Few Concrete Steps Taken at US-Led Economic Summit
World leaders vow action, new global safeguards
WASHINGTON - World leaders battling a dire and deepening economic
crisis vowed yesterday to cooperate more closely, keep a sharper eye
out for red-flag problems and give bigger roles to fast-rising nations
- but kicked many hard details down the road for their next summit
after President-elect Barack Obama takes office.
Perhaps as important as the modest concrete steps they took, the
leaders of the planet's richest nations - and some of the
fastest-developing - made clear their recognition of the world's
increasingly interconnected financial architecture and the
responsibilities that go along with it.
"There shall be no blind spots," Chancellor Angela Merkel of Germany
declared. "There is here a great common will to ensure that such a
crisis is not repeated."
Underscoring how bad things have gotten this time, President Bush,
the summit host, said he had agreed to the recent $700 billion rescue
plan for US financial institutions only after being told the nation was
at risk of falling into "a depression greater than the Great
The meeting of the 20 nations - including some which have been
sidelined by traditional powers in the past - showcases the importance
of a global solution to an interconnected worldwide economic problem,
said Representative Barney Frank, a Democrat from Newton.
"There is this realization now that the world economy is even more
linked than before," said Frank, chairman of the House Committee on
Financial Services. "It's now clear we're in it together."
Frank said the United States and foreign nations need to come up
with some kind of coordinated strategy for both stimulating the economy
and regulating banks and securities.
But it will be difficult for much progress to be made while Bush is
still in office, Frank said, since the lame duck president has been
very resistant to both a second stimulus package and enhanced
government regulation of financial services.
"This has got to wait for Obama," Frank said. "Bush is sort of resisting reality."
This summit was significant for the far broader range of countries
invited, rather than the elite, old-guard group that usually holds such
"Emerging market countries were not the cause of this crisis, but
they are amongst its worst affected victims," declared Prime Minister
Manmohan Singh of India.
Leaders from 21 nations and four international organizations
attended the emergency summit that was held as Washington was blanketed
in a gray mist and which took on a workaday feel appropriate to the
grim crisis that drew them together.
At the conclusion of the two-day summit, they released a joint communique that was modest in scope but high in hopes.
Covering eight pages and 47 action items, the document's overarching
focus is to establish a series of new safeguards for the fragile and
opaque global financial system.
Nearly all the efforts are aimed in some way at better flagging
risky investment patterns and regulatory weak spots before they bring
down companies and then ripple dangerously through entire economies, as
has happened in recent months.
To that end, the leaders called for such mundane things as
"supervisory colleges," where financial regulators can compare market
notes across countries, better cooperation between nations on
regulations, the eventual standardization of accounting rules governing
how companies can value potentially tricky assets, and new attention to
The leaders also supported expanding the membership of the Financial
Stability Forum, a group that has been examining the causes of the
financial crisis and crafting ways to prevent future problems. And the
group called for broadening the financial police work of the
63-year-old International Monetary Fund as well as modernizing the
institution to better keep pace with the changing economic environment.
None of the items was splashy, and most would be understandable to
few outside of financial experts, but officials argued they have
"It's not glamour," said President Nicolas Sarkozy of France.
Susan Milligan of the Globe staff contributed to this report.