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For Immediate Release
Office of the Press Secretary
September 30, 2008
Press Briefing by Tony Fratto
James S. Brady Press Briefing Room
11:34 A.M. EDT
MR. FRATTO: Good morning, everyone. Just a couple things to note. The President -- we haven't given you a schedule for what the President will be doing on the next two days. I say at least for tomorrow, Thursday, the President -- I'm sorry, today is Tuesday.
Q Tomorrow is Wednesday.
MR. FRATTO: Yes. (Laughter.) The President will be here on Wednesday. The President will be here on Thursday. And we'll let you know about Friday, but the President intends to stay here to work on this financial rescue package with members of Congress for as long as it takes to get this done, because it is critical. And if we need to change our plans for Friday, we'll do that.
Q Meetings or working phones, or both?
MR. FRATTO: Both, all of the above. Working with his staff here, talking to members of Congress, working with Secretary Paulson, hearing from the Fed Chairman, Ben Bernanke, and other regulators who have ideas and options and anything that can be constructive in terms of a way forward to try to get this legislation passed, because obviously the crisis we were dealing with before is still with us today. There's still evidence of that, that markets are under stress and the banking system is under stress, specific banks are under stress.
I think I told some of you this morning that -- you may have heard it from the Senators' offices -- that Senator McCain and Obama each called the President this morning. They offered constructive ideas and had a good conversation with the President. The President appreciated hearing from them and about their commitment to continue to work to try to get this problem solved, and to get legislation that will help the economy and that can get passed by both Houses of Congress.
So that's where we are today. The President has been meeting with his team and having conversations with his team here. I know -- a number of you have asked this morning who he is calling, who he's meeting with, and I just want to be clear, we're not going to read out every meeting and every call that the President has on this in coming days. There will be a lot of work that gets done, and what we are working on is the strategy and ways that we can -- whether it's augment the bill or strengthen the bill in ways that will, again, help the economy and be able to pass both Houses of Congress and that the President can sign.
Q Just to follow up, first of all, on that point, Tony. Is the White House strategy going forward to try to get essentially 12 more votes to get that House bill passed? Or do you view that you have to basically start all over? What's the premise you have --
MR. FRATTO: No, I don't think we have to start all over. We do have a solution that will fix the problem, and that's the original proposal that was made by Secretary Paulson. We have to remember that while we have a political and legislative problem here, that the problem that we most need to fix is the economic problem. So we want to make sure the economic policy is the right one. There may be ways to improve upon that and to help the economy in other ways that could contribute to legislation that can pass both Houses of Congress, but that's our test: Does it, first, fix the problems with our economy, or help to improve the problem in our economy, and strengthen markets and our financial institutions so that they do not damage the real economy out there.
Q But, Tony, if you say that you have a solution and the solution is the original proposal made by Secretary Paulson, that is what originally stirred up all of the discontent on the Hill on both the left and the right. Are you saying that you won't accept the modifications which have already been voted on?
MR. FRATTO: No, not at all. In fact, I think what you heard us say and heard the President say a number of times last week, including in his address to the nation, was that our work with Congress greatly improved the original proposal that was put forward by the administration. That was -
Q You sounded like you were saying that the package -- you know.
MR. FRATTO: No, no, no. Well, let's be clear. The proposal that Secretary Paulson made, that the administration made, is an important part of the solution. That core idea of taking these assets that are not trading in markets today, that is what is essentially a frozen market, that needs to be part of a solution. We need to address those assets and to get a market restarted so that banks and businesses are able to operate in their normal way, where banks are able to lend to each other overnight, and businesses are able to borrow from banks for overnight lending.
We're seeing lots of strains throughout the country, especially from small businesses who are searching for overnight lending. Banks are having a very difficult time lending. We saw that again in overnight credit rates last night where the spreads on those rates increased again.
So there's real stress in the market, and that is a solution to fix it. But to get to your point, there's no single silver bullet here. There are lots of good ideas that can help the financial services industry and our financial markets, and we're going to look at all of those ideas.
Q But you're not ruling out -- just to be clear, you're not ruling out the fixes that were already added and voted on?
MR. FRATTO: Not at all. No. Those were -- we've said this a number of times -- those were good additions to our original proposals; they strengthened it, they improved it, and we'd like to keep that whole package together.
Q Tony, what level of confidence, if any, do you have that a deal can be completed and voted on this week?
MR. FRATTO: We believe it can be. I know -- a lot of you noted I came here yesterday, stood here and said that I thought we had the votes to pass the legislation yesterday. And a lot of us --
Q How did that work out?
MR. FRATTO: -- a lot of us did. Not so good, and not for the good of the country. But it wasn't for lack of trying. There was a lot of work that went into it. We didn't get the votes that -- that we needed. And you saw the reaction. But we're going to go back to it and keep trying to get this done, because as Secretary Paulson said yesterday, we simply cannot allow this to fail because the damage to our economy would be too great.
Q So you believe, or you're hopeful that this can go through both Houses by the end of this week?
MR. FRATTO: We're very hopeful. We think it needs to be done. And when something needs to be done, then we need to be working as hard as we can to get it done.
Q Tony, in the past, on important controversial issues, the administration has really worked the conservative base, reached out to them in advance, laid the groundwork. Do you, in hindsight, think the White House perhaps could have done better with that on this issue, seeing as how it was the conservative Republicans who were the ones predominantly who did not vote for this?
MR. FRATTO: Look, I know that yesterday afternoon erupted into, as only Washington can, a number of hours of great finger-pointing. You didn't see that coming from here. We're not going to engage in finger-pointing on this issue. What we're focused on is fixing the problem and trying to get it to a solution that can pass.
A lot of people may want to be critical of what we've done. We're dealing with a really unique challenge here. Unlike a lot of other policy issues, the way we talk about markets and things that the federal government will do with respect to markets has market outcomes. If you were watching 10 or 11 days ago, when just the rumor that we were going to have a proposal hit the markets, I think the Dow went up 300 points in an hour and a half in one afternoon.
So we have to be very, very careful about how we talk about the things that we're going to do that affect markets and the economy, and that's a constraining thing. We're also dealing with an incredibly complex issue -- not just in the solution and how it works, but also the problem. We spent a lot of time talking about -- talking about the problem and how it affects Americans in their daily lives, and it's a hard thing to do because there are four or five steps involved in that before you get to the kitchen table of the average American family and how it affects them.
So it is a challenge. We try to do it; I know all of you try to it, too, to deal with the complicated -- all of a sudden all of you are also financial news reporters now. Next week you might be foreign correspondents again on some other issue. So it's a challenge for everyone in terms of explaining it. And we try to do the best we can. We put the President out on national television with an address to the nation that was very well received. A lot of the members appreciated that. And we heard that people throughout the country appreciated hearing that explanation also.
So we're going to keep doing that. We obviously have more work to do, and I think we'll be able to do it.
Q As a follow-up, in that additional work, looking forward then, will you be reaching out more to the conservative base, to those who did have these deep objections, and trying to solve this better?
MR. FRATTO: I don't think it's a conservative thing or a liberal thing. We're talking about the U.S. economy. I know there are people out there who talked about this as a -- its impact on people who think about the free markets. We're not talking -- this isn't a debate -- this isn't about free markets or socialism. This is a debate about frozen markets. And you can't have a free market when you have a frozen market. And what we're trying to do is unfreeze this really important part of our market that has an impact on every financial transaction in this country in one way or another.
So that's what we're focused on. It's not an ideological debate. We need to be able to better demonstrate that there are impacts for American families, for retirees, for small businesses, for larger businesses who are hiring, for our banking system, for the ability to get home loans, for businesses to be able to make their payrolls, their small business accounts. These are all the things that are affected because of this one frozen asset class. And that's the problem that we're focused on and trying to fix.
Q Tony, you talked about looking at ways to augment or strengthen this bill. Can you give us an idea of what areas the White House believes that there is still room for improvement?
MR. FRATTO: We don't want to debate this bill in the press. I think what we want to do is to have our conversations with staff and members. We're willing to listen to any idea that anyone out there has, whether in Congress or in the private sector. Some of you have asked about the FDIC idea that a number of people are talking about today. It's not necessarily a new idea; I know Sheila Bair, over at FDIC, has raised these kinds of solutions in the past. Larry Lindsey, who was the former Director of the National Economic Council here at the White House, has written about that idea. It's something that we'll pay attention to and discuss. But I'm not going to get into discussions of the various pros and cons of each idea out there. I don't think that's the most constructive way --
Q But there's still flexibility in that?
MR. FRATTO: Absolutely, yes.
Q Tony, is it the world "bailout" that you think did you in yesterday? Listening to you and Gillespie and even the President talking about opponents of the bill and the way in which you avoid that word -- is that what you're trying to disabuse Americans of, that it was a bailout?
MR. FRATTO: I think it's really unfortunate shorthand for a very complicated issue. You all know me; I'm not someone who bashes the media. I think I've been clear; this is a very difficult issue for everyone to communicate on. But we presented ideas that were -- that talked about a very specific problem in our economy and what our goal was to try to correct that problem. Our critics took the language of a bailout for Wall Street. And I think it's undeniable that the media chose that branding of this debate -- and I see it on all the scrolls, I see it in the headlines. Like I said, I'm not bashing the media, but I'm saying that was unfortunate to take the language of the critics to brand what this policy debate is about.
It is not a bailout for Wall Street. It is certainly not a bailout for Wall Street CEOs. It is an effort to fix this problem of a frozen asset class that has implications over our entire economy.
We have a couple days here now where we're going to work with Congress and we're going to continue to communicate on this. And hopefully we can do a better job of making clear just what our goal is and what we're trying to fix. Maybe more American people will be able to see that and hopefully more members of Congress.
Ben, why don't we go to --
Q Just a quick follow-up on the President's role in this. He's spoken nearly every day of late, including that prime-time address you referred to. But his own party was a key block in shooting this down -- two-thirds of Republicans voted against it. Are the President's powers of persuasion, if you will, are they simply gone at this point?
MR. FRATTO: I think there has always been far too much made of any one President's powers of persuasion on an issue. We've had some really difficult debates and battles over legislation this year; we've won a lot of them, and we won a lot of them with that group that you're referring to.
This is, like I said, a very complicated issue. There are strong feelings on both sides about it. But what we are focused on is helping everyone to understand the problem and why the package of solutions that we're putting forward will be effective in addressing that problem. And that's what we're going to be focused on. We are not going to get in the business of pointing fingers at others on this.
Q Yes, Tony, can you -- I know you said you were not going to debate the bill in the media here. Can you say if the existing bill, every piece of it is subject to modification, if you can find some votes by changing it?
MR. FRATTO: I think I just want to leave it at the test that I said, which is, if it will help the economy, if it will help deal with this problem in our financial markets and the strength of our financial institutions, and if it will help in being able to pass legislation, those are things that we'll consider.
But the core of the idea that the administration put forward, with respect to these mortgage-backed securities and other distressed assets, we think is critical to the solution. We talked about $700 billion to invest in this asset class and to try to build a market. A lot of people have talked about it as a major spending program. We think it's not really a spending program; this is an investment in an asset. We're going to try to have a well-functioning market, and we think that the -- there will be a return on that investment to taxpayers so that it will be a fraction of the $700 billion.
That one issue alone is a very -- has been a great challenge to try to explain. We're going to continue to try to do that and help people understand this isn't a spending program; this isn't going into people's wallets; we're not buying disposable products with it. We're investing in an asset class that has value and will have a return to taxpayers. And that's a very important part of this, and part of the explanation for this, for why it's needed and why the program will be effective.
Q Would the $700 billion be subject to modification, or is that sacred?
MR. FRATTO: That was the number that Secretary Paulson and his team, and Chairman Bernanke and others felt would be most effective in being able to deal with a market of this size. It's a huge market. It's measured in the trillions of dollars. And they felt that a $700 billion program is necessary to have the appropriate impact.
If you try to have a political solution on that number, and you bring it lower, then you may not be -- you may not be doing what is best for the economy. So we have to try to do what's best for the economy.
To put it in some perspective, we're talking about a $700 billion investment program in assets. In one quick afternoon yesterday, our equity markets lost $1.3 trillion in value -- in just an afternoon. And we're talking about a two-year program that will involve investments that we know have -- that are well-performing, they're backed by the mortgages of millions of Americans who actually, by and large, overwhelmingly, pay their mortgages and pay them on time.
Q So $700 billion would be --
MR. FRATTO: We think that's the right number. Unless Secretary Paulson comes back and says it's a different number. That was his expert, considered judgment of his team and other federal regulators and people who follow the markets. So we're going to take Secretary Paulson's advice on that.
Q Tony, the flip side of finger-pointing is responsibility. By my count, the plan got not a single vote from Texas or Arizona. How is it the President was not able to convince members of the House from his own state to vote for this bill?
MR. FRATTO: Now, I don't think I'm going to be able to get into explanations for why anyone -- or any one group of members of Congress voted the way they did. What happened yesterday --
Q Well, it speaks more to the President, when he started his lobbying for the bill.
MR. FRATTO: I don't think so. The President worked incredibly hard on this. He worked on it personally. He was personally engaged. He was personally engaged with his team, and he was engaged with the leadership and members. At any rate, that was yesterday. And we're looking towards tomorrow and the next days to try and get this done. That's what our focus is on.
Q You talk a lot about the issue of how to explain it to make sure people really understand the consequences and the nature of the plan. How much do you think this has been an issue of explaining and selling and convincing, as opposed just the substance of it, that maybe people do understand it and they just don't like it?
MR. FRATTO: Well, I don't know. I'm not -- I don't think I'm going to do analysis on -- I don't think I can do analysis on that. Look, it is a very, very complicated issue. You know, I could tell you something -- something we pay attention to here, in terms of how the markets are faring. You hear us talk about credit markets, right? Well, something we look at is the Libor rate. Well, can anyone -- raise your hand if you're familiar with the Libor rate. The London Interbank -- Bloomberg would know. All right, the London Interbank Overnight Rate.* It's banks lending to banks. That is a critical number.
Well, it reached -- that spread reached an all-time high last night. Okay? I mean, that is our communications challenge, is to explain why the Libor rate is at all relevant to an American's ability to get an auto loan, or a small business' ability to maintain their payroll account at a financial institution. There are a lot of steps between the Libor rate and the homes of Americans. So we obviously have a challenge.
Now, we've tried to do this in, now, less than two weeks, from the day that Secretary Paulson and the President and Chairman Bernanke came forward and talked about the crisis and what we were going to try to do it, in a very, very short period of time, tried to help Americans and work with members of Congress to get legislation that tackles this very complicated issue. It's not an easy challenge. If people want to point fingers at us, that's fine, but we're going to focus on continuing our efforts to communicate on it and continue to work constructively with members of Congress to get to a solution.
Q Tony, I have two questions. So what I'm hearing you say basically is that the White House is working on refining the message as opposed to refining the bill.
MR. FRATTO: That would be a misreading of what I'm saying. I think we're going to continue to -- continue to carry our message forward in every way that we can. So that continues; and our efforts to continue to improve the bill in a way that will assist the economy and get enough votes in Congress is our other goal. And I'm not saying that they're not connected, but it's not one or the other.
Q Okay. And the other question is that, I know you don't like poll numbers, but a new ABC News/Washington Post poll shows that 26 percent of Americans approve of the President's job approval rating -- that's his career low -- 70 percent disapprove; that is a historical high. Do you think that the President is out of political capital and that might be to blame?
MR. FRATTO: No, I think you can find lots of people who can comment on polls, but I won't.
Q You mentioned repeatedly of frozen assets, assets that have value. But what about human assets? Because there's a lot of argument out there that people around that kitchen table might not be able to wait three or four steps along the way. As you know, unemployment insurance is running out mid-October, about three weeks before the election. The White House said it opposes that. There's supposedly a bargaining chip out there by Democrats for the President to drop his veto threat on the second stimulus bill. Are you rethinking any of these positions?
MR. FRATTO: Which -- let me try to break down your question in a few different ways. You talked about unemployment insurance. We extended unemployment insurance. Congress put that forward for a 13-week extension of unemployment insurance, from 26 weeks-six months, for an additional 13 weeks extension.
Q It expires in October --
MR. FRATTO: The additional 13 weeks for those people who have been on unemployment insurance already for six months, for them it does expire. But it rolls, depending on when you get on the program, so that if you are on the program today, if you go on this week, you have the original 26 weeks, plus an additional 13 weeks. So that's where it stands today.
Congress may have ideas on things that they want to try to do with respect to unemployment insurance. They may try to find legislative vehicles to deal with them. We'll have those conversations with Congress if there are other efforts that they want to do. But with respect to this particular problem, if you want to help those people at their kitchen table, if you want to help the ability of their employers to keep them employed, then you want to fix the problem that we're trying to fix this week.
And there will be -- there is nothing we can do that is more important for the U.S. economy, short term and long term, than to fix this problem with this frozen asset class. It is the single best thing we can do for the economy. That's our primary focus, and that's what we're going to be working on. We'll obviously continue to talk about other issues also if Congress has interest in them.
Q But you have to acknowledge that one of the key issues here is also to get something that will pass. And if the bargaining chip is to drop the veto threat on a second stimulus package, would you reconsider it?
MR. FRATTO: I think we will leave our negotiations for our discussions with members of Congress and not try to have me negotiate from here.
Let me go to Olivier, and then Les.
Q Just a couple for you. One is, any world leader calls this morning on this topic?
MR. FRATTO: Not that I'm aware of, no.
Q And in the readout of the telephone call with the French President, the White House indicated that President Bush agreed on the need to hold some kind of international forum to reevaluate how the world does business. The French President has gone somewhat further, saying it's time for a top-to-bottom overhaul. What exactly did the President -- did President Bush agree to, and what forum do you envision for having a discussion on how the world does business and how to change that?
MR. FRATTO: Well, I think it's premature to say what exactly the forum would be and how it would work. What the President is focused on this week is this problem. We'll figure out next steps, especially with respect to the global economy, in the coming months.
He really appreciated President Sarkozy's commitment and thinking on this issue. We've been engaged in the international community on ways to improve the functioning of the global economy and how to deal with capital flows across borders. We've dealt with this with the Financial Services Forum. They have put forth a lot of ideas that we approve of. These are conversations the President has had with not only President Sarkozy, but with Prime Minister Brown and Chancellor Merkel and others.
We will try to get to that, and I think we will, and we'll have these discussions. I can't tell you what -- I don't know specifically what the President may or may not have agreed to, other than to continue this discussion and see where it goes from here. And we'll let you know if there's an announcement.
Q So we shouldn't expect the October 10-11 IMF to be a forum for --
MR. FRATTO: Well, for the IMF -- that weekend, the IMF and World Bank meetings, the G7 finance ministers will be here meeting. They will be meeting for sure. And they talk about these issues at each of their meetings, three or four times a year. And obviously it would take -- there might be heightened interest this time. But I think those will be meetings that we want to be paying attention to.
Q Thank you, Tony. Two questions. The AP reports from Caracas that President Chavez said on Sunday that Russia will help Venezuela develop nuclear energy. And my question: Does the White House have concern that the capability of processing nuclear fuel will lead to a nuclear-armed Venezuela?
MR. FRATTO: We'll just see what happens with Russia and Venezuela. I don't have a view on that right now.
Q Okay. The AP also reports that 33 pastors in 22 states make specific endorsements of political candidates, in challenging the IRS-Lyndon Johnson ruling about no political endorsements in churches. And my question: Does the President believe that America's clergy should be denied the freedom of speech to endorse political candidates?
MR. FRATTO: Those rules are set forth in IRS regulations, directed by statute. And the IRS is enforcing the law, and the President believes that the IRS should enforce the law. But on the specific question of these clergymen, I haven't had that conversation with the President.
I'll come to you, April, right after Rich.
Q Given the breakdown of the House vote yesterday, that you had about 60 percent of Democrats, I think the number was, voting for the package, but only about 30-32 percent of Republicans, will the effort to get the extra votes -- will the White House's effort to get the extra votes focus on Republican votes at this point? Is that the side of the liberal-conservative split that you're going to go after to get those extra votes?
MR. FRATTO: We will talk at great length with Republicans about their concerns, but this has to be a bipartisan effort. I've been asked the question, are you going to try to get more Democratic votes; are you going to try to get more Republican votes? We want to raise the number of concerned votes, people who understand that this is a real problem that needs to be fixed, and that these are solutions that will help our economy and deal with this problem. And I don't think we're going to limit it to one or the other side of the aisle. It needs to come from both sides of the aisle.
Q Tony, you say it's a bipartisan effort. Just before you started your briefing, there was word that there was something called the "skeptics meeting" of congressional leaders about this bill on the Hill right now. And one of those skeptics who voted against it, Democrat Bobby Scott from Virginia, he said we're rewarding the behavior of bad actors that caused the crisis and punishing hardworking American taxpayers. He also said, you know, they're trying to do this $700 billion bill without knowing what we're buying. And basically, in that meeting, they're trying to find out what this is specifically going to -- not just a blanket statement that you -- the White House has been giving and Paulson has been giving, but some intricate details they want to know.
MR. FRATTO: I think we've given a great deal of detail. Secretary Paulson testified I think for nearly six hours on Tuesday and five hours on Wednesday, answered hundreds of questions about this proposal. We've tried to provide as much information as possible on this. They have had caucus meetings, both Republicans and Democrats. It's been -- I don't -- there may not be another issue that has received as much media attention and analysis as this issue has this year.
So there is a lot of information out there. It happened in -- with a great deal of discussion with members of Congress. We listened to them, we incorporated their ideas, and we ended up with a strengthened bill. And we're going to continue to work with them until we can get the ball across the goal line.
Q And then a follow-up. Is this administration willing -- one of the options on the table -- to change the $700 billion number to a smaller number? As many people are concerned that it was a number just pulled out of the air, and they're concerned it's just there just to go somewhere, and it's not --
MR. FRATTO: This is a question that was asked earlier. We are not going to -- the size of the program can't be guided by politics. It has to be guided by the problem that we're trying to fix. And the size of the market --
Q But the $700 billion number --
MR. FRATTO: For us to do a program that is ineffective would be incredibly wasteful. Now, everybody wants to protect the taxpayer. The worse thing we can do to the taxpayer is to allow this degradation in our economy right now, in our financial system to continue. That is the absolute worst thing we can do for the taxpayer.
So we need to focus on fixing the problem. And our experts at places like the U.S. Treasury Department, the Securities and Exchange Commission, the Federal Reserve, the Federal Reserve Bank of New York, and others who analyze this issue and this market, believe that a size of $700 billion is appropriate and necessary to address the problem.
Q Where did that number come from? And that's what a lot of people are concerned about.
MR. FRATTO: Treasury -- I think Treasury testified on that number.
Q But did it just come out of the air? Did it come --
MR. FRATTO: No, it didn't come out of the air.
Q People are concerned about that.
MR. FRATTO: Okay.
Q Thank you. Talking about U.S. economic crisis, we are only step away as far as the U.S. civil nuclear agreement in the Senate, and it's now in the Senate; House has passed it. And it may bring billions of dollars in the U.S. Treasury. And you think the President is making any phone calls in the Senate?
MR. FRATTO: We have been in very close contact with Majority Leader Reid, who has committed to getting that agreement passed in the Senate. I don't know if the President and Majority Leader Reid have specifically spoke about it recently. But I know our staff has, and Secretary Rice and others have been in contact with the Senate and his office. And it's something we -- it's a very, very high priority for us. We want to see it get accomplished, and Senator Reid does, as well.
Q And second, as far as meetings between President Bush and President Zardari of Pakistan in New York, if this issue has ever come between their meetings? Because President Zardari has accused the U.S. that this is not a war -- global war on terrorism, but war against Islam.
MR. FRATTO: I have to apologize, I wasn't in New York for the meetings at UNGA.
Q What President have to say about his comments?
MR. FRATTO: I don't know. It's not a conversation I had with the President. I'm sorry, Goyal.
MR. FRATTO: Thank you.
END 12:09 P.M. EDT
* London Interbank Offered Rate