're about to be bought. PEOPLE - Read some financial history specifically how the Pound Sterling LOST it's reserve status. FUNDING WWI and guess who their banker was? US!

Now WE have been banking in Asia and Pax Americana is eroding. We're the freakin ST LOUIS FED REPORT declaring two years ago that America is broke...the evidence is all around us if one can manage to be objective.

Gary Rogers writes:

This should not be a surprise to anyone. Our debt is 9+ trillion and climbing and we have social programs that are simply unfundable over the next 20 years. Add to this that the most expedient way for our politicians to deal with the problem is to continue spending while inflating our debt away. Is it surprising that our lenders are getting nervous? The news is not that the Fed will have to submit to this examination but that the IMF has not been friendly to growth oriented recovery plans. Whenever they have intervened, it is with austerity plans that severely limit the economies of the targeted countries. I see this as one of the worst things that could happen and similar to Herbert Hoover trying to balance the federal budget in the face of the great depression.

Patrick writes:

I have a basic structural understanding of growth as such. Finite resources are finite. Growth oriented strategies work right up until they dont. Therefore growth oriented strategies are ultimately doomed to fail strategies as the East Islanders can attest to. So what other system works once this has rubicon has been crossed? Granted we're talking LONG scales of linear time, but it shall come to pass. Curious on other's thoughts on the matter.

Regina writes:

To elaborate on Patrick's comment...interesting reading at this link:,1518,562291,00.html

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