The Meltzer proposal recommendation 1

1
The Meltzer proposal
recommendation 1

• -First, the report paints a very misleading
  picture of the impact of the IFIs over the past
  fifty years.
• -The economic record of that period is a success
  unparalleled in human history, both for the
  advanced industrial countries and for most of the
  developing nations.
• -The severe monetary crises of recent years have
  been overcome quickly. Hundreds of millions of
  the poorest people on earth have been lifted out
  of poverty.
• -The IFIs have contributed substantially to this
  record. The "bottom line" is unambiguously
  positive but the majority portrays a negative
  tone that badly distorts reality.

2
Recommendation 2.
Second, the recommendations of the majority would
totally undermine the ability of the IMF to deal
with financial crises and hence would promote
global instability. The majority would authorize
the Fund, when facing a crisis, to lend only to
countries that had pre-qualified for its
assistance by meeting a series of criteria
related to the stability of their domestic
financial systems. This approach has two fatal
flaws - it would permit Fund support for
countries with runaway budget deficits and
profligate monetary policies (because the
majority believes that IMF conditionality does
not work) this would enable the countries to
perpetuate the very policies that triggered the
crisis in the first place, squandering public
resources and eliminating any prospect of
resolving the crisis. - it would prohibit
support for countries that were of systemic
importance but had not pre-qualified, again
running a severe risk of bringing on global
economic disorder.

3
Recommendation 3

• Third, the report makes a series of sweeping and
  radical proposals without a shred of supporting
  evidence or analytical support closure of the
  International Finance Corporation and the
  Multilateral Investment Guarantee Agency,
  shifting all non-concessional lending to Latin
  America from the World Bank to the Inter-American
  Development bank and shifting all
  non-concessional lending to Asia from the World
  Bank to the Asian Development Bank. Some of these
  proposals may have some merit but the report
  fails to make a case for any of them.

4
Conclusion

• Further, the report misses most of the central
  trade issues in its chapter on the World Trade
  Organization. This is not surprising since it is
  a report of the International Financial
  institutions Advisory Commission and the members
  were not chosen for their knowledge of trade. The
  legislation authorizing the commission did not
  even ask it to review the statutes relevant trade
  and we believe that the Congress should simply
  ignore this component of the report.