G-20 leaders declare recovery worked, agree to new reform steps

PITTSBURGH -- President Obama and other world leaders said Friday that the steps they took to halt the global economic crisis have worked, but they agreed to new reforms and vigilance to prevent another financial catastrophe.

Obama and member countries of the G-20 said at the close of the summit here that while they are preparing exit strategies from their individual stimulus and recovery initiatives, it is too soon to pull out, and they agreed to continue until job growth is strong.

The U.S. and other G-20 countries also agreed to a framework for limiting executive compensation and other stricter financial regulations, reducing subsidies for fossil fuels that contribute to global warming and to adopt the G-20 as the primary vehicle for global economic coordination.

The closing remarks from Obama and the joint statement from the G-20 represent a stark contrast from the last such summit in London in April, when the world was still in the middle of the financial crisis. Obama credited the London summit as the "turning point" that "brought the global economy back from the brink."

"At that time, our countries agreed to do everything necessary to ensure recovery, to repair our financial systems and to maintain the global flow of capital," the member countries said in a statement. "It worked."

Even as Republicans and other Obama administration critics continue to be skeptical of whether the president's $787 billion stimulus package is growing the economy and creating jobs, G-20 members were unanimous in declaring that those efforts had staved off a crisis akin to the Great Depression.

Obama appeared to achieve consensus on all of his economic goals at a summit that was largely overshadowed by an international showdown with Iran over the revelation that the country has been building an underground uranium enrichment facility.

The president hailed the agreement on a new framework for financial regulations as senior administration officials said earlier in the week that they were confident Congress was acting to enact reforms in the U.S.

Obama also lauded the global cooperation on both the economy and Iran; the countries agreed to "forge a new framework for a strong, sustainable and balanced growth." On the economy alone, Obama said this G-20 summit resulted in "tangible global economic cooperation that we have never seen before."

"We cannot tolerate the same old boom-and-bust economy of the past," Obama said at a press conference at the close of the summit. "We can't grow complacent. We can't wait for a crisis to cooperate."

In the joint statement from the world leaders, Obama and the others said they had agreed "to raise capital standards, to implement strong international compensation standards aimed at ending practices that lead to excessive risk-taking, to improve the over-the-counter derivatives market and to create more powerful tools to hold large global firms to account for the risks they take."

"To make sure our regulatory system for banks and other financial firms reins in the excesses that led to the crisis," the statement said. "Where reckless behavior and a lack of responsibility led to crisis, we will not allow a return to banking as usual."

Obama said at the press conference that the countries would seek to "tie executive pay to long-term performance so that sound decisions are rewarded instead of short-term greed."

On those new regulations, Obama and the member countries said they "have set for ourselves strict and precise timetables."

"Standards for large global financial firms should be commensurate with the cost of their failure," they said in the statement.

Treasury Secretary Timothy Geithner told reporters at the G-20 on Thursday that he was assured by Senate Banking Committee Chairman Sen. Christopher Dodd (D-Conn.) and House Financial Services Committee Chairman Rep. Barney Frank (D-Mass.) that they are moving forward on implementing new regulations in the U.S.

As for climate change, the agreement to work to eliminate subsidies for fossil fuels in a "historic effort" that could eliminate $300 billion in global subsidies that contribute to global warming, Obama said.

The leaders also agree to adopt the G-20 as the primary international institution for dealing with the global economy, essentially eliminating the G-8.

To that end, Obama and the others agreed to meet at G-20 summits in Canada in June 2010 and Korea in November 2010, then meeting annually after that with the first meeting in France in 2011.

Obama was returning to Washington on Friday evening after two days at the G-20 and three days at the United Nations General Assembly.

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