President Bush said Friday he was confident that world leaders gathering for the G-20 economic summit would "overcome this crisis." But as the weekend meeting approaches, European leaders and analysts are looking less hopeful.
The idea of a new international regulator seems unlikely to win approval, at least in the form that French President Nicolas Sarkozy envisioned.
"I'm not expecting big recipes coming out from the G-20 meeting on Saturday in Washington," said French Foreign Minister Bernard Kouchner at a think tank in Washington this week.
But even if little concrete progress is made, there can be domestic benefits for some countries that are critical of the U.S. for its central role in the current crisis, says Barry Eichengreen, a political scientist and economist at the University of California, Berkeley.
"Rhetoric about the weaknesses of cowboy capitalism in the United States resonates with a domestic audience in — to pick a country at random — France," he says.
And while France may not get its international regulator, the concept is not totally off the table. G-20 leaders are considering a new, less robust oversight body that would monitor the largest financial institutions in the world and make sure they aren't taking risks that would put the entire system at jeopardy, according to the The Washington Post Friday.
Eichengreen has his own proposal along these lines. He suggests a World Trade Organization for finance.
"We actually do this — belong to an international organization that creates obligations for our policies in the case of trade. So, I would submit, why not in the case of finance?"
Such talk upsets traditional critics of the WTO, like labor unions and left-leaning advocacy groups. Conservative and business groups, on the other hand, are concerned a big new powerful regulator could stifle innovation and create unintended consequences.
Whatever emerges, it will probably take months to implement.
But even if little comes out of the current summit, it serves an important purpose, says Bob Litan, an economist with the Brookings Institution: giving other countries a chance to vent at the U.S. for being the source of the current crisis.
"Yeah, I think we're just gonna sit back and take it and then make vague promises about how to cooperate with them in the future. I think that's the most we can expect out of this," he says.
That doesn't mean the U.S. is going to do nothing. Litan says it'll make big changes in the regulation of its own financial markets in coming months.
"Well, I think the most likely way this will play out is that we will get our own house in order and adopt a whole bunch of new rules. And then the rest of the world will probably copy them or tweak them somewhat."
On Friday morning the President's Working Group on Financial Markets announced steps to monitor complex financial instruments like credit default swaps. They've been blamed for playing a large role in the credit crisis that brought down Lehman Brothers and pushed other big institutions to the brink of bankruptcy, causing problems across the globe.