WASHINGTON — President Obama on Wednesday called for greater efforts by foreign governments to stimulate their economies in the fight against the global recession. But he also pledged an equal commitment to toughen regulation of financial institutions, a priority in Europe and elsewhere.
Elaborating on the president's comments, Treasury Secretary Timothy F. Geithner said developed nations should increase their financial commitment to the International Monetary Fund by a combined total of $500 billion to ensure that it had enough money to help poorer countries hit hard by the economic crisis.
Both the president's call and Geithner's pitch for backstopping the IMF were part of the Obama administration's effort to achieve what it hoped would be a more coordinated response to the economic meltdown worldwide.
"We can do a really good job here at home, with a whole host of policies, but if you continue to see deterioration in the global economy, that's going to set us back," Obama said.
With a meeting of financial ministers from leading economic powers set for this weekend, and Obama and other major world leaders heading to an economic summit next month, the administration is stepping up pressure on foreign governments to pour money into major stimulus plans, such as the $787-billion package the U.S. enacted last month.
But many of the Group of 20 leading and developing nations, known as the G-20, are resisting. That's partly because of widespread resentment over the U.S. role in creating the worldwide financial crisis -- and resentment over being asked to spend their money to combat it.
Also, although Americans are relatively comfortable with growing deficits, the European Union has rules against too much red ink, and many countries believe they already have done enough to stimulate their economies. Instead, they are more focused on tightening financial regulations to prevent a repeat of the crisis.
"There is this question: Do you simply say, 'Let's do the firefighting now and worry about new global rules later?' Or do you want to firefight and agree on global rules at the same time, which is more difficult," said Jakob von Weizsacker, a former World Bank economist who now is resident scholar at Bruegel, a Brussels think tank.
Obama and Geithner emphasized Wednesday that regulatory reform was a twin goal of the April 2 summit of G-20 leaders.
"It's time now for us to move together and to begin to act to put in place a stronger framework of reforms," Geithner said after a White House meeting with Obama.
Although Congress quickly enacted stimulus legislation last month, studying the regulatory system and proposing a major overhaul is a much more complicated process. Obama said he had been in discussion with congressional leaders about revamping financial regulations, and the administration has said it would unveil proposals next month.
Among the suggestions is a regulator to watch the entire financial system for major risks such as the collapse of the housing market. The Federal Reserve is the leading candidate for such a job.
Lawmakers have begun holding hearings on legislation to strengthen financial regulations. On Wednesday, for example, Mary L. Schapiro, the new chairwoman of the Securities and Exchange Commission, told a House Appropriations subcommittee that the SEC needed more money to hire additional staff members and upgrade the agency's technology to better protect investors.
"What I think we really need is more boots on the ground," she said, noting that the agency has 3,600 employees to monitor more than 30,000 regulated entities, such as investment advisors and mutual funds.
The SEC has been sharply criticized for failing to prevent the risky investments that led to the collapse of major financial institutions and for failing to halt the $50-billion Ponzi scheme allegedly operated by New York investor Bernard L. Madoff.
Geithner, briefing reporters ahead of the meeting of G-20 finance ministers in London, said the United States would urge developed nations to beef up the International Monetary Fund's ability to lend to troubled governments by $500 billion.
He described it as an "emergency reserve fund" for the IMF, which monitors the financial health of governments around the world.
Generally, the United States provides about 20% of the international group's funds, so the U.S. share would be roughly $100 billion, Geithner said. But because the funds are in effect used as capital, not spent, the increase would not affect the federal budget or the federal deficit -- so no additional taxpayer funds would be needed.
"What we're proposing is that we move quickly to reach agreement globally on a . . . much, much larger capacity for the IMF to deal with future crises," Geithner said. "We want it to be large enough to be effective and credible in response to a crisis of this magnitude. It's a very dramatic expansion."