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Fact Sheet: Summit on Financial Markets and the World Economy
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For Immediate Release Office of the Press Secretary November 15, 2008

Fact Sheet: Summit on Financial Markets and the World Economy

ÿÿWhite House News

ÿÿÿÿÿ In Focus: Summit on Financial Markets and World Economy

President Bush And World Leaders Agree On The Washington Declaration To
Address Current Financial Crisis

Today, President Bush and world leaders gathered for the first in a series
of meetings to discuss efforts to strengthen economic growth, deal with the
financial crisis, and to lay the foundation for reform to help to ensure
that a similar crisis does not happen again. Since the outbreak of this
crisis, the world's leading nations have coordinated actions more closely
than ever before. Thanks in large part to these decisive measures, once
frozen global credit markets are beginning to thaw and businesses around
the world are gaining access to essential short-term financing. This
problem did not develop overnight, and it will not be solved overnight. No
single nation will be able to fix this crisis, but with continued
cooperation and determination, it will be solved as long as we are
steadfast in our commitment to reforming our financial sectors and
maintaining free and open markets.
  þ Today's Summit achieved five key objectives. The leaders:
      þ Reached a common understanding of the root causes of the global
        crisis;
      þ Reviewed actions countries have taken and will take to address the
        immediate crisis and strengthen growth;
      þ Agreed on common principles for reforming our financial markets;
      þ Launched an action plan to implement those principles and asked
        ministers to develop further specific recommendations that will be
        reviewed by leaders at a subsequent summit; and
      þ Reaffirmed their commitment to free market principles.
  þ The leaders agreed that immediate steps could be taken or considered to
    restore growth and support emerging market economies by:
      þ Continuing to take whatever further actions are necessary to
        stabilize the financial system;
      þ Recognizing the importance of monetary policy support and using
        fiscal measures, as appropriate;
      þ Providing liquidity to help unfreeze credit markets; and
      þ Ensuring that the International Monetary Fund (IMF), World Bank and
        other multilateral development banks (MDBs) have sufficient
        resources to assist developing countries affected by the crisis, as
        well as provide trade and infrastructure financing.

The Leaders Agreed On Common Principles To Guide Financial Market Reform:
  þ 

    Strengthening transparency and accountability by enhancing required
    disclosure on complex financial products; ensuring complete and
    accurate disclosure by firms of their financial condition; and aligning
    incentives to avoid excessive risk-taking.
  þ 

    Enhancing sound regulation by ensuring strong oversight of credit
    rating agencies; prudent risk management; and oversight or regulation
    of all financial markets, products, and participants as appropriate to
    their circumstances.
  þ 

    Promoting integrity in financial markets by preventing market
    manipulation and fraud, helping avoid conflicts of interest, and
    protecting against use of the financial system to support terrorism,
    drug trafficking, or other illegal activities.
  þ 

    Reinforcing international cooperation by making national laws and
    regulations more consistent and encouraging regulators to enhance their
    coordination and cooperation across all segments of financial markets.
  þ 

    Reforming international financial institutions (IFIs) by modernizing
    their governance and membership so that emerging market economies and
    developing countries have greater voice and representation, by working
    together to better identify vulnerabilities and anticipate stresses,
    and by acting swiftly to play a key role in crisis response.

Our Nations Will Continue To Take The Right Steps To Get Through This
Crisis

The leaders approved an Action Plan that sets forth a comprehensive work
plan to implement these principles, and asked finance ministers to work to
ensure that the Action Plan is fully and vigorously implemented. The Plan
includes immediate actions to:
  þ Address weaknesses in accounting and disclosure standards for
    off-balance sheet vehicles;
  þ Ensure that credit rating agencies meet the highest standards and avoid
    conflicts of interest, provide greater disclosure to investors, and
    differentiate ratings for complex products;
  þ Ensure that firms maintain adequate capital, and set out strengthened
    capital requirements for banks' structured credit and securitization
    activities;
  þ Develop enhanced guidance to strengthen banks' risk management
    practices, and ensure that firms develop processes that look at whether
    they are accumulating too much risk;
  þ Establish processes whereby national supervisors who oversee globally
    active financial institutions meet together and share information; and
  þ Expand the Financial Stability Forum to include a broader membership of
    emerging economies.

The leaders instructed finance ministers to make specific recommendations
in the following areas:
  þ Avoiding regulatory policies that exacerbate the ups and downs of the
    business cycle;
  þ Reviewing and aligning global accounting standards, particularly for
    complex securities in times of stress;
  þ Strengthening transparency of credit derivatives markets and reducing
    their systemic risks;
  þ Reviewing incentives for risk-taking and innovation reflected in
    compensation practices; and
  þ Reviewing the mandates, governance, and resource requirements of the
    IFIs.

The leaders agreed that needed reforms will be successful only if they are
grounded in a commitment to free market principles, including the rule of
law, respect for private property, open trade and investment, competitive
markets, and efficient, effectively-regulated financial systems. The
leaders further agreed to:
  þ Reject protectionism, which exacerbates rather than mitigates financial
    and economic challenges;
  þ Strive to reach an agreement this year on modalities that leads to an
    ambitious outcome to the Doha Round of World Trade Organization
    negotiations;
  þ Refrain from imposing any new trade or investment barriers for the next
    12 months; and
  þ Reaffirm development assistance commitments and urge both developed and
    emerging economies to undertake commitments consistent with their
    capacities and roles in the global economy.

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