By Michael A. Fletcher
Washington Post Staff Writer
Wednesday, March 4, 2009
President Obama and British Prime Minister Gordon Brown met at the White House yesterday and emerged promising close cooperation to address the global economic crisis.
The two leaders reiterated their determination to work together to draft regulations to govern the world of modern global finance. And, ahead of a meeting of major economic powers in London next month, they also agreed that coordinated international action is needed to stem the deepening economic downturn.
"There's got to be deep regulatory change," Brown said. "We've just been talking, Barack and I, about the need for proper supervision of shadow banking systems, of areas where there were bank practices that were unacceptable, where remuneration policies got out of hand and weren't based on long-term success but on short-term deals."
Obama concurred that the world's major economies should coordinate their stimulus efforts, while agreeing to a set of rules for the banking sector "so that problems that exist in emerging markets like Hungary or the Ukraine don't have these enormous ripple effects that wash back onto our shores."
Obama acknowledged that the global banking system has been dealt a "heavy blow" and that, as a result, severe financial losses are working their way through the markets and the wider economy. But he also expressed confidence that joint action on new global financial rules and stimulus programs will free the flow of credit and help ease the deepening worldwide economic contraction.
"I'm absolutely confident that credit is going to be flowing again, that businesses are going to start seeing opportunities for investment, they're going to start hiring again, people are going to be put back to work," Obama said. "What I'm looking at is not the day-to-day gyrations of the stock market but the long-term ability for the United States and the entire world economy to regain its footing."
Although the U.S. stock market has sunk to levels not seen in a dozen years, Obama urged patience. He compared the daily ups and downs of the stock market to political tracking polls. "If you spend all your time worrying about that, then you're probably going to get the long-term strategy wrong," he said.
With prices at their lowest point in years, Obama said that "buying stocks is a potentially good deal if you've got a long-term perspective on it."
Beyond the pressing economic matters that dominated their meeting, Obama and Brown discussed the challenges in Afghanistan and Iraq.
The president affirmed his belief in the "special relationship" between Britain and the United States. And after meeting in the Oval Office, Brown and Obama had a working lunch at the White House residence. Today, Brown is scheduled to address a joint session of Congress.
Brown's visit comes a month before he is scheduled to host Obama and other leaders of the world's major economies at the Group of 20 meeting. There, he is expected to further press his case for a "global new deal" to modernize financial regulations and institutions.
"A bad bank anywhere can affect good banks everywhere," Brown said yesterday. "So we've got to root out the problems that exist in other parts of the world, as well, set principles with the banking system for the future and make sure that the banks subscribe to lending agreements where they actually increase the lending that is available to citizens in every country."