G20 finance ministers praised Europe’s efforts to “maximise the impact” of the EU’s €440bn bail-out fund (EFSF) and ensure that the region’s banks are “adequately capitalised”, but there were heated exchanges behind closed door as the Anglo-Saxon states, and India rebuked Europe’s leaders for failing to grasp the nettle and mobilize the full lending power of the European Central Bank. “They clearly have more work to do on strategy and details,” said US Treasury Secretary Tim Geithner. “In financial crises, it is more risky to act gradually and incrementally than to act with bold force”.
Diplomats say Mr Geithner’s plan to use the ECB as a guarantor of eurozone sovereign bonds was dismissed out of hand, while the EU failed to offer clear assurances that bank recapitalisation would be carried out with sufficient speed and scale to halt an incipient run on the system.
Olli Rehn, the EU’s economics commissioner, said Brussels will announce a “very serious plan” over come days to beef up banks and strengthen the firewall against contagion. German foreign minister Guido Westerwelle politely told the US to mind its own business. “I cannot understand some of the comments of our American friends. You can’t solve a debt crisis with more debt.”
It is no secret that the relationship between President Obama and Wall Street has chilled. A striking measure of that is the latest campaign finance reports. Mitt Romney has raised far more money than Mr. Obama this year from the firms that have been among Wall Street’s top sources of donations for the two candidates. That gap underscores the growing alienation from Mr. Obama among many rank-and-file financial professionals and Mr. Romney’s aggressive and successful efforts to woo them.
The imbalance exists at large investment banks and hedge funds, private equity firms and commercial banks, according to a New York Times analysis of the firms that accounted for the most campaign contributions from the industry to Mr. Romney and Mr. Obama in 2008, based on data from the Federal Election Commission and the nonpartisan Center for Responsive Politics.