G-20 Leaders Reach Deal On Economy

Leaders of the Group of 20 nations approved more than $1 trillion of additional resources for the International Monetary Fund and World Bank. They also agreed on a regulatory crackdown that will bring hedge funds and other financial institutions under tighter global supervision.

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From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

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And I'm Melissa Block. A trillion dollars for the IMF and World Bank and a blueprint for regulating global capitalism, it's all in a day's work for the leaders of the G-20 trying to rescue the global economy. Well, not just a day's work, but the announcement came after just one day-long meeting in London today. As NPR's John Ydstie reports, the leaders exceeded expectations.

JOHN YDSTIE: In the days leading up to the summit, there were concerns over a breakdown between those who wanted more stimulus, the U.S. and Britain and China and those who wanted the summit to focus on reining in the unfettered global capitalism that sparked this crisis. That faction included the leaders of France and Germany. In the end, the leaders decided to do both, but in an unexpected way. The summit's host, British Prime Minister Gordon Brown, declared the outcome a success.

Mr. GORDON BROWN (British Prime Minister): Today's decisions, of course, will not immediately solve the crisis, but we have begun the process by which it will be solved.

YDSTIE: The most surprising outcome, a whopping increase in resources for the IMF and World Bank.

Mr. BROWN: We have also agreed today, additional resources of one trillion dollars that are available to the world economy, through the International Monetary Fund and other institutions.

YDSTIE: That money will allow the IMF and World Bank to support the economies of emerging market nations and developing countries. They include countries like the new market economies of Eastern Europe and poor countries in Africa. They've suffered from the global downturn as investors have pulled out money and export markets have dried up. The trillion dollars pledge today will help them recover.

Alongside the effort to stimulate those struggling economies, the leaders approved a series of measures to reform and regulate what they agreed was a global economic system that went out of control. Regulation of hedge funds and tax savings are among those measures, as well as a set of principles aimed at controlling executive pay in bonuses. Prime Minister Brown summed up the actions this way.

Mr. BROWN: These are not just a single collection of actions. This is collective action, people working together at their best. I think a new world order is emerging and with it the foundations of a new and progressive era of international cooperation.

YDSTIE: Later in his news conference, President Obama fended off suggestions that he hadn't achieved his main goal of getting the G-20 countries to pump more fiscal stimulus into their own economies. That's something the Europeans had opposed. He pointed out that the U.S. had supported the large increase in resources for the World Bank and IMF to help emerging economies. And he said that benefits Americans, too, including companies like Caterpillar.

President BARACK OBAMA: So if we want to get Caterpillar back on its feet, if we want to get all those export companies back on their feet, so that they are hiring, putting people back to work, putting money in people's pockets, we've got to make sure that the global economy as a whole is successful.

YDSTIE: Mr. Obama said he was pleased with the final product produced by the leaders and would leave it to others to determine how much influence he and his economic team had had on the outcome. And he said the process had been extraordinary, saying that 10 years ago you couldn't have imagined a meeting like this.

Pres. OBAMA: Former adversaries, in some cases, former mortal enemies, negotiating this swiftly on behalf of fixing the global economy, you would've said that's crazy. And yet it was happening and it happened with relatively little - relatively few hiccups.

YDSTIE: The president joked that the last time the world financial order was reformed at Bretton Woods, it was just Winston Churchill and Franklin Roosevelt working things out over a glass of brandy. This was more difficult, he said, but that's the way the world is now, and he added, that's the way it should be.

John Ydstie, NPR News, London.

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G-20 Heads Offer $1.1 Trillion To Aid World Economy

Leaders of world economic powers agreed Thursday to a mix of financial assistance and regulation designed to fight off the worst recession since the 1930s, as a one-day summit in London came to a close.

British Prime Minister Gordon Brown said the G-20 leaders would pump more than $1.1 trillion into the world economy through the International Monetary Fund and other organizations and impose stricter regulations on financial institutions that include oversight of executive pay, tax havens and hedge funds.

"We are rebuilding the international financial system so that it serves the people, rather than, as on occasion, it has served itself," Brown said at the close of the daylong summit.

He said the plan includes tripling the resources available to the IMF to $750 billion, supporting $250 billion in IMF reserves called Special Drawing Rights and ensuring $250 billion to support trade.

Brown, the summit host, said the European Union and Japan have each agreed to contribute $100 billion to boost IMF resources, and the U.S. suggested it might contribute a similar amount. China will contribute $40 billion and gain more power at the IMF, he said.

The G-20 leaders –- who include the leaders of 19 industrial and developing countries and the European Union –- also asked the IMF to open sales of its gold reserves to raise money to help poor countries.

Attending his first international summit, President Obama lauded the actions taken by G-20 leaders, saying he believes the group made strides toward turning around the global economy.

"I'm excited about the ability not just to help heal this economy but also to make progress on a sustainable model of economic growth that relies less on a cycle of bubble and bust — something that I've spoken about back home," Obama told a news conference.

He acknowledged that other world leaders "indicated from their perspective that this [financial problem] started in America, or this started on Wall Street, or this started with particular banks or companies.

"You know, perhaps what helped was my willingness to acknowledge — and it's hard to deny — that some of this contagion did start on Wall Street," he said. But he also noted, "I think that part of the reason people didn't give me too hard a time is because if you look at European banks or Asian banks, they've had their own issues."

In addition to the financial pledges by the G-20, Obama said he plans to ask Congress to provide $448 million in assistance to vulnerable populations from Africa to Latin America and double the amount of money the U.S. provides for food safety to more than $1 billion.

Although G-20 leaders skirted the issue of pumping additional stimulus money into their home economies, Brown said the actions that have been taken thus far will put an additional $5 trillion into the economy by the end of next year.

"Together with the measures we have each taken nationally, this constitutes a global plan for recovery on an unprecedented scale," Brown said.

Those actions will restore credit, stimulate growth and save or create millions of jobs in the global economy, he said.

The G-20's closing statement also said that world leaders agreed to the creation of a new supervisory body to oversee the global financial system. That includes reining in excessive pay for executives, regulating hedge funds and publishing a blacklist of tax havens.

Acknowledging that problems in the U.S. financial industry were a factor in the current economic meltdown, Obama said he supported the move for greater oversight.

"We thought it was important to make sure that we had a strong, coordinated regulatory response, and many of the details of the regulatory response draw from principles that we had developed prior to coming here," Obama said.

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