Pittsburgh As leaders of the world’s most developed nations inched closer to consensus in Pittsburgh on Thursday on how best to restrict compensation packages for financial executives, masked protesters and police in armored vehicles clashed in what’s become a familiar ritual at such meetings.
In a chaotic scene near downtown, police in riot gear quashed an unauthorized march by an estimated 2,000 protesters, some clad in black and carrying posters with anarchist symbols. Police responded with tear gas and arrests. However, the streets around the meeting site were well secured and generally peaceful.
President Barack Obama arrived in town Thursday afternoon for the start of a two-day summit of the Group of 20 leaders. It marks the third time this year that the leaders of the most developed nations have gathered to take stock of what now appears to be a waning global financial crisis.
Leaders will announce today that the G-20 will replace the smaller Group of 8 nations as the body for international cooperation, according to a senior administration official, who spoke on the condition of anonymity because the decision hasn’t yet been made public.
The shift is a recognition of the growing influence of developing nations, including China and India.
The G-8, which includes the United States, Great Britain, Canada, Russia, Italy, France, Germany and Japan, will continue to meet to discuss foreign policy and security issues.
By the meeting’s adjournment today, the leaders expect to mutually commit to major changes in financial regulation, and to adopt a common approach preventing the outsized executive bonuses and other forms of compensation for bank chief executives, received in spite of the near-collapse of the financial system last year.
The U.S. appeared late Thursday to have defeated efforts to impose hard and fast caps on executive compensation — a position championed by France. Instead, the G-20 leaders appear ready to embrace standards for pay that more closely link compensation to performance.
Adding to outrage over bank pay, the New York Post reported this week that Goldman Sachs, which earlier this year repaid $10 billion in taxpayer bailout funds, expects to have a bonus pool this year approaching $16 billion.
G-20 leaders — representing the U.S., the European Union and 18 other nations — also are expected to call on nations to try to harmonize “rules of the road” for finance so that banks and other financial firms can’t avoid regulation.
“We need to see competition for stronger standards not weaker standards,” Treasury Secretary Timothy Geithner said during a Pittsburgh news conference.
Added White House Spokesman Robert Gibbs, “We do know that unless we all have greater rules for the road, money can fly and transfer anywhere. So if there are weaker rules in one place but everybody else is taking concerted efforts, you don’t have a defense ... because money can always go to a place very quickly.”
There were plenty of other flashpoints as the meeting got under way.
Several European nations are upset about a proposal from Geithner that would give developing nations a greater say in global financial institutions such as the World Bank and International Monetary Fund.
Geithner wants to transfer another 5 percent of voting shares in the IMF to developing nations such as China, India and Brazil, to reflect their growing importance in the global economy. Europe isn’t opposed per se, but European leaders don’t want this greater influence to come in the form of reducing voting powers for developed nations.