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Meet the IMF's New Leader: Dominique Lagarde

Thursday, July 07, 2011

Welcome to Politics Bites, where every afternoon at It's A Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on the Brian Lehrer Show, Economics editor for Bloomberg Businessweek Peter Coy will introduce us to Christine Lagarde, the new head of the IMF.

For the first time in history a woman will lead the International Monetary Fund, following the resignation of former leader Dominique Strauss-Kahn.

Christine Lagarde, like Strauss-Kahn, is French, and like her predecessor, she comes to the job after serving as Finance Minister. However though Lagarde and Strauss-Kahn share a lot of similarities, there are major differences between the two. Strauss-Kahn is a socialist, while Lagarde is affiliated with the administration of French president Sarkozy.

Peter Coy explained the function of the IMF as an institution whose main job is dealing with financial crisis.

It’s supposed to be an international lender of last resort. So the same way that the federal reserve is the financial crisis lender of last resort in the United States, they need to have something that is sort of multi-national, [for] what happens if a country gets in trouble. And you can imagine that they’re pretty busy right now, especially in Europe.

He said the IMF was created in the depression of WWII in 1944.

It’s had an eventful history and this is one of the most eventful episodes right now.

Christine Lagarde is a lawyer by training, born in 1956. She attended high school in the States and interned in Congress, before working at a large US law firm.

The IMF Director is a position that comes with a lot of power, and Coy said traditionally it has been an economist in that seat.

So she comes in and she saying right off the bat “I’m not an economist and I don’t pretend to know the micro aspects of this job, but I’m going to be… more like an orchestra conductor.. Orchestra conductors don’t have to know how to play the cello or the harp, they just need to know how to elicit the best performance."

Coy said Lagarde had to be strategic in seeking supporters, courting nations such as China and India. 

She understands that Europe is the number one job for her to deal with right now, but she’s not going to get the support of the organization to deal with Europe unless she shows that she cares about the agenda of the rest of the world as well.

Predictably, Lagarde has been facing questions regarding the scandal involving her precursor at the lender. Coy said while he doesn’t think the IMF as a whole is too badly tarnished by the allegations against Strauss-Kahn, he does think the IMF might be tightening its ethics rules in response to the number of women who stated that there was a hostile climate towards women at the IMF.

Asked recently if she has concerns about the IMF’s credibility, Lagarde said that institution needs to be transparent and even-handed. Coy said part of the problem with being evenhanded is that IMF bylaws mandate that the lender cannot lend to countries without a sustainable plan to fix their finances. That explains, he said, the austerity plan passed by the leadership in Greece despite blistering protests.  

It seems as thought some of the official organizations, the IMF in particular, are willing to kind of give a wink and a nod to the Greeks because they realize just exactly how deep their problems are. They kind of want to give them money if they possibly can because they see how severe the nation’s problems are.

One of the legacies of the discrediting of Strauss-Kahn, Coy said, is that many have forgotten what a good IMF leader he was.

He was charismatic, he was intelligent, he knew everybody who was anybody, he knew how to forge compromises. Now Lagarde has to show that she’s capable of the same thing, and I think she is.

Lagarde began the job this week on July 5th.

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Comments [11]

Dagmar from Brooklyn

What is the IMF? A nice lender of last resort to nations? To benefit the populations? Really?

Thanks NPR for producing another "soft news" program. A lot of chat about the personal management style of Lagarde and what she eats and likes. Why didn't the host Jami Floyd do her homework on the IMF? I guess it is too controversial for NPR.

There was one caller who talked about the real impact the IMF (and the World Bank) have on the populations (not the elites) of debtor nations.

I wished NPR would have a mission of investigative journalism instead of chat.

Fortunately this type of journalism can be found on PRN, ProgressiveRadioNetwork.com

For info on the IMF and the World Bank one might start with (among many sources):

http://www.globalexchange.org/campaigns/wbimf/

Jul. 07 2011 12:24 PM
Lori from Montclair, NJ

My favorite Lagarde moment was last year when the BBC asked Christine Lagarde (then French Finance Minister) if they have "the balls" to act on financial reforms in France and Lagarde, a woman, asked how that metaphor related to her!

Poetic justice that a pig like DSK was replaced by a strong woman like Lagarde.

Jul. 07 2011 11:31 AM
monroe

Tom from New Jersey was confused with the Lilian Betancourt/Sarcozy scandal. I don't believe CL was implicated in that.

Jul. 07 2011 11:19 AM
Ken Shusterman

Why wasn't the #2 person, John Lipsky, given the opportunity to succeed DSK?

Jul. 07 2011 11:19 AM
Daniel

Why has a Frenchman been in charge for nearly 50% of the history of the IMF? Is there economy strong enough and their participation in the IMF strong enough to motivate that? Wouldn't a German be more appropriate these days (if one wants a European)?

Jul. 07 2011 11:16 AM
Daniel

Make that more than 50% --- there's a been a French managing director for 55% of he history of the IMF.

Jul. 07 2011 11:15 AM
Yourgo from Astoria

Where does IMF get its money?

Jul. 07 2011 11:15 AM
Janine from NYC

At least she won't be chasing skirts down at the IMF.

Jul. 07 2011 11:15 AM
David from West Hempstead

Why does the IMF keep on demanding on austerity even though these demands have worsened conditions in nearly every crisis in which it has intervened?

Jul. 07 2011 11:14 AM
David

What's the difference and/or relationship between the IMF and the World Fund?

Jul. 07 2011 11:11 AM
Tony

I don't understand what is the hype about her. She has done a horrible job as French minister of finance. Debt-wise, France is in worse shape than Italy :
http://media.economist.com/images/images-magazine/2011/07/02/IN/20110702_INT400.gif

And for all this spending, growth is anemic:
http://media.economist.com/images/images-magazine/2011/07/02/IN/20110702_INT100.gif

And you want her to use US tax dollars to bail out European countries when even Germany, who gained much more from the Euro, is unwilling to?

That's insanity (I am French but live in the US btw)

Jul. 07 2011 10:44 AM

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