- The Washington Times - Thursday, November 6, 2008

The Bush administration Wednesday predicted that the idea of a global financial regulator - pushed by Europeans - will fall flat at an upcoming economic summit of world leaders, and said that it will also oppose a move in Europe to increase the treasury of the International Monetary Fund.

But Bush officials also said there is more common ground between them and Europe, “notwithstanding the rhetoric” from Paris about the need for an overhaul of the existing international financial regulatory structure.

“A lot of work has been going on already within institutional bodies that has not received a lot of high-level political attention. As leaders begin to focus on these issues, as many of them have, they will see that, yes, by all means, more can be done … but there is much already under way,” said a senior White House official involved in the planning of the Nov. 15 summit, who spoke to a small group of reporters anonymously so that he could talk with more discretion.

The official said several international committees already have been formed to look at the problems of credit default swaps and derivatives, credit-rating agencies and stock ratings.

French President Nicolas Sarkozy has led a chorus of voices in Europe and around the world calling for more stringent oversight of financial institutions, in the wake of the economic crisis earlier this fall.

The White House, however, wants to focus the summit on developing consensus about what has caused the global economic crisis. Many other countries blame the problem on a weak U.S. housing market that triggered the collapse of mortgage-backed securities.

“So their objective is to get the United States to get to doing better fiscal discipline and abandoning our model for the financial system. I don’t think we can or should,” said Edwin Truman, who served under President Clinton as assistant Treasury secretary for international affairs.

Economists and financial observers have upped the stakes, speculating that the summit with leaders and finance ministers of Group of 20 nations could rise to the level of a Bretton Woods-type event.

The first Bretton Woods summit was convened in 1944 during World War II and established the U.S. dollar as the global reserve currency, replacing the British pound and guaranteeing U.S. dominance for the foreseeable future.

A senior Treasury Department official also involved in planning the summit said the comparison was overblown.

“It’s hard to imagine something that radical unless you were saying you wanted to blow up the [global financial] institutions that exist and start from scratch,” said the official, who spoke on the condition of anonymity.

As for the idea of a supranational regulatory body that oversaw financial institutions around the world, the White House said that idea has actually not been proposed.

The Treasury official, meanwhile, was clear that the Bush administration does not favor increasing the size of the IMF’s treasury bankroll, an idea that has been pushed by British Prime Minister Gordon Brown.

Mr. Brown has urged oil-rich Middle East countries, along with Asian countries, to contribute to a fund that would help struggling economies seeking to survive the current crisis.

But the Treasury official said IMF’s $200 billion in funds is enough for now.

“There has been no roll-up of need that I’ve seen that surpasses that,” the Treasury official said. “The immediate needs come nowhere near that.”


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