International Monetary Fund managing director Christine Lagarde spoke with Bloomberg Television's Margaret Brennan and said that she expects more contributions on top of the $320 billion raised and "I look at this pot of money as an umbrella…there are clouds on the horizon." In reference to Spain, Lagarde said that, "if there's a need, the IMF has to be there for all members."
Lagarde also said that the U.S. must address housing issues "forcefully" to help the American economy and that whatever can be done to help households "is going to be of help to the entire U.S. economy."
Lagarde on whether $320 billion in pledges is the final ask:
"It is not the final ask. Is a step on the way and we are looking for a much more critical mass for the end of the week. We have the spring meeting going on now. It will begin officially tomorrow. I hope to get to more than that."
On where the IMF has other commitments from:
"I have currency commitments from the euro zone, from Japan, from the Nordic countries, from Switzerland. There will be a few more that will be announced today but I will leave it to them to announce. I have more bilateral meetings coming up all day this afternoon and tomorrow and I hope to increase the pot."
On how the IMF prioritizes the reserves against the pressure on countries to reduce spending:
"It has to work from all angles. I look at this pot of money as an umbrella. There are clouds on the horizon, whether it is unemployment or slow protracted growth or whether it is bank deleveraging, and we need to protect against that. Countries have to take measures. They have to really combine fiscal consolidation in the medium term. They have to make sure that growth picks up and it takes hold and that jobs are being created. All sorts of measures have to be taken. As managing director of the IMF, I am in charge of improving the stability and I need to have that umbrella available in case the clouds break into a nasty rain."
On whether the IMF would participate in aiding Spain:
"There is no such need at the moment as I understand. I hope that through the combined efforts that the Europeans will be able to support the efforts undertaken by the Spanish government. They are taking really serious measures for the labor market and fiscal consolidation as well. They are determined to take control of the provinces' budgets, which was an issue and they have announced that they want to strengthen the Spanish bank capitals. The Europeans have done quite a bit, whether it is national measures with new governments or the ECB playing a much more significant role or whether it is a euro firewall which they put in place at the end of March. The tool box is much bigger and I hope they can address the Spanish issues together with the Spanish government. If there's a need, the IMF has to be there for all members…If there is appropriate burden sharing and proper risk mitigation. The IMF never loses money and always pays back as creditor. I have to make sure that the tradition survives."
On how the IMF separates banks that have taken on sovereign risk:
"Ideally, it would be helpful, for instance, the EFSF and this new mechanism they are putting in place, the ESM, would be capable of investing directly into the capital of banks, bypassing the sovereigns. Then you cut the link between sovereigns and banks. That can be in a bad situation a bit of a vicious link. Our suggestion is that they could be direct investment under very secure terms and with a strong European supervision, with a strong European backstop, with a resolution, legal system, that is in place. There is work to be done."
