Does An International Regulator Make Sense?

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President Bush will host an economic summit with the G-20 countries Saturday. Some European leaders want a strong, new international financial regulator to prevent future financial meltdowns, while president prefers a lighter hand.


The current financial crisis will be the big topic this weekend when President Bush hosts leaders from the world's 20 largest economies, otherwise known as the G-20. Member nations agree they'd like to prevent similar problems in the future, but there's less accord when it comes to how. NPR's Jeff Brady reports.

JEFF BRADY: There's a temptation to compare this upcoming summit to the Bretton Woods conference more than six decades back.

Unidentified Man: Invited by President Roosevelt to the first major world financial meeting since the London Conference of 1933, they will work in the seclusion of this White Mountains resort.

BRADY: Instead of a New Hampshire hotel, Saturday's summit will be in a museum in downtown Washington. And instead of spending a couple years preparing, as the countries did in 1944, this time, they've had just a couple weeks. The goals are similar, though, bring stability to world financial markets.

The heads of several European countries, most notably Nicolas Sarkozy of France, are talking about a big new international regulator. The Bush administration is skeptical of such a proposal. Scott Talbott with the Financial Services Roundtable says his member companies want a balance to be struck.

Mr. SCOTT TALBOTT (Senior Vice President for Government Affairs, Financial Services Roundtable): They don't want to see over-regulation to a stifling of competition, a stifling of innovation. You get focused on the regulation, and you avoid the business of business.

BRADY: Talbott says each country should first develop its own rules to make sure no one company poses a threat to the entire financial system. President Bush in an October 25th radio address expressed his concerns over too much regulation. Despite the current financial mess, Mr. Bush said open-market policies have helped millions of people around the world get out of poverty.

President GEORGE W. BUSH: These policies have shown themselves time and time again to be the surest path to creating jobs, increasing commerce, and fostering progress. And this moment of global economic uncertainty would be precisely the wrong time to reject such proven methods for creating prosperity and hope.

BRADY: President-elect Barack Obama has largely declined to make specific statements about the upcoming economic summit. In his first news conference, he reminded reporters that the U.S. has only one president at a time.

But other countries are wondering how an Obama administration will address this issue, according to Arvind Subramanian. He's with the Peterson Institute for International Economics. He says emerging economies such as Brazil, India, and China want to maintain open markets.

Mr. ARVIND SUBRAMANIAN (Senior Fellow, Peterson Institute for International Economics): We have a Democratic president. We have a Democratic Congress. Protectionist pressures are going to increase. Will the new administration and Congress be able to resist these pressures and keep markets open?

BRADY: Subramanian says an important element in Saturday's summit is who's attending. It's not just the traditionally big players that make up the G8, but a much broader group, the G-20. He says that's a recognition that some of these countries now play significant roles in the world economy.

With little time to prepare for this week's economic summit, it's unlikely any fully-formed policies will emerge from it. But Subramanian says the most important thing is for all the leaders to show they're on the same page.

Mr. SUBRAMANIAN: No dissonance, no kind of backbiting, no finger-wagging, no blaming and so on. I think there has to be a united front that all the leaders present.

BRADY: He says that alone could assure wary markets that political leaders are serious about fixing current problems and preventing future ones. Jeff Brady, NPR News, Washington.

COHEN: Stay with us on Day to Day from NPR News.

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