To be honest, I just wrote that headline to freak Michelle Bachmann out. But I have, in recent days, been posting on the possibility that Congress would need to pass Obama's promised infusion of cash into the IMF's Special Drawing Rights fund, thus rendering a crucial source of help to emerging markets wildly unlikely. I got that from The New York Times, which seemed pretty certain of the situation. An informed reader, however, thinks they're wrong:
Hi Ezra, You--and the NYT--are incorrect to state that "the Special Drawing Rights currency that would, it seems, require congressional approval for America to fund." In fact, the Secretary of Treasury can vote for an allocation of SDRs of up to ~$300 billion without Congressional approval (he only needs to notify Congress 90 days in advance). And once the SDRs are allocated, they become property of the Exchange Stabilization Fund at the Treasury which can do whatever it wants without Congressional approval (the ESF was used to bail-out Mexico in 1995 when Congress wouldn't cough up the money). So not only can the allocation be done without Congressional approval, but the US can turn around and simply give its share to other countries, also without Congressional approval. The relevant section for what the Secretary of Treasury can vote for at the IMF without Congressional approval in the US Code is Title 22, Section 286q. For details on how the ESF works see this Cleveland Fed piece.
Here's hoping he's right.
