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Obama seeks to reassure G20 on financial reforms

(Agencies)
Updated: 2009-09-19 20:32

US President Barack Obama (L) participates in an interview with Bob Schieffer of CBS Face the Nation in the Roosevelt Room of the White House September 18, 2009. [Agencies]

WASHINGTON: US President Barack vowed on Saturday to work with fellow G20 leaders next week to close gaps in financial regulations and insisted reckless schemes that yield "fat executive bonuses" could no longer be tolerated.

Five days before hosting a summit of the Group of 20 nations in Pittsburgh, Obama said steps taken since they last met in April in London had produced "real progress" toward breaking the back of the global economic crisis.

But Obama, in his weekly radio and Internet address, insisted that "stopping the bleeding isn't nearly enough."

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"We know we still have a lot to do, in conjunction with nations around the world, to strengthen the rules governing financial markets and ensure that we never again find ourselves in the precarious situation we found ourselves in just one year ago," he said.

Financial market reform will be a central issue at the summit of leading developed and developing nations but progress in Congress on Obama's regulatory agenda has been slow.

Seeking to show other countries his administration is serious about tackling US weaknesses and excesses blamed for setting off the global crisis, he said, "As the world's largest economy, we must lead, not just by word, but by example."

European G20 members have taken the lead in calling for some restraint on the "bonus culture" of banking, insisting it must be treated as a key item at Pittsburgh, and the issue seemed to be moving higher on the US agenda as well.

Larry Summers, Obama's top economic adviser, said the way that pay for bankers is set must be recalibrated to ensure that the risky behavior that helped fuel the worst banking crisis since the Depression of the 1930s is not swiftly repeated.

'FAT EXECUTIVE BONUSES'

Weighing in on the compensation issue, Obama said, "We cannot allow the thirst for reckless schemes that produce quick profits and fat executive bonuses to override the security of our entire financial system and leave taxpayers on the hook for cleaning up the mess."

Federal Reserve sources said on Friday the US central bank was near to proposing wide-ranging rules to apply to any banker able to take risks that could imperil an institution.

That would be a step forward for US policymakers who have been reluctant to endorse anything like the caps or dollar limits on pay and bonuses sought by some European officials.

"At next week's G20 summit, we'll discuss some of the steps that are required to safeguard our global financial system and close gaps in regulation around the world," Obama said.

He renewed his call on Congress to approve his proposal for creating a Consumer Financial Protection Agency, which he said would set clear rules on mortgages, credit cards and lending.

"Not surprisingly, lobbyists for big Wall Street banks are hard at work trying to stop reforms that would hold them accountable and they want to keep things just the way they are. But we cannot let politics as usual triumph so business as usual can reign," Obama said.