Finance ministers from around the world have gathered in Washington this weekend. They are here for long-planned meetings but have a more urgent agenda now — how to bring back confidence in global financial markets. President Bush met Saturday morning with finance ministers from the Group of Seven leading industrialized nations to show that, as he put it, "We are in this together and will come through this together."
That was also the message the group offered Friday night when the officials came up with a five-point plan to stabilize the markets and restore the flow of credit.
As they posed for what they called their family portrait, the finance ministers tried to show the world they were working in a coordinated way to tackle a global financial crisis that has proved to be far more serious than anyone anticipated. Treasury Secretary Henry Paulson came out describing the communique they issued as something more than the usual, a real plan he hopes will restore investor confidence.
"We've got an action plan," he said. "Let's work on these action plans together. Let's do it in a robust way, and let's communicate regularly so that we do it in a way that supports the common good."
In the statement, the U.S., Britain, Canada, France, Germany, Italy and Japan vowed to take decisive action and use all tools to support what they call "systemically important financial institutions." Paulson announced that the Treasury Department is moving forward with a plan to buy an ownership stake in troubled American banks, though he didn't offer specifics on that. He promised only to move quickly.
"We are going to do it as soon as we can do it and do it properly and do it effectively and right," he said.
He said this is "a period like none of us has ever seen before." While the G-7 countries agreed on the broad outlines of next steps, Paulson explained that countries are going to have different needs and will approach the problems differently. That was a thought echoed Friday from other foreign ministers, including Alistair Darling of Britain.
"What each country does may differ," he said. "The important thing is that through whatever means are available to it, each government supports the system, because unless we have a banking system that is robust and a banking system where confidence is being restored, then the problems we are seeing today will be exacerbated."
Christine Lagarde, the French minister of the economy, also said the most important thing was to agree on common principles, such as not letting major financial institutions collapse.
"It is necessary to enter into this recapitalization process by taking stake in the institutions, sorting it out, doing away with the management, if necessary, putting in place the right teams, sorting the whole place out and then returning it to the market," she said.
Though she says she doesn't want to play the blame game, Lagarde does think it was a mistake for Treasury Secretary Paulson to let the global financial services firm Lehman Brothers fail last month because that led to widespread distrust among banks which then became reluctant to lend to each other.
"That decision has precipitated a series of events that have unfolded and are unfolding and precipitated a further and deeper financial crisis," she said.
She was speaking Friday at the Council on Foreign Relations, where the moderator pointed out that Lagarde was once on France's synchronized swimming team, so she should know a thing or two about how to coordinate with others. The French finance minister joked that her swimming taught her something else that might prove useful: "You also have to hold your breath."