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Updated Thursday, March 11, 2010 9:35 am TWN, By Desmond Butler, AP

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U.S. will work with Greece: Obama

Papandreou's trip is part of a four-nation tour aimed at boosting Greece's financial credibility and winning support for more favorable interest rates for loans. Papandreou says the solution lies with support from European Union countries. He was in the United States as the Obama administration and Congress are considering major changes in the U.S. financial system designed to prevent future activities such as those that caused a major recession in Obama's first year in office.

“I found a very positive response from the president,” Papandreou said of Obama's reaction to his call for currency trading reforms.

Papandreou and other European leaders have been urging the U.S. to take specific action on currency trading. The EU has said it is considering banning financial instruments including certain credit default swaps that it believes have exasperated the global financial crisis.

Credit default swaps are a form of insurance for buyers to protect them against the risk that a seller or borrower would default on a security such as a government bond. In “naked” sales, the buyer does not hold the underlying asset and faces no such risk — but can make a profit on the swap itself.

Papandreou on Monday compared the practice of selling naked credit default swaps to buying insurance on a neighbor's house and then burning it down to collect.

Tuesday in New York, the head of the U.S. Commodity Futures Trading Commission renewed his call for new regulation of the $600 trillion global financial derivatives market. CFTC Chairman Gary Gensler said such action would “greatly reduce” the risk posed by credit default swaps, which account for an estimated $60 trillion of the derivatives trade.

However, Gensler added in a speech, “additional reforms ... should be considered to address the unique characteristics” of credit default swaps.

Papaconstantinou warned in an interview with The Associated Press that leading economic powers have not yet implemented the changes needed to avoid another financial crisis.

“The real question that we should be asking ourselves on both sides of the ocean is, `Have we learned the lessons of that financial crisis?”' he said. “I think the honest answer is that despite some political will to do so, we haven't actually taken all the necessary measures.”

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