First results, G20 leaders pledge credit action plan, but decisions made at home

As leaders of the world's 20 largest economies, dubbed the G-20, gather in Washington, some European leaders are pushing for global financial regulation. And critics charge that the Bush administration itself has violated free-market principles with its massive $700 billion bailout plan. They note that the plan has failed to get credit flowing freely again.

While President Nicolas Sarkozy of France proposed this meeting, and President Bush agreed to play host, the most sought-after country at a gathering some have called Bretton Woods II may prove to be China.With close to $2 trillion in foreign exchange reserves and an economy that is still growin

But prospects for joint action on growth, let alone a major overhaul of the world financial system, looked slim with host President George W. Bush resisting bold moves before leaving office in two months and President-elect Barack Obama absent.

French officials said the Group of 20 advanced and developing economies were close to agreement on a final declaration at the summit which wraps up on Saturday. European officials said the leaders pledged to finalise a first series of measures to reform financial regulations by March 31.

The first central clearinghouse for the $33 trillion credit- default swap market should be in operation by year-end in the U.S., under an agreement signed yesterday by three U.S. financial regulators. The Federal Reserve, Commodity Futures Trading Commission and Securities and Exchange Commission agreed to provide consistent oversight of credit-default swaps, which are unregulated contracts that are traded privately.

The clearinghouse would back trades and absorb losses in case of a dealer failure. Some in Europe have been pushing for a clearinghouse under government control, or within the IMF. Investors, supported by the Fed, want it to be independent. The New York Fed has been meeting with groups including CME Group Inc., Intercontinental Exchange Inc. and NYSE Euronext on plans to create a privately run organization.