March 12 (Bloomberg) -- Treasury Secretary Timothy Geithner urged the Group of 20 nations to take “forceful” actions to end the financial crisis and called for an expansion of the International Monetary Fund’s supplementary borrowing program by about $500 billion.

“This is a global crisis which requires a global response,” Geithner said yesterday in a statement from Washington. “G-20 countries must take strong macroeconomic and financial sector measures.” A “reasonable benchmark” is the IMF’s recommendation for stimulus equivalent to 2 percent of a nation’s gross domestic product, Geithner said.

Geithner will make the recommendations at a meeting starting tomorrow near London of finance ministers from 20 of the world’s industrial and developing nations that will lay the groundwork for a summit of leaders on April 2 in London.

The Treasury secretary also proposed expanding, by as much as $500 billion, the IMF’s capacity to borrow extra funds from some of its member nations. The fund currently is able to borrow about $50 billion through special supplementary financing arrangements. The U.S. contribution is about 20 percent, indicating a possible new commitment of about $100 billion, Geithner told reporters.

“We should consider further ways to strengthen the IMF’s capacity to provide support to emerging markets and the poorest,” the Treasury said in a separate statement.

Gold Stockpile

Geithner last month pushed Group of Seven officials to soften criticism of China just weeks after he had said the nation was “manipulating” the yuan, according to a person briefed on the matter. G-7 finance ministers on Feb. 14 welcomed China’s “commitment to a flexible exchange rate.”

The Obama administration soon will also push Congress for legislation that allows the IMF to “mobilize” its stockpile of gold, Geithner said yesterday. Congress would need to approve the IMF funding expansion, although it wouldn’t count against the budget deficit, he said.

Congress would not need to approve a separately planned trade financing initiative because that would be done within the existing resources of the Export-Import Bank and the U.S. Overseas Private Investment Corp., Geithner said. He said the U.S. wants to support efforts by the World Bank to give a coordinated boost to trade financing from governments around the world.

At the G-20 summit, Geithner plans to compare notes with his counterparts about moves aimed at stemming the global financial crisis. The U.S. is working on a new program to help banks clear out the toxic assets that are “gumming up the system,” using a mix of private investment and public financing, Geithner said.

Executive Pay

Geithner said there is a consensus among major economies that executive pay levels need to be reined in, since past practices have contributed to the buildup in leverage and risk that led to the current financial crisis.

“I do believe that compensation just got way divorced from any meaningful appreciation of risk,” Geithner said. “We’re going to need a much stronger set of standards applied very evenly across the major globally active financial institutions and those critical markets.”

Geithner said he will go before Congress in two weeks to lay out a new plan to strengthen U.S. financial regulation. This will include “more carefully designed restraints on leverage” as well as an overhaul of supervision for systemically important financial institutions, he said.

At this weekend’s meetings, finance ministers will talk about efforts to coordinate regulatory changes as well as spending initiatives to bring back economic growth.

Obama’s Goals

“Our economy needs a revival of global growth to complement the stimulus we are injecting at home,” Geithner said. “Forceful financial sector actions are critical to rebuild confidence, restore market functioning, get credit flowing again and bring stability to the global financial system.”

President Barack Obama said the U.S. has two goals for the summit in London. One is to ensure there’s “concerted action around the globe to jump-start the economy.” Second is to “make sure we are moving forward on a regulatory reform agenda” to ensure against a repeat of the current crisis.

European Union finance ministers have rejected calls from the U.S. to pump more money into their economies to battle the global recession. Obama last month signed into law a $787 billion package of tax cuts and new spending to spur U.S. economic growth.

‘Aggressive Initiatives’

“In the United States, we are implementing a series of aggressive initiatives to stabilize and strengthen our financial system to support economic recovery, and we look forward to complementary actions around the world,” Geithner said.

German Chancellor Angela Merkel said today that her country and France “speak with one voice” on stimulus and will wait to see the effects of existing programs. “France and Germany have taken unprecedented fiscal measures to promote economic recovery and job creation,” according to a joint statement issued after talks between Merkel and French President Nicolas Sarkozy in Berlin today.

The IMF said in a report last week that only the U.S., Saudi Arabia, China, Spain and Australia are moving toward meeting the IMF’s target of introducing fiscal stimulus equivalent to 2 percent of gross domestic product this year. Germany’s efforts currently amount to 1.5 percent of GDP, which is double what France has passed, according to the IMF.

To contact the reporter on this story: Rebecca Christie in Washington at Rchristie4@bloomberg.net.

Last Updated: March 12, 2009 10:01 EDT