For Immediate Release
Office of the Press Secretary
October 1, 2008
Press Briefing by Deputy Press Secretary Tony Fratto
James S. Brady Press Briefing Room
11:40 A.M. EDT
MR. FRATTO: Good morning, everyone. So, of course, you have the news that Majority Leader Reid made on the Senate floor last night, after he and the Minority Leader, Mitch McConnell, Senator McConnell, were able to get unanimous consent to consider legislation this evening on the financial rescue package. As I say, obviously we greatly appreciate the leadership of both leaders to modify this bill and be able to bring it to the floor -- and to modify it in a way that we believe significantly improves the chances of ultimately being passed by both chambers and finding its way to the President's desk.
So we strongly urge Senate passage of the bill. The bill is a product of extensive bipartisan cooperation to address the crisis in our financial markets. The amendments to the bill include the extension of renewable tax credits for wind and solar power. That's something we've advocated for a long time now. We think it's important to get those extensions passed, as well. It also includes protection for approximately 26 million Americans who would be hit by the AMT. And this, again, is something that we've tried to get for some time. We think it's something that must be done, and again, helps to improve the chances of passage of this bill.
And then, of course, the core of the bill itself, the way it will be modified for amendment this evening should the amendments pass, dealing with FDIC reform, lifting the cap from $100,000 to $250,000, is an important improvement. It will have benefits for banks across the country. It will have benefits for credit unions across the country, which I understand are included in the amendment.
And so we look forward to that debate. We look forward to the votes tonight. I think there is no question that if you look at your papers this morning, look at the news this morning, you see increasing evidence of how the credit squeeze is affecting small businesses and municipalities across the country.
` This might be a first -- I'm going to recommend from this podium that you take a look at a story in The New York Times this morning -- (laughter) -- the bottom, right-hand corner -- a really important story about how the credit squeeze is facing municipalities across the country trying to issue bonds to fund things for their local spending projects for infrastructure and other needs. Also, a lot of coverage that I see in your newspapers and in regional newspapers across the country of how small businesses are being affected.
Just some of the examples that we've seen: A store in Oregon who had to cut 30 jobs when its available line of credit was reduced. There are stories involving what we saw in the newspaper today from auto retailers across the country that are having trouble being able to make auto loans to customers who want to come in and buy cars at a time when we know that the auto industry is under great pressure.
So it is affecting real Americans out there. I think people are starting to notice this. We've seen communication from governors, from mayors, with members of Congress and senators, expressing their concern and the urgency to get this legislation passed. And so we hope we can do that this evening, and get it done.
A couple things on what the President is doing today. He's been on the phone with some members of Congress, some senators this morning. He'll continue to make calls throughout the day. He has been communicating with his -- had some meetings with his advisors this morning. This afternoon at lunch, shortly, Secretary Paulson and Fed Chairman Bernanke will be in here for lunch and he'll have a chance to get updated on how the markets are looking this morning, how the overnight credit markets are performing in this environment. As you know, there's been a great deal of volatility, and so the President will be able to get an update from Secretary Paulson and Chairman Bernanke on that, as well.
And also one other thing to point to: This evening there will also be votes on the India civil nuclear agreement, and so we'll be paying attention to those votes also.
Q How extensive is the President's call list today? How many people is he trying to reach out to?
MR. FRATTO: I haven't seen -- I haven't seen the full length of the list. I think I saw a list -- I don't know, I can't recall how many names are on it. I'll try to give you more this afternoon, see if we can give you a little bit more on how those calls go. I can tell you the calls so far have all been very positive. And we feel that there's a sense of momentum, and certainly the senators that the President has spoken to understand the urgency of getting this done, and have all expressed their commitment to getting it done.
Q How many people are you talking about? Were these people wavering or opposed? Or is he calling people who were opposed to the legislation, or --
MR. FRATTO: I think it will be a mix, some who are opposed who are trying to get any others who might be skeptical or wavering to support it, and he'll call some senators who we think haven't made up their minds yet either.
Q How much influence does the White House think the President has at this point in making these calls and talking to senators?
MR. FRATTO: I think a great deal of influence. The President has the opportunity to share with senators, and to make sure that they're getting the information that -- the same information that he is seeing, in terms of the crisis that's confronting our country and global markets. So the President can share that information and -- so the calls have been constructive. A lot of the calls at this point are more focused on strategy and process for trying to be able to get the legislation passed, because I think right now most senators fully accept the sense that we need to do something to address this problem. And we're hearing good things in terms of support for this particular package, as well.
Q One final thing. Is he calling any House members, the two-thirds of the Republicans who voted against the package?
MR. FRATTO: He will. I don't believe those were on his call list this morning, but I can check on that. But right now we're focused on what's happening in the Senate.
Q The AMT patch -- of all the things being talked about, how critical, and does it go far enough? Is it what you were looking for, what the White House was looking for?
MR. FRATTO: Yes, absolutely. This is -- both on the tax extenders and the AMT patch, this was legislation that had been through the Senate already, which we support. And we have statements of administration policy out there. Yes, it's exactly what we support and would like to see passed.
Q Tony, Russian Prime Minister Putin said today that it was "really sad" -- his words -- and irresponsible that the U.S. government had not acted more forcefully so far in dealing with the financial -- the global financial crisis, and that raised questions about the U.S. assertions of global economic leadership. Any reaction to that?
MR. FRATTO: I think -- let me just put it this way. We have dealt with this problem, a very complicated and far-reaching problem, in as aggressive a way possible. And I don't think there's any question of that, and I'll just leave it at that.
Q Tony, you said the calls that the President were making, a lot of them were focusing on strategy and process. Is the White House, the administration, implementing a new strategy in trying to push this measure through the Senate, considering the lack of success you had with the House?
MR. FRATTO: Well, the strategy was -- the strategy for moving it in the Congress was developed by the leadership there. And so Senator Reid and Senator McConnell -- this was the strategy that they devised; they believe it's the best way to be successful, and we agree. We think we can get this legislation across the finish line. But we're going to keep working today, and we're going to work tomorrow when the House takes it up.
Q Again, is the President, then, or is the administration doing anything at all differently? Again, you said you were confident Monday, thought you had the votes; didn't. Any change at all?
MR. FRATTO: We're continuing to do everything that we've been doing in terms of making sure that members have all the information they need; all the questions that they have, we want to make sure that they get answers to those questions. But I think what members of Congress and senators are seeing in recent days is more news in terms of how the credit squeeze is affecting everyday Americans, and I think they're also starting to hear from other public officials and business groups to express more clearly just the strains that they are dealing with in this current environment and the urgency for addressing it.
And I think that's really important. I worked in a House office and a Senate office and I know how important it is to hear from people back in the district, because you represent your district. So that's important, and I think a lot more members are hearing that.
Q Tony, if I can follow on that real quickly because some senators have said the White House has been a little bit more aggressive in the way that they've pushed this the last day or two.
MR. FRATTO: I know that there is -- there's always going to be criticism for how we deal with these issues. I went through this a little bit yesterday. The issue is very complex. We tried to be exceptionally respectful of the Congress in how we dealt with this because we knew that we were putting on their desks a very big problem, a problem that was going to be difficult for people to understand the urgency of it.
Some people ask, why didn't the President do a national address on the very first night that we introduced the -- that Secretary Paulson and Chairman Bernanke presented the solution for dealing with this problem? And one thing we didn't want to do was try to jam Congress by trying to appear that we were putting pressure on them. We wanted to make sure that members of Congress had a chance to get all the information that they needed and that we can work with them and we can work with them on a bipartisan solution.
We're fully aware -- we've been criticized by a lot of people for sending up a three-page proposal. Well, what we wanted to send to Congress was the proposal for the very specific problem that we were trying to fix. And our intention on that very first day was that we are going to work with members of Congress to get final legislation in a way that they could accept. And that's what we've tried to do.
But, again, remember how big this problem is, how big a solution is that we're trying to get passed, and the time frame in which we're trying to do it. We're not even two weeks into the day that the President and Chairman Bernanke and Secretary Paulson came to the Rose Garden to announce that we were going to do this. So it's been very quick. And we've continued to be very aggressive. The President has been out there speaking about it -- I think someone said yesterday 12 out of 13 days. We've done a national address; we've had senior staff here and at Treasury and elsewhere in contact with members of Congress. We're going to continue to be aggressive. I think others outside of Washington are also starting to be more aggressive in terms of delivering their message.
Q So you would say you have not altered your approach?
MR. FRATTO: I'm not going to try to do more analysis on it. We're just going to keep working to try to help members of Congress get this bill passed.
Q One other thing. Did Senator McCain on the phone with the President yesterday suggest, as Senator Obama says he did, raising the limits on FDIC insurance?
MR. FRATTO: It sounds to me like you're asking if Senator -- if I'm going to comment on Senator Obama's characterization of Senator McCain's conversation with the President --
Q Obama didn't say anything about McCain's -- I'm asking you if you can tell us whether --
MR. FRATTO: Both Senator McCain and Senator Obama discussed FDIC in their conversations with the President.
Q Tony, is the White House concerned at all about the possibility of losing votes in the House because of the add-ons in the Senate bill?
MR. FRATTO: Right now we're focused on the Senate. We think the modifications are helpful and will help to achieve passage in the House.
Q Didn't you want a clean bill, though? You didn't want a lot of add-ons and you're ending up with add-ons.
MR. FRATTO: Well, we didn't want a lot of add-ons. We didn't want things that we felt would be harmful to the economy. But since we started working with the Congress 10 days ago on the actual legislation, we've made a number of changes and modifications. The things that are being added on right now, on the tax extenders, these are things that we have all supported. In fact, both Houses support extending the tax credits for renewable energy; both support AMT reform. There's a dispute in terms of whether they should be offset, and of course, we have opposed increasing taxes to pay for fixing a problem in the tax code. And the FDIC decision has been a recent one that we think will garner some additional support.
So, yes, look, this is not -- it's never a straight line in trying to get legislation like this, and we're very appreciative of the Senate's efforts to try to develop this legislation in a way that will be successful.
Q Let me go back to Matt's question. It's understandable that you don't think much of Vladimir Putin's criticism, but there is substantial criticism coming out of Europe; accusations of casino capitalism, criticism from really strong U.S. allies like Alvaro Uribe of Colombia, who says that the world basically financed this country's debt and now we owe the world -- and big pushes from Sarkozy for global regulation. Do we owe the world a debt for this? Are we responsible for this? And are you likely to go along with the tighter global regulations that it seems almost certain Europe will call for?
MR. FRATTO: Those kinds of criticisms -- and I'm not going to speak to any -- what any one head of state says. They have their views. But there is no question at all that the U.S. -- the U.S. economy and the U.S. financial markets have contributed greatly not just to American growth, but to global growth over the past 15 years, and a lot of very important innovations. And to stand here and just dump on what that industry has done because of this crisis is I think a bit unfair.
And also, understanding why foreign capital was attracted to the United States was because of the strength of our economy, because the strength of our financial institutions, and the innovations that they've been able to do. Savings from across the world didn't flow into the United States out of some sense of altruism. Countries were making what they judged to be the best risk-adjusted rate of investment return that they could get, as part of their portfolios, and there's a lot of investment from the United States that goes out to other parts of the world, too, that fuels investment.
There's no question that if you understand what the problem is here with our economy right now, having to do with the housing correction and how that infected problems in our financial industry, that there were things I think everyone would have liked to avoid. But any investor in the world who buys securities, or makes foreign direct investment, or any kind of portfolio investment, does it based on their own judgment. Our investors do it when they invest in other countries, and foreign investors do it when they invest in the United States. And we're going to trust their judgment. And I think everyone has gotten a bit wiser about the due diligence that you need to do to be able to make those investments in the future.
Q And does that suggest you would along with global -- more tighter global regulations?
MR. FRATTO: I would say better global regulations, not necessarily tighter global regulations, but we want them to be better and more effective. We want to see a whole lot more transparency in how investment capital moves around the world.
The sheer volume of investment capital moving cross-border around the world, the increase over the past 20 years has presented incredible challenges for regulatory agencies here and in Europe and in Asia to deal with -- innovation of new products and increases in flows that measure in the trillions of dollars a day.
And so that's very difficult to do. We have had an exploding global economy. We know about the growth in places like China and India and other parts of the world, and it's a difficult challenge. We do think that financial leaders across the world should get together and work to try to find and put in place structures that protect investors, but also allow for that flow of capital to continue, because what you want is investment capital going to the very best ideas, wherever they can find each other, to produce the best products, at the lowest price for consumers. And that's how an economy works.
Q As far as this trust and faith in investing in America from foreign countries or foreign investors, that faith and trust is still there? And also what do you think President has a message for the small investors? And there must be some guilty people who abused the system and if they are going to be held accountable?
MR. FRATTO: Yes, I think a lot of people have been held accountable and I think you'll see more of that. I think you'll see a lot of people looking into this crisis. And I think if -- if everyone takes a step back and looks at the attributes of the U.S. economy, and the attributes of our financial industry here and in Chicago and in other parts of this country, I think we will be able to recover. And I think they will -- they will return with the great talent that still exists here, and still a great deal of expertise. And we'll be able to rebuild from what we had.
Q You said, or you indicated that the White House supports this bill in its current form. Are there tax offsets in there? Because we have a --
MR. FRATTO: No. I understand that there are not.
Q And you also mentioned the difficulty in terms of understanding the difficulty and understanding the package as one of the reasons it was hard for garnering support. Would you also think credibility was another issue? Because about five years ago, Americans were warned of the consequence of inaction, and they were also warned about an imminent danger. And as you know, we never found any weapons of mass destruction.
MR. FRATTO: No, I don't think that has anything to do with this at all, Paula.
Q Short of wanting a clean bill, is there anything that the White House has been pushing to be added to this legislation in the last couple of days?
MR. FRATTO: That the administration has pushed?
MR. FRATTO: Well, Sheila Bair of the FDIC, as you know, last night requested that the Senate do the FDIC insurance cap increase. The FDIC made that recommendation independently, but it's certainly one we support.
Q That's it?
MR. FRATTO: Yes. And we agreed with the senators' decision to add the tax extenders and AMT relief also.
Q Are you thinking about any kind of broader post mortem on what's happened over the last few weeks?
MR. FRATTO: What all you guys will be doing? (Laughter.)
Q Right. Can you just sort of help us out with that? (Laughter.)
MR. FRATTO: I have a feeling I'll be helping you guys out a lot with that. Yes, absolutely. I think -- I think we will be spending time on -- on what happened on -- in the weeks that led up to the crisis that we saw two weeks ago that we're still dealing with today. And I think you'll also see Secretary Paulson continue to encourage work on the regulatory blueprint that he put forward earlier this year.
And also, as we continue our discussions with -- as Wendell was asking about -- as we continue our discussions with finance ministries in other financial capitals around the world on how we should move forward to deal with the flows of capital and regulatory structures and all those things. There have been people I know at Treasury and the Fed and the Federal Reserve Bank of New York that have been working on these things for a very long time, and maybe one thing that will come of this crisis is the impetus to move forward with greater urgency in dealing with those kinds of issues.
Q Can I go to another subject. I'll yield to anybody --
MR. FRATTO: Can we just stay on this for now? Yes, Yunji.
Q I have two quick questions. The first one is, it sounds like you were thinking that the coverage this morning, at least, was a little more favorable. But if you look at newspapers around the country, a lot of the headlines still have the word "bailout", not "buyout." Are you sure that that message is really getting through to the American people?
MR. FRATTO: "Buyout" isn't our word, either. No, I do think the message is getting through to more people. I think we're hearing that anecdotally. Somebody e-mailed me to say they saw in -- there was a front page of one newspaper that didn't have the word "bailout" in it. So maybe that was a tiny victory for me. I don't know. (Laughter.)
Q Okay. Well, then the other question is, the RNC -- and granted it's an independent expenditure unit -- but they have an advertisement on the air in five states right now, railing against the bailout. Doesn't that undermine the President's message when you have the President, the nominee, everyone trying to push this forward?
MR. FRATTO: I understand that that ad is an independent expenditure, and I don't comment on campaign ads, anyway.
Q But, I mean, that's from the President's own party, railing against the bailout.
MR. FRATTO: I understand. And as I understand, the party leadership isn't able to comment on or affect that message on that independent expenditure, either. But I'll let them answer for themselves on that.
John? On the same subject? Okay.
Q Yes. Thank you, Tony. Was there any discussion of repeal or significant amendment of the Community Reinvestment Act, the CRA?
MR. FRATTO: I'm not aware of that. I don't know.
Q It never came up?
MR. FRATTO: I don't know if it came up or not.
Q Another thing is, the Fed pumped in a substantial amount of money -- I think the figure was $669 billion recently --
MR. FRATTO: Coordinated with other central banks.
Q Coordinated with other central banks. Did anyone ever say, isn't that enough on this whole situation?
MR. FRATTO: No, well, they would have a sense of whether that's enough. That was to deal with a specific liquidity problem involving global banks and, in particular, problems with European banks, as well. They've explained it. I'd rather not go into too much detail into why they do the liquidity injections that they feel are necessary. I'd rather have the Fed comment on that themselves.
Q Liquidity injections are separate from the package that --
MR. FRATTO: Very separate. Remember, what we're trying to do here is to deal with this specific problem of these assets that aren't trading in our financial system, and those liquidity injections don't have an impact on that particular problem.
Any more on the financial crisis?
Q Yes, quick one, please.
MR. FRATTO: Okay.
Q What do you think President has --
MR. FRATTO: And I'll come back --
Q What do you think President had to say to the foreign investors in country? Should they continue to invest in the U.S.?
MR. FRATTO: Investors should make their own decisions.
Q In regards to the temporary suspension of mark-to-market, how do you build confidence if --
MR. FRATTO: That wasn't a temporary suspension of mark-to-market. It was a clarification of the guidance on mark-to-market accounting that the SEC made.
Q The end result, though, is that some financial institutions won't have to value these assets at mark-to-market --
MR. FRATTO: Actually, they are allowed to consider the impact of distressed markets along with mark-to-market accounting.
Q So at the end of the day, though, isn't -- how do you build confidence and get investors back in if they're not going to be able to know what the true value is because of this?
MR. FRATTO: Well, I mean, the question of the true value -- and I'm not going to debate the value of mark-to-market accounting versus fair-value accounting. I think we've bored everyone enough here already on this. (Laughter.) But the question of how you -- whether these assets are valuable or not, those are questions that the institutions are going to have to make themselves, and under those guidelines by the SEC and the accounting board -- that's something that they're going to have to deal with. You can make a case that the fact that you're dealing with a distressed market, that there's a problem with mark-to-market accounting, but --
Q Well, wouldn't the end result be to not build confidence, which is exactly what they're trying to do -- wouldn't it be just the opposite?
MR. FRATTO: It may be, and maybe not. I'll let SEC deal with that. That was their rule, along with the Accounting Standards Board.
I'm going to take the last one from Keith, and then I'll come to you, Les.
Q Why weren't members of Congress -- you mentioned that this plan has been around for weeks or even months. Why weren't members of Congress brought in, even before it was announced, to help draw up the plan, get their feedback? Why weren't they sort of co-opted into this process?
MR. FRATTO: I think what I said, there were Treasury staff who were looking at this kind of -- and probably Federal Reserve staff also -- who were looking at this kind of solution and whether it was necessary to do or not. I think I mentioned this yesterday, when word got out by rumor or however these market rumors start last week, you saw major -- this was two weeks ago now -- you saw major market moves just based on the rumor that the administration was considering this kind of policy option.
So we need to be sensitive that when we work on these kinds of things, they affect markets, and have to be very, very careful about doing that. But I know, because I think I've heard some members of Congress talk about it in the past, it's not a solution that they were unaware of. They had heard these kinds of policy options from others in the private sector in the past.
Q Are you concerned that they would have leaked the information if they were brought in --
MR. FRATTO: I just -- what I said, we just need to be careful with market-sensitive information.
Q Tony, thank you. Two questions. Would it be accurate to say that the President strongly opposes racial segregation anywhere in the U.S. government?
MR. FRATTO: Yes. (Laughter.)
Q Thank you. California's Democratic Congressman Pete Stark risked his life on behalf of civil rights in Mississippi in the 1960s, and because his Oakland district has a large number of blacks, he applied to join the Congressional Black Caucus, but he was turned down because of his skin shade. And my question: Does the President know of any change in this Black Caucus segregation, and if not, does he believe there should be?
MR. FRATTO: I would say that the executive respects the right of the legislature to make rules on their own organizational practices.
Q Even though it's racial segregation?
Q Thank you.
MR. FRATTO: Thank you.
END 12:10 P.M. EDT