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G-20 addresses bankers' bonuses

September 06, 2009|Associated Press

LONDON — Finance officials from rich and developing countries agreed Saturday to curb hefty bankers' bonuses, but the proposed crackdown on excessive payouts fell short of European demands because the United States and Britain shied away from imposing a cap.

The Group of 20 finance ministers also pledged to maintain stimulus measures such as extra government spending and low interest rates to boost the global economy.

A recovery is under way, they said, but it is far from certain to continue.

"The financial system is showing signs of repair," said U.S. Treasury Secretary Timothy Geithner. "Growth is now under way. However, we still face significant challenges ahead."

The International Monetary Fund has said that the global economy is beginning a sluggish recovery from its worst recession since World War II and raised its estimate for global economic growth in 2010 to 2.5%, from an April projection of 1.9%.

But the IMF also downgraded its forecast for this year, saying the world economy would shrink by 1.4%, instead of 1.3%.

The G-20 also pushed ahead with plans to reform the financial system, including tougher action against tax havens and giving developing countries a greater say in global governance.

Curtailing bankers' pay and bonuses has been seen as key by some countries that blamed the risk-promoting payment culture for fueling the current financial crisis.

British Treasury chief Alistair Darling said that there must be no more cases in which "people are being rewarded for reckless behavior."

European countries had pushed for the G-20, which represents 80% of the world's economic output, to enforce an official cap on both individual payouts and collective bonus pools at financial institutions.

Britain supported the general effort to rein in bonuses, but not the cap, while the United States was more intent on pushing its proposal for a global accord to force banks to hold more capital reserves.

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