US fends off G20 push for global finance copThe Group of 20 summit came together on principles for regulations to help avert future crises but stopped short of an agreement for a global financial market enforcer, analysts said.
The lame-duck administration of US President George W. Bush was unlikely to bend to European pressure for a supranational Supranational
An international organization, or union, whereby member states transcend national boundaries
or interests to share in the decision-making and vote on issues pertaining to the wider grouping. financial regulator The Financial Regulator (Irish: Rialtóir Airgeadis), officially known as the Irish Financial Services Regulatory Authority (Central Bank and Financial Services Authority of Ireland Act 2003, Section 26 that would limit flexibility for national governments, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
"President Bush was not going to agree to any kind of international enforcement mechanism," said Diana Furchtgott-Roth, a former chief of staff of Bush's Council of Economic Advisers who is now a senior fellow at the Hudson Institute The Hudson Institute is a corporatist-leaning U.S. think tank, founded in 1961 in Croton-on-Hudson, New York, by the futurist Herman Kahn and other colleagues from the RAND Corporation. .
"He would agree to principles but not to any mechanism that would punish the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. for not taking specific action."
As part of its six-point plan for tackling the financial crisis, the G20 leaders said in a statement that market regulation remains a national responsibility but that harmonization har·mo·nize
v. har·mo·nized, har·mo·niz·ing, har·mo·niz·es
1. To bring or come into agreement or harmony. See Synonyms at agree.
2. Music To provide harmony for (a melody). is needed to keep problems from spilling across borders.
"Regulation is first and foremost the responsibility of national regulators who constitute the first line of defense against market instability," the G20 statement said.
"However, our financial markets are global in scope, therefore, intensified international cooperation among regulators and strengthening of international standards, where necessary, and their consistent implementation is necessary to protect against adverse cross-border, regional and global developments affecting international financial stability."
Furchtgott-Roth said that despite the lack of an agreement on more specific enforcement, the move points toward progress in harmonizing and strengthening rules.
"Fulfilling the principles will be left to the individual countries, some of which may do it and some of which may not do it," she said.
"I think there is a great desire among all these countries to get us out of the global mess and I think they will do their best ... there will be an honest effort on the part of all these governments to work on all of these principles."
She added that French President Nicolas Sarkozy and British Prime Minister Gordon Brown had pushed for a more specific regulatory scheme because "they wanted to minimize the power of the United States. They did not succeed in that."
Furchtgott-Roth said US president-elect Barack Obama has remained on the sidelines On the sidelines
An investor who decides not to invest due to market uncertainty.
on the sidelines
Of or relating to investors who, having assessed the market, have decided to avoid committing their funds. of the G20 but added that he was unlikely to agree to such a scheme "because that would reduce his options for governing."
Robert Brusca at FAO FAO,
n See Food and Agriculture Organization. Economics said the G20 offered "nothing specific" on financial regulation of exotic financial instruments or hedge funds aside from a pledge on cooperation and harmonization.
In that regard, and in avoiding specifically blaming the United States for the crisis, Brusca called the statement a US "victory."
Australian Prime Minister Kevin Rudd Editing of this page by unregistered or newly registered users is currently disabled due to vandalism. said the summit leaders were striving "to ensure that we undertake the necessary financial system reforms to prevent this type of crisis from occurring again. And in doing so, the summit has agreed on five major core principles to guide regulatory reform Regulatory Reform concerns improvements to the quality of government regulation.
At the international level, the "OECD Regulatory Reform Programme is aimed at helping governments improve regulatory quality -- that is, reforming regulations that raise unnecessary obstacles to ."
The G20 statement said regulators "must ensure that their actions support market discipline, avoid potentially adverse impacts on other countries, including regulatory arbitrage, and support competition, dynamism and innovation in the marketplace."
The G20 action plan calls for more disclosure on complex financial instruments and incentives aligned "to prevent excessive risk taking."
Among stepped-up plans for bolstering regulation, the G20 said they would "exercise strong oversight over credit rating agencies Credit Rating Agencies
Firms that compile information on and issue public credit ratings for a large number of companies. , consistent with the agreed and strengthened international code of conduct."
Ryan Sweet at Economy.com said it was not surprising to see the G20 steer clear of any specific regulatory scheme.
"While regulation is needed, the current priority should be to stabilize financial markets and stimulate the global economy," he said.
"New regulation and reform should be on the back burner until the global economy finds its footing.