U.S. Appeals Abroad Fall Flat as Leaders See No Crisis at Home

Barclays, one of Britain's largest banks, has said it will acquire Lehman's profitable investment banking and capital markets businesses as well as its landmark headquarters building in Manhattan. "This is a once in a lifetime opportunity for Barclays," Robert E. Diamond Jr., Barclay's president, said in a statement last week.

British Prime Minister Gordon Brown, meanwhile, said Britain would do "whatever it takes" to stabilize the markets. His government nationalized the ailing British mortgage lender Northern Rock in February.

Speaking at the U.N. General Assembly, French President Nicolas Sarkozy proposed holding a special Group of Eight meeting before the end of the year to address the crisis. His aides said Sarkozy would deal with the crisis in a major policy speech today.

But European leaders gave little sign they would create their own bailout funds to boost bank liquidity, despite entreaties from Washington. The French government, for one, has said that it does not think banks in France are at great risk of contamination from the toxic loan problem. Finance Minister Christine Lagarde told reporters that the government had no intention of making funds available and had received no request for aid "of any kind" from French banks.

The Russian government, flush with reserves from oil revenues, is looking inward, moving to prop up its troubled banks and stock market. On Tuesday, a state-owned bank agreed to buy and bail out Svyaz Bank, a midsized lender struggling to pay creditors. State banks are also in talks to rescue a boutique investment bank, Kit Finance, that defaulted on debt obligations.

"If a situation which could break the stability of the banking system emerges, the state will intervene," Arkady Dvorkovich, the chief economic adviser to President Dmitry Medvedev, told reporters last week. "The state will act swiftly, so that no one doubts that our goal is stability."

In Latin America, where several major countries were staggered by financial crises over recent decades, there was relief that this time it isn't them.

Bankers and economists in Brazil, South America's largest economy, said their nation has felt the impact of the U.S. financial crisis but its $200 billion of reserves and strong economic growth make any serious problems unlikely.

"For once, Brazil is a comfortable place from which to watch the crisis," said Candido Bracher of Itau, an investment bank. Asked whether any Brazilian companies would need a government bailout, he said: "We are far, far away from that."

The world's big sovereign wealth funds -- whether run by the oil-rich sheiks with well more than $1 trillion in Kuwait, Dubai and Abu Dhabi alone or the technocrats of communist China -- have been missing from the scramble to rescue the American banks and investment houses.

"It was thought that [foreign] money would come in, but people have gotten more jittery and have become concerned about the long-term fiscal implications of this crisis on the U.S. as well as the debate in Congress," said Simon Johnson, former chief economist for the International Monetary Fund and senior fellow at the Peterson Institute for International Economics. "They are weighing the implications carefully and not rushing in."

China Investment Corp., a $200 billion state fund set up last year, spent more than $8 billion on stakes in the Blackstone Group, the world's largest buyout fund, and Morgan Stanley, the second-biggest U.S. securities firm. The value of those investments has plunged about 43 percent.

"Morgan Stanley and Goldman Sachs have enough capital to solve their own problems independently," the state New China News Agency said regarding rumors of talks between the firms and Chinese funds.

"It is clear that the investment banks were all unduly optimistic a few months ago about the full impact of the subprime crisis, taking the position that they had no further exposure, and hence there was little downside for the SWFs," said Nader Sultan, former chief executive of the Kuwait Petroleum Corp. and senior partner of F&N Consultancy. "I would say they lost some credibility."

Sovereign funds, reeling from setbacks in other parts of their own international investments, also don't make decisions fast enough for the quick deal-making that has stunned Wall Street over the past two weeks, Sultan said.

Moreover, said Kuwait Investment Authority's Saad, "We have social and economic responsibilities toward our own country." Kuwait's investment authority has put more than $375 million into its own sagging stock market, Saad told al-Arabiya. The central bank of the United Arab Emirates said Monday it had set up a more than $13 billion fund to try to ensure the kingdom's banks had enough cash.

Staff writers Ariana Eunjung Cha in Shanghai, Ellen Knickmeyer in Cairo, Edward Cody in Paris, Philip P. Pan in Moscow, Juan Forero in Caracas and Josh Partlow in Rio de Janeiro and special correspondent Karla Adam in London contributed to this report.