When the head of an institution tasked with stabilizing the world's financial system is in jail, it's a problem. Today, the global financial community is reeling from the Saturday arrest of IMF chief Dominique Strauss-Kahn on sexual assault charges. Calls for his immediate resignation are beginning to surface.
At Sky News, Tadhg Enright suspects that former British PM Gordon Brown will replace Strauss-Kahn because he fits the "most fundamental criteria: that the IMF job goes to a European leaving the World Bank in the hands of the Americans." Enright says, "We know Gordon Brown wants the job," citing his international lecture tour on the world economy. Brown has an advantage over French finance minister Christine Lagarde (also rumored to be in the running to succeed Strauss-Kahn) because of his 10-year position on the IMF's Policy Committee and role building a consensus at the G20 discussions regarding post-crash financial regulation. However, he does not have the support of British PM David Cameron.
Regardless of who replaces him, CBS News reports that Strauss-Kahn is feeling pressure to step down given the IMF's looming problems with European debt. "Considering the situation, that bail was denied, he has to figure out for himself that he is hurting the institution," said Maria Fekter, Austria's finance minister. Analysts tell the Associated Press it's just a matter of time until he steps down. Other contenders for the top job include Turkey's finance minister Kemal Dervis, Singapore's finance minister Tharman Shanmugaratnam, South Africa's former finance minister Trevor Manuel, Mexico's central bank governor Agustin Carstens, former Brazilian central bank president Arminio Fraga and China's Min Zhu, a special adviser to Strauss-Kahn.
The American Prospect's Yannis Palaiologos says the Strauss-Kahn scandal will be "felt most keenly" by Greece. "Strauss-Kahn pushed and prodded the Greek government to keep on with painful reforms, all the while cajoling European governments--especially Germany--to not turn their backs on Athens," he writes. "His contribution was thought vital in hammering out a new $50 billion to $60 billion bailout for Greece in return for new cuts, widespread privatization, and other structural reforms. It will be a hard sell both for the Greek public and for northern European governments unwilling to bail out the bailout. Now, with the managing director of the IMF awaiting trial in Manhattan on sexual-assault charges, the fate of the new bailout seems even less clear."