TORONTO: As world leaders gathered to deal with the aftermath of the global financial crisis, President Barack Obama boasted about a congressional compromise on overhauling the US banking system and called for an international effort to prevent future economic meltdowns.

But Obama was still facing major obstacles in convincing a balky Congress to provide more money to fight high unemployment and many countries were resisting the American president’s appeals for continued stimulus spending to support the global economy. They were moving in the opposite direction to raise taxes and cut government programs out of fears of a Greek-style debt crisis.

After meeting through the night in Washington, congressional negotiators cleared the financial overhaul proposal with the help of an administration-brokered compromise on derivatives trading.

The agreement was certain to be a major discussion point as Obama and other leaders of the Group of 20 major economies gathered for three days of talks in Canada. Those discussions were set to begin yesterday with a session at a resort three hours north of Toronto in Canada’s Muskoka lakes region.

“We need to act in concert for a simple reason: This crisis proved and events continue to affirm that our national economies are inextricably linked,” Obama said on the White House lawn before leaving for Canada. “At the G-20 summit this weekend, I’ll work with other nations not only to coordinate our financial reform efforts but to promote global economic growth.”

Leaders of the Group of Eight major industrial nations – the United States, Japan, Germany, France, Britain, Italy, Canada and Russia – were meeting to discuss a range of initiatives to alleviate global poverty.

Those discussions are to move back to Toronto today and tomorrow for talks with the larger G-20 group which includes the rich countries and major developing nations such as China, Brazil and India.

The G-20 group represents 85 per cent of the global economy and the United States wants this group to endorse the outlines for global financial reform to eliminate the threat that banks facing tougher regulations in one jurisdiction will move their operations to countries with more lax rules.

The G-20 countries have been trying for months to overcome differences on financial overhaul centered around setting tougher global standards for the amount of capital the major international banks must have to cushion against losses. Massive losses that began with sub-prime mortgages in the United States triggered a global meltdown starting in the fall of 2008.

Even before the summit began, the leaders engaged in a series of dueling letters and interviews that exposed their conflicts.

A key discussion point for the G-8 was a proposal being promoted by Canadian Prime Minister Stephen Harper, the summit host, to bolster support for maternal and child health care in poor nations. The G-8 was also holding an outreach session with leaders of seven African nations.

The G-8 was also scheduled to spend time over dinner yesterday night exchanging views on hot-button issues, such as Iran’s nuclear programme and possible sanctions on North Korea following the sinking of a South Korean warship.

The House-Senate conference committee agreement on financial overhaul, which the administration hopes can be passed by Congress and on Obama’s desk by 4 July, represented a welcome triumph for a White House that has had a tough two months dealing with the worst offshore oil spill in history and a Congress increasingly worried about soaring US deficits.

On Thursday, solid Republican opposition caused the defeat of legislation that would have provided billions of dollars for job creation and extended benefits for unemployed people.

Other G-20 leaders have not signalled much support for Obama’s warnings that countries should not pull back their stimulus efforts too quickly.

Britain, Germany, France and Japan have all unveiled deficit-cutting plans. Canada’s Harper was urging the countries to agree to concrete deficit-reduction goals as a way of restoring investor confidence following the turmoil caused by the Greek debt crisis.

Asked about the disputes over stimulus spending versus deficit reductions, Canadian Finance Minister Jim Flaherty said, “One size doesn’t fit all.”

Toronto was braced for the potential of disruptive protests that so far have not materialised.