Obama urges G20 growth kick-start
President Barack Obama today called on the world's political leaders to kick-start the global economy at next week's G20 as his Treasury Secretary went to Congress to ask for powers to clean up the US financial system.
In a clarion call ahead of the London meeting of the so-called Group of 20 leading industrial countries, Obama made his priority for the meeting clear.
"First we must take quick measures to stimulate growth," said the US President, who has begun to draw flak at home over his efforts to deal with the financial crisis after two months in the White House. Obama has also been at odds with some of European counterparts over the fiscal stimulus. "If the London summit contributes towards immediately initiating joint measures, we can smooth the path for a secure recovery," said the President.
Back in Washington, his Treasury Secretary Tim Geithner today called for more power to deal with failing financial institutions other than banks, such as insurance giant AIG.Geithner was set to use testimony on the $180 billion rescue of AIG to focus on the need for new tools to deal with future crises.
He wants powers similar to those enjoyed by the Federal Deposit Insurance Corp, the bank regulator, which can wind down failed lenders and insure deposits.
The demands come a day after he unveiled plans to buy $500 billion to $1 trillion of toxic assets from banks. Geithner wants to allow the authorities to step in more easily and combat problems at other systemically important institutions on the verge of failure. "We must ensure that our country never faces this situation again," he said.
"To achieve that goal, the administration and Congress have to work together to enact comprehensive regulatory reform and eliminate gaps in supervision."
The surge in stock markets on news of Geithner's bailout yesterday, when the Dow Jones was up nearly 500 points or 7% to 7775.86, hit the buffers today as the FTSE 100 in London traded down 51.44 points at 3901.37. The Dow fell 100.68 to 7675.18.
