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Second, credibility (fund reputation) is a huge confound.
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The size $16 billion has been lent to Argentina would be unprecedented, with consequences for the Fund's reputation and for the way it does business.
This would allow the IMF to use its insurance function explicitly to tackle global imbalances.Yet this, too, is a hostage to the fund's reputation.
All the options under consideration are founded on the fund's reputation for helping countries, albeit sometimes painfully, return to fiscal health and manage short-term liquidity crises.
But Ms. Schadler has a different view, seeing the decision and the secretive way it was handled as damaging to the fund's reputation.
But he said that the recent push for radical overhauls of nations that borrow money has undermined the fund's reputation and strained its competence.
Though Mr. Strauss-Kahn received generally high marks for his stewardship of the fund, his reputation was tarnished in 2008 by an affair with a Hungarian economist who was a subordinate there.
But several industry insiders, who spoke on the condition of anonymity because they did not want to damage any relationships, highlighted the potential harm the news could have on the fund's reputation.
And because hedge-fund strategies usually sound like rocket science, investors may suspend their own critical faculties, relying excessively on a fund's reputation and on outside advice.Still, a minimum of due diligence should have raised questions about Bayou, which had had a couple of brushes with regulators.
These days institutions from university endowments to pension funds that were once wary of hedge funds' swashbuckling reputation are entrusting money to them.
The REF can boost universities' basic research funding and reputation – or do the opposite.
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CEO of Professional Science Editing for Scientists @ prosciediting.com