By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, Ap Economics Writer – 16 mins ago
PITTSBURGH – Major world leaders formed themselves into a new board of directors for the global economy Friday, vowing to overhaul lax financial regulations and work harder to control dangerous imbalances that contributed to a financial meltdown.
President Barack Obama and the other leaders declared that going forward, their meetings of the Group of 20 nations would be the primary way of coordinating global economic policy. That group will take over the job that had been done for more than three decades by a smaller group of the wealthiest countries known as the G-8.
"The old system of international economic cooperation is over. The new system, as of today, has begun," declared British Prime Minister Gordon Brown. He said that the G-20, which includes not only developed nations but fast-growing emerging markets such as China, Brazil and India, would become the "premier economic organization for dealing with economic management around the world."
To show their resolve, the G-20 nations held a series of discussions Friday to discuss the thorny problems still confronting the economy and to search for ways to make sure that the financial excesses that led to the worst global downturn since the Great Depression were not repeated.
The concluding communique, according to drafts that were circulating, addressed issues such as restraining excessive bonuses paid to bankers to stop financial institutions from engaging in the risky practices that contributed to the crisis.
According to participants, the final document papered over differences on the executive-bonus issue by avoiding language for specific caps, something that France had pushed for but that America had opposed. A U.S. push for stronger requirements for bank capital — the cushion that banks hold against loan losses — was included, but with many of the specifics over how the capital would be determined left to set at later meetings.
The leaders also agreed to a U.S. proposal for a "framework for sustainable and balanced growth" to deal with such issues as China's huge trade surpluses and the soaring U.S. budget deficit. Brown said the plan would set economic objectives for individual countries which would be reviewed annually with the International Monetary Fund assisting in those reviews.
However, there would be no penalties for failing to meet the objectives because no country wanted to see its sovereignty encroached upon by an international organization like the IMF.
Still, the leaders sought to portray their summit as a major success.
"I have the impression that we are on a successful path," said German Chancellor Angela Merkel, who was leaving Pittsburgh to fly back to Berlin where on Saturday she was holding her final campaign rally before facing German voters on Sunday.
After scattered acts of vandalism on Thursday, the streets of Pittsburgh were generally quiet Friday with heavy security around the David L. Lawrence Convention Center where the talks were being held.
As often is the case, foreign policy issues intruded in the economic discussions.
Obama and the leaders of France and Britain demanded that Iran fully disclose its nuclear ambitions "or be held accountable" to an impatient world community. They threatened new sanctions after the disclosure of a secret Iranian nuclear facility.
"Iran is breaking rules that all nations must follow," Obama said in the opening moments of the G-20 economic summit.
French President Nicolas Sarkozy said Iran has until December to comply or face sanctions. "This is for peace and stability," the French leader said. British Prime Minister Gordon Brown accused Iran of "serial deception."
The Pittsburgh meeting marked the third G-20 leaders summit in less than a year as the countries continued to grapple with a debilitating downturn that has resulted in millions of unemployed around the world, the loss of trillions of dollars in wealth and massive amounts of government stimulus spending designed to jump-start economic growth.
With spreading signs that the worst of the downturn is over and many countries beginning to return to modest growth, the leaders were able to hold their discussions in less of a crisis atmosphere than their two previous meetings — in November in Washington and in April in London.
But the lessening of the crisis raised concerns that the momentum to implement reforms could lessen as well, posing a threat that G-20 officials vowed to resist.
"We are not going to walk away from the greatest economic crisis since the Great Depression and leave unchanged and leave in place the tragic vulnerabilities that caused this crisis," Treasury Secretary Timothy Geithner told reporters Thursday.
Geithner said the U.S. supports China's efforts to gain greater voting rights in the IMF and its sister lending institution, the World Bank, over the reservations of European nations, who would lose influence. Officials said progress had been made on giving emerging countries more voting rights at the IMF but that further talks would be needed before the issue was resolved.
The leaders gathered with their spouses for a welcoming reception at a botanical reserve Thursday night where they were greeted by Obama and Michelle Obama, wearing a sleeveless taupe-colored cocktail dress.
Geithner said the G-20 countries had reached a consensus on the "basic outline" of a proposal to limit bankers' compensation by the end of this year. He said it would involve setting separate standards in each of the countries and would be overseen by the Financial Stability Board, an international group of central bankers, finance ministers and regulators that has representation from all the G-20 nations.
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Associated Press writers Pan Pylas, Michael Fischer, Emma Vandore, Ben Feller and Daniel Lovering contributed to this report.
PITTSBURGH – Major world leaders formed themselves into a new board of directors for the global economy Friday, vowing to overhaul lax financial regulations and work harder to control dangerous imbalances that contributed to a financial meltdown.
President Barack Obama and the other leaders declared that going forward, their meetings of the Group of 20 nations would be the primary way of coordinating global economic policy. That group will take over the job that had been done for more than three decades by a smaller group of the wealthiest countries known as the G-8.
"The old system of international economic cooperation is over. The new system, as of today, has begun," declared British Prime Minister Gordon Brown. He said that the G-20, which includes not only developed nations but fast-growing emerging markets such as China, Brazil and India, would become the "premier economic organization for dealing with economic management around the world."
To show their resolve, the G-20 nations held a series of discussions Friday to discuss the thorny problems still confronting the economy and to search for ways to make sure that the financial excesses that led to the worst global downturn since the Great Depression were not repeated.
The concluding communique, according to drafts that were circulating, addressed issues such as restraining excessive bonuses paid to bankers to stop financial institutions from engaging in the risky practices that contributed to the crisis.
According to participants, the final document papered over differences on the executive-bonus issue by avoiding language for specific caps, something that France had pushed for but that America had opposed. A U.S. push for stronger requirements for bank capital — the cushion that banks hold against loan losses — was included, but with many of the specifics over how the capital would be determined left to set at later meetings.
The leaders also agreed to a U.S. proposal for a "framework for sustainable and balanced growth" to deal with such issues as China's huge trade surpluses and the soaring U.S. budget deficit. Brown said the plan would set economic objectives for individual countries which would be reviewed annually with the International Monetary Fund assisting in those reviews.
However, there would be no penalties for failing to meet the objectives because no country wanted to see its sovereignty encroached upon by an international organization like the IMF.
Still, the leaders sought to portray their summit as a major success.
"I have the impression that we are on a successful path," said German Chancellor Angela Merkel, who was leaving Pittsburgh to fly back to Berlin where on Saturday she was holding her final campaign rally before facing German voters on Sunday.
After scattered acts of vandalism on Thursday, the streets of Pittsburgh were generally quiet Friday with heavy security around the David L. Lawrence Convention Center where the talks were being held.
As often is the case, foreign policy issues intruded in the economic discussions.
Obama and the leaders of France and Britain demanded that Iran fully disclose its nuclear ambitions "or be held accountable" to an impatient world community. They threatened new sanctions after the disclosure of a secret Iranian nuclear facility.
"Iran is breaking rules that all nations must follow," Obama said in the opening moments of the G-20 economic summit.
French President Nicolas Sarkozy said Iran has until December to comply or face sanctions. "This is for peace and stability," the French leader said. British Prime Minister Gordon Brown accused Iran of "serial deception."
The Pittsburgh meeting marked the third G-20 leaders summit in less than a year as the countries continued to grapple with a debilitating downturn that has resulted in millions of unemployed around the world, the loss of trillions of dollars in wealth and massive amounts of government stimulus spending designed to jump-start economic growth.
With spreading signs that the worst of the downturn is over and many countries beginning to return to modest growth, the leaders were able to hold their discussions in less of a crisis atmosphere than their two previous meetings — in November in Washington and in April in London.
But the lessening of the crisis raised concerns that the momentum to implement reforms could lessen as well, posing a threat that G-20 officials vowed to resist.
"We are not going to walk away from the greatest economic crisis since the Great Depression and leave unchanged and leave in place the tragic vulnerabilities that caused this crisis," Treasury Secretary Timothy Geithner told reporters Thursday.
Geithner said the U.S. supports China's efforts to gain greater voting rights in the IMF and its sister lending institution, the World Bank, over the reservations of European nations, who would lose influence. Officials said progress had been made on giving emerging countries more voting rights at the IMF but that further talks would be needed before the issue was resolved.
The leaders gathered with their spouses for a welcoming reception at a botanical reserve Thursday night where they were greeted by Obama and Michelle Obama, wearing a sleeveless taupe-colored cocktail dress.
Geithner said the G-20 countries had reached a consensus on the "basic outline" of a proposal to limit bankers' compensation by the end of this year. He said it would involve setting separate standards in each of the countries and would be overseen by the Financial Stability Board, an international group of central bankers, finance ministers and regulators that has representation from all the G-20 nations.
___
Associated Press writers Pan Pylas, Michael Fischer, Emma Vandore, Ben Feller and Daniel Lovering contributed to this report.
