Friday, March 13, 2009

G-20 Seeks to Tackle Toxic Bank Assets, Defuse Policy Tension

March 13 (Bloomberg) -- Group of 20 finance ministers zeroed in on cleansing banks of toxic assets as they sought to set aside a transatlantic dispute on how best to fight the global recession.

“You are not going to have a substantial recovery in the real economies until we solve this bank issue,” Flaherty told reporters in Horsham. Lagarde, who this week stoked concerns that a rift was developing with the U.S., said in an interview that “it would be major” if the G-20 agreed how to aid banks.

A deepening slump and the banking turmoil are forcing officials to form a more united approach. The run-up to the meeting was marred by discord as European governments rebuffed a U.S. call to spend more money and demanded more focus be paid to tightening market regulation.

“We need urgent policy action,” Simon Johnson, a former chief economist at the International Monetary Fund and now a senior fellow at the Peterson Institute for International Economics, told Bloomberg Television. “The financial sector problems are far from over. We have a worsening real economy.”

The G-20 officials will dine tonight at a luxury countryside retreat and continue discussions tomorrow. The gathering comes three weeks before national leaders meet for their own summit in London.

G-20 members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S., the U.K. and the European Union.

Bloomberg link

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