Geithner calls for new leadership at the IMF

Treasury Secretary Tim Geithner speaks during a Conference on the Future of Housing Finance at the Treasury Department in Washington, D.C.

UPDATED INTERVIEW

JEREMY HOBSON: The calls are mounting for a resignation from IMF chief Dominique Strauss-Kahn. He's in jail in New York -- after being charged with sexually assaulting a hotel maid over the weekend.

Last night, Treasury Secretary Tim Geithner said Strauss-Kahn is not in a position to run the IMF.

And As Marketplace's Stephen Beard reports some are saying the next IMF chief who is traditionally a European should come from a developing country.


STEPHEN BEARD: The jockeying and the horsetrading have already begun. The Chinese say now is the moment to recognise the shift in economic power away from the west and appoint an IMF chief from an emerging economy. Turkish, Mexican and Egyptian figures have all been mentioned.

But the German Chancellor Angela Merkel says the post must remain in European hands while Europe is the main focus of IMF activity.

Veteran IMF watcher Andrew Hilton says the body only needs to appoint someone for the remaining two years of Dominique Straus-Kahn's tenure. He says the French finance minister Christine Lagarde is the obvious choice:

ANDREW HILTON: She also is an American trained lawyer who spent most of her career in Chicago. So the Americans love her. She speaks English better than the Brits so we Brits love her as well. And she's a competent, highly plausible candidate who would fill out the rest of his term.

Lagarde could face the objection that she would be the second French politician in a row to be IMF chief.

In London I'm Stephen Beard for Marketplace.


ORIGINAL INTERVIEW

STEVE CHIOTAKIS: There're reports today that Dominique Strauss-Kahn is facing growing pressure to step down as head of the International Monetary Fund. Strauss-Kahn is in custody in New York, accused of sexually assaulting a hotel housekeeper. Last night, U.S. Treasury Secretary Tim Geithner said Strauss-Kahn is obviously not in a position to run the IMF.

But who will likely replace him?

Marketplace's Stephen Beard is with us live this morning. Hi Stephen.

STEPHEN BEARD: Hello Steve.

CHIOTAKIS: All right, so it seems clear the IMF is going to have a new leader soon. Will Strauss-Kahn's departure make much of a difference?

BEARD: Oh yes -- potentially a huge difference. I mean, he's immensely powerful, capable. And he strongly supported the bailout plan in Europe -- pouring billions of dollars of loans into countries like Greece. But there's a growing perception this isn't working. And there may need to be a different approach including perhaps some of these governments defaulting. It would be very messy, but it is a possibility now if, as expected, Strauss-Kahn leaves the top job and IMF policy changes.

CHIOTAKIS: So what do we know, Stephen about a likely successor then?

BEARD: Well, there's been talk of the IMF leadership switching outside Europe for the first time -- going perhaps to China or Brazil. That possibly could mean a difference in the bailout plan. But the jockeying and the horsetrading is going on. It's underway. And what I'm hearing is that one of the likeliest successors could be the French finance minister Christine Lagarde. The Europeans like her, the Americans like her too. The argument is she could step in for the remaining two years of Strauss-Kahn's tenure. If that happens, IMF policy probably won't change and the bailouts will continue.

CHIOTAKIS: Marketplace's Stephen Beard in London. Stephen, thank you.

BEARD: OK Steve.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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