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September 20, 2009

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Obama pledges to work with G20 to curb banking excesses

UNITED States President Barack Obama yesterday vowed to work with fellow G20 leaders this week to close gaps in financial regulations and insisted reckless schemes that yield "fat executive bonuses" could no longer be tolerated.

Five days before hosting a summit of the Group of 20 nations in Pittsburgh, Obama said steps taken since they last met in April in London had produced "real progress" toward breaking the back of the global economic crisis.

But in his weekly radio and Internet address, he insisted that "stopping the bleeding isn't nearly enough."

"We know we still have a lot to do, in conjunction with nations around the world, to strengthen the rules governing financial markets and ensure that we never again find ourselves in the precarious situation we found ourselves in just one year ago," he said.

Financial market reform will be a central issue at the summit of leading developed and developing nations but progress in Congress on Obama's regulatory agenda has been slow.

Seeking to show other countries his administration is serious about tackling US weaknesses and excesses blamed for setting off the global crisis, he said: "As the world's largest economy, we must lead, not just by word, but by example."

European G20 members have taken the lead in calling for some restraint on banking's "bonus culture," insisting it must be treated as a key item at Pittsburgh, and the issue seemed to be moving higher on the US agenda as well.

Larry Summers, Obama's top economic adviser, said the way that pay for bankers is set must be recalibrated to ensure the risky behavior that helped fuel the banking crisis is not repeated.

Obama said: "We cannot allow the thirst for reckless schemes that produce quick profits and fat executive bonuses to override the security of our entire financial system and leave taxpayers on the hook for cleaning up the mess."

He added: "Not surprisingly, lobbyists for big Wall Street banks are hard at work trying to stop reforms that would hold them accountable and they want to keep things just the way they are. But we cannot let politics as usual triumph so business as usual can reign."


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