Geithner: Major countries won’t reach agreement at G-20 on bank tax to pay for future bailouts

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Geithner: Nations won’t agree on bank tax at G-20

WASHINGTON — Treasury Secretary Timothy Geithner says the world’s major economies disagree over taxing banks to pay for future bailouts. But he said the differences are narrowing in other areas of financial reform.

Geithner said Wednesday he did not think the Group of 20 major industrial and developing countries would reach agreement at upcoming meetings in South Korea over the question of imposing a new tax on banks.

But he says differences were narrowing in other areas, including how to stiffen standards on how much capital banks need to protect against a future financial crisis.

“We want to accelerate progress on a global agreement on core reforms,” Geithner told reporters at a briefing before he left for talks on Friday and Saturday in Busan, South Korea.

The discussion among finance ministers and central bank governors will be to develop the agenda for President Barack Obama and other G-20 leaders when they meet on June 26-27 in Toronto.

The G-20, which includes the world’s wealthiest industrial countries plus major developing nations such as China, India and Brazil was designated last year as the top policy-setting group for dealing with the global financial issues.

Geithner told reporters that he expected the discussion in South Korea would focus on a review of efforts to promote a sustained rebound, a discussion that has taken on a sense of urgency with the European debt crisis, and on narrowing differences in the area of financial regulatory reform.

On the issue of financial reform, Geithner said that the United States was setting a good example for the rest of the world by getting sweeping reform proposals through both the House and Senate. Leaders in both chambers have predicted they will have a final bill on Obama’s desk by July 4.

Geithner said he would stress during the weekend talks the need to improve transparency, promote better regulations for derivatives, and boost standards for capital or the reserve banks use to protect against bad loans.

The issue of a bank tax to pay for future bailouts is one that is favored by the United States and European nations but is opposed by countries such as Canada and Australia.

Geithner said he did not think the countries were “on the verge of a global consensus” on the bank tax issue, and he said he did not expect that issue to be resolve at the meeting in South Korea.

But he sounded more optimistic on efforts to reach a global standard for bank capital requirements, saying in that area “the differences are narrowing.”

(This version CORRECTS dates of G-20 summit to June 26-27)