Stimulus Packages Fail To Charm G-20
LIANE HANSEN, host:
This is WEEKEND EDITION from NPR News. I'm Liane Hansen.
AIG, American International Group, has received more than $170 billion in bailout money from the government, but the company still plans to meet a deadline today to pay its executives millions of dollars in new bonuses. Treasury Secretary Timothy Geithner called the bonuses unacceptable. But AIG defends its decision saying the company is legally obligated to pay the bonuses, which were promised last year, before the crisis.
Meanwhile, finance ministers and central bankers from the world's 20 largest economies have been meeting this weekend near Horsham in the south of England. They've been trying to agree on a plan to tackle the global economic crisis. The weekend's meeting was supposed to set the agenda for their bosses, the heads of state, who are due to meet in the G-20 global economic summit in London next month.
Although the ministers' meeting was declared a success, there are clear differences of approach among the people charged with rescuing the world economy. Eleanor Beardsley sends this report from Horsham.
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ELEANOR BEARDSLEY: The finance ministers were all smiles and cheer as they strolled out onto the lawn for a group photo at the 19th century English country estate where they were holding talks.
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Unidentified Man: Now, we're going to have two groups of photographs. The first will be the (unintelligible).
BEARDSLEY: But behind the scenes, there were tensions over how to handle the crisis. The U.S. advocates bigger stimulus packages and the Europeans, more regulation. But as the summit drew to a close, those differences were papered over, and consensus emphasized. British Finance Minister Alistair Darling hosted the meetings.
Mr. ALISTAIR DARLING (Finance Minister, Great Britain): There is this commitment, which is absolutely critical, I think, in terms of the message that we're sending out, the 20 largest economies in the world stand ready to do whatever is necessary for as long as it is necessary. And I think that is a major step forward.
BEARDSLEY: Darling said there was no one-size-fits-all solution to the crisis and that each country had to take measures that suited its situation. But he said everyone had agreed to underlying principles like no protectionism, a bigger role, and more funding for the International Monetary Fund and more help for developing nations.
While the finance ministers were sequestered in the country, British Prime Minister Gordon Brown and German Chancellor Angela Merkel were pushing tougher rules for tax savings at a press conference in London. Brown said he and Merkel saw eye-to-eye on toughening banking regulations.
Mr. GORDON BROWN (Prime Minister, Great Britain): We must bring the shadow banking system - and that includes hedge funds - into the regulatory system. The old tax havens and the regulatory havens have no place in this new world.
BEARDSLEY: Merkel said she accepted the need for stimulus packages, but felt Germany had already done enough. What Germans were most worried about, she said, was making sure a crisis never happened again. Many Europeans blame America for the current economic meltdown. U.S. Treasury Secretary Timothy Geithner said he understood that, but he said the world was working together to come out of the crisis.
Secretary TIMOTHY GEITHNER (Department of Treasury): What you see today is a very strong commitment by the leaders of the world's most important countries to move together to do what is necessary to bring recovery back on track, and at the same time, to begin the very important process of reform of the financial systems so that we never again face a crisis of this magnitude.
BEARDSLEY: The British government decided to hold the finance ministers' meeting out in the Sussex countryside, in part, as a security precaution. Previous meetings of this sort have been met with large demonstrations, some of which have turned violent. No protestors showed up at this event, but that didn't mean there weren't skeptics.
Nick Beater(ph) lives in the small neighboring town of Horsham. He was in the pub Saturday night when the summit drew to a close.
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Mr. NICK BEATER: President Obama, it's great that he's got elected, but he can't change the world. Gordon Brown can't change the world. And the markets will always dictate. And that's the way it is.
BEARDSLEY: But the finance ministers say they are laying the groundwork for big changes to the world financial order. The situation is so dire this time around, they can't afford not to.
For NPR News, I'm Eleanor Beardsley in Horsham, England.