The leaders of the Pittsburgh G20 Summit sit around the summit meeting table in the midst of the second plenary session of the summit in the Pittsburgh Convention Center in Pittsburgh, Penn., Sept. 25, 2009. (Jim Bourg/Reuters)
Analysis: Curtain closes on the G20, but will it close on "money-making games"?
World leaders can agree on a new set of economic prerogatives, but they're only as strong as the rules underlying them.
PITTSBURGH — G20 world leaders will leave Pittsburgh satisfied that they have committed to rebuilding a new financial architecture where economies will grow at reasonable levels, the withdrawal of stimulus funds will be done cooperatively and financial regulation will be central to discouraging another worldwide financial melt-down like the one that happened last year.
Designating itself as the “premier forum for our international economic cooperation,” deadlines were set for creating rules on bank capital by the end of next year, global financial overseers were asked to monitor progress and firms were put on notice about excessive pay packages and how much extra capital they would need to cushion future shocks.
“We are committed to take action at the national and international level to raise standards together so that our national authorities implement global standards consistently in a way that ensures a level playing field and avoids fragmentation of markets, protectionism and regulatory arbitrage,” the final statement of the group’s work said.
Not many would disagree with the objective, especially since much of the work done on the financial front aims to eliminate, as French President Nicolas Sarkozy said: “Totally indecent bonuses paid out to a few traders. We all agreed unanimously not to let this happen again.”
President Obama also professed at the end of the summit that “never again should we let the schemes of a reckless few put the world's financial system — and our people's well-being — at risk. Those who abuse the system must be held accountable. Those who act irresponsibly must not count on taxpayer dollars. Those days are over.”
Or, as the G20 closing document said: “Banking as usual is over.” Leaders also said they would not pull the plug on various economic stimulus packages until unemployment improves. When they do move, they promised it would be in a coordinated way.
In short, it all sounds nice on paper and some additional adult supervision of financial institutions and their behavior will be implemented to varying degrees. With the recovery of the global economy since last year, the idea in London, when the crisis was deepest, that there must be global regulation has disappeared.
“It doesn’t matter,” said Marc Mark Weisbrot, an economist who is co-director of the Center for Economic and policy Research, a think tank in Washington, of the G20 final provisions. "They have no means of implementing them. It’s just talk.”
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