The Beltway Insider Trying for a Greek Deal

If an agreement is reached in coming days to reduce Greece’s debt burden, markets will calm, dire predictions about the euro will fade, and Charles Dallara may finally get a solid night’s sleep. Since July, Dallara has shuttled among Greek and European Union authorities and the banks, hedge funds, and other financial institutions he represents in the seemingly endless negotiations that all parties hope will lead to a second Greek bailout. No matter what, Dallara’s side will lose. The private debt holders, who hold a huge portion of Greece’s €200 billion ($262 billion) debt, are expected to accept a 70 percent or more reduction in the value of their investments.

Dallara walked into this mess because he is managing director of the Institute of International Finance, a little-known Washington trade group of more than 450 banks and other financial organizations from 70 countries. He has likened the negotiations to “getting on the Coney Island roller coaster,” as he told the BBC last fall. “You take some sharp turns, they’re unexpected, and it rattles you around a little bit, but then it settles out and you have to move forward.” His job involves balancing the interests of the IIF’s diverse members, from state-supported banks, who want a deal quickly to calm debt markets, to hedge funds desperate to protect their investments.