US legislators put the finishing touches on the nation's most sweeping financial reforms in a generation yesterday while the leaders of the world's largest economies gathered to debate how to control deficits without endangering recovery from the global downturn. The new US regulations, which aim to protect consumers and put tighter controls on Wall Street's financial titans, must be approved by both branches of Congress and president Barack Obama before they become law.
Quick passage is expected for the reforms, which represent a major victory for Mr Obama heading into the Group of 20 (G20) summit in Toronto, which concludes tomorrow. Leading up to the summit, ministers from Europe have stressed the need to plug widening government budget deficits. US officials were pushing for measured fiscal restraint, warning spending cuts that are too deep could jeopardise economic recovery.
The US treasury secretary, Timothy Geithner, and Lawrence Summers, who heads the White House's National Economic Council, wrote jointly in The Wall Street Journal: "We must demonstrate a commitment to reducing long-term deficits, but not at the price of short-term growth. Without growth now, deficits will rise further." David Cameron, the British prime minister, defended the austerity measures in his government's budget this week and said there was no tension with the US over fiscal policy.
Each country needed leeway to direct its own economic course, he wrote in a letter to The Globe and Mail newspaper in Toronto. "We must each start by setting out plans for getting our national finances under control," Mr Cameron said. Saudi Arabia is the only Gulf country in the G20. The G20 talks were preceded by a Group of Eight summit of the world's large developed economies, which was held yesterday and today.
afitch@thenational.ae