The lame-duck administration of U.S. President George W. Bush was unlikely to bend to European pressure for a supranational financial regulator that would limit flexibility for national governments, according to observers.

“President Bush was not going to agree to any kind of international enforcement mechanism,” said Diana Furchtgott-Roth, a former chief of staff of Bush’s Council of Economic Advisers who is now a senior fellow at the Hudson Institute.

“He would agree to principles but not to any mechanism that would punish the United States for not taking specific action.”

As part of its six-point plan for tackling the financial crisis, the G-20 leaders said in a statement that market regulation remains a national responsibility but that harmonization is needed to keep problems from spilling across borders.

“Regulation is first and foremost the responsibility of national regulators who constitute the first line of defense against market instability,” the G-20 statement said.

“However, our financial markets are global in scope, therefore, intensified international cooperation among regulators and strengthening of international standards, where necessary, and their consistent implementation is necessary to protect against adverse cross-border, regional and global developments affecting international financial stability.”

Furchtgott-Roth said that despite the lack of an agreement on more specific enforcement, the move points toward progress in harmonizing and strengthening rules.

“Fulfilling the principles will be left to the individual countries, some of which may do it and some of which may not do it,” she said.

“I think there is a great desire among all these countries to get us out of the global mess and I think they will do their best ... there will be an honest effort on the part of all these governments to work on all of these principles.”

She added that French President Nicolas Sarkozy and British Prime Minister Gordon Brown had pushed for a more specific regulatory scheme because “they wanted to minimize the power of the United States. They did not succeed in that.”

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