For Immediate Release
October 2, 2008
Press Briefing by Deputy Press Secretary Tony Fratto
James S. Brady Press Briefing Room
12:33 P.M. EDT
MR. FRATTO: Good afternoon, everyone. I want to read something about a -- some legislation that was passed last night. I know a lot of people were focused on the financial rescue package, the emergency legislation that was passed in the Senate last night, and I'm sure we'll spend some time discussing that.
But another really critical piece of legislation was the U.S.-India Civil Nuclear Agreement, the 123 Agreement. The approval of the 123 Agreement by Congress last night is a major victory for everyone involved and a significant achievement. The agreement embodies the trust and closeness that our two countries have developed over the past decade. Once the formalities of signing the legislation and signing the 123 Agreement are completed, the United States and India will be able to engage in full civil nuclear cooperation as trade envisioned in July 2005, when the agreement was announced.
We now look to the U.S. and Indian private sectors to take the lead in implementing the agreement and beginning cooperation. The opportunities now available for U.S. investment in India's civil nuclear sector are enormous, and we encourage our private sector to take advantage of every opportunity.
As we move forward, the United States will continue to abide by the commitments it has made to India throughout this process. We have every reason to believe that India will also abide by its commitments, thereby providing a solid framework for cooperation. The achievement of bilateral civil nuclear cooperation is not a culmination but a beginning in U.S. -- a new beginning in U.S.-India relations.
We must now build on this framework that we have achieved to continue the transformation of our relationship in all aspects. The civil nuclear initiative is one part of a broad, multifaceted partnership that includes cooperation in agriculture, education, trade, investment, defense, and democracy.
Having completed the civil nuclear initiative, we now look forward to working with India even more closely than before to continue the evolution of our strategic partnership.
And you may have just seen the announcement from the State Department a short while ago that Secretary Rice will be traveling to India this weekend to commemorate the agreement and to meet with Indian leaders.
Also this morning, you saw President Bush met with a group of manufacturers -- manufacturers from all across the country who are experiencing difficulty because of the credit crisis. Some of these manufacturers are experiencing difficulty themselves in obtaining the credit they need. A lot of them are noticing the difficulties that their dealers and their customers are having in obtaining the credit they need to purchase equipment and other products.
That's a major concern for them. One of the participants in the meeting said you can't sell equipment if your customers can't get credit to borrow. If you're talking about a $200,000 piece of heavy manufacturing equipment, you need to buy that on credit; that's the way our economy works. And their customers are having trouble getting the credit that they need.
Some of these firms are laying off employees, and they're very concerned about that. They care about their employees; they invest a lot of time and energy and training in their employees and would prefer to keep them. That's a long-term cost for them. It's not easy to hire back employees once you lay them off.
They also noted in this package that the Senate passed last night the benefits of some of the tax -- the extension of tax relief that's in the package, and in particular they noted the R&D tax credit. One of the participants said that it's -- obviously it's more expensive to innovate if you don't have the R&D tax credit. It's a great incentive for innovation, which is something that helps keep our businesses competitive in the global economy.
The President told them that an important part of this package and what it's really about is capital for small and medium businesses being able to conduct their normal operations on a day-to-day basis. And they certainly understood that message.
So the President, in terms of what he is doing today, he's continued making phone calls. He made calls throughout the day yesterday. Obviously he was very, very pleased with the strong bipartisan vote that came out of the Senate. I think, all told, between yesterday and today, he probably will have called somewhere in the order of three dozen House members. The calls have been, from his view, positive and productive, and we feel fairly optimistic that we have a good chance for a successful vote tomorrow.
Q When were all those calls made -- sorry -- today or --
MR. FRATTO: Yesterday and today.
Q I'm trying to understand this deposit insurance increase.
MR. FRATTO: Sure.
Q One of the reasons obviously that the vote went the way it did on Monday was that folks were uncomfortable with the idea of so much government money into the private markets, into Wall Street, that whole line of concern. But I'm trying to understand how protecting deposits that are over $100,000, which is a lot of money -- not -- most regular people don't have $100,000 sitting around in any one account --how is that getting to the Main Street regular people --
MR. FRATTO: Sure. Actually, it's one of -- America's small businesses use their local banks in order to fund their operations. That's where they keep their money for day-to-day operations -- their funds for payroll, for example. And so they would have -- in fact, a great many of them would have far more than $100,000 in their accounts. And what a lot of small businesses have had to do across the country is to split up their accounts as they felt that maybe banks were threatened -- split up their accounts in numerous banks, which is incredibly inefficient; it's not a very efficient way to do business. And you're also noticing that small businesses were moving their funds from banks that were perceived to be weak to banks that were perceived to be strong, and so really not normal ways of doing business.
Raising the cap allows them to have the confidence that they can keep those funds in their local bank. They don't have to move them around. And so it's a much bigger cushion.
Q Okay. And just to follow on that, the President obviously was making a lot of calls on Monday, and now again talking to individual lawmakers. Is there a new angle that he's taking when he talks to them, some different way to press the argument that he -- is either finding success with it or is it just that the bill itself has been changed and that --
MR. FRATTO: I think it's both. Yes, I think it's both, Jennifer. He's -- all of the members saw the market reaction on Monday, also, after the vote. And I think that clarified things for a lot of members in terms of -- some weren't sure whether we were really in a crisis situation, and I think over the course of the week, also, they started seeing some of the same stories that we've been talking about here in the briefing room about their small businesses and local communities. That helped -- has helped change the views of some members.
And also the bill itself changed also. The bill that the Senate put forward last night does have a lot of other pieces to it that members are comfortable with and want to see passed.
Q But is he selling those pieces or what is exactly the President saying?
MR. FRATTO: The President is still focused on the core of this problem and dealing with the credit crisis and the program that the administration put forth to deal with mortgage-backed securities and distressed securities. So that's what his focus is on. But there are -- he is discussing other pieces of the bill also. I had the opportunity to listen to -- listen in on a few of the calls, and they're overwhelmingly on the main focus of the bill, but the other parts are discussed also.
Q You're saying that he --
Q Tony --
Q You're saying that he changed the minds of some House members?
MR. FRATTO: I think, through the conversation, he certainly heard from certain members that -- who had been "no" votes on Monday will be "yes" votes today. They may have changed their own minds, or he changed their minds, but certainly -- I overheard some of the calls that went from "no" to "yes."
Q Did he know you were listening in? (Laughter.)
Q Tony, you said --
MR. FRATTO: April.
Q Tony, you said the core of this is the credit crisis, but the impetus of this whole bill was the housing crisis. And is there any money in this $700 billion plan that allows for those who are going through foreclosure, or having foreclosure, to help them restructure their loans?
MR. FRATTO: There is mortgage -- or foreclosure mitigation in the core of this package. In fact, it was in the legislation that was on --
Q But is there money?
MR. FRATTO: Well, yes -- well, $700 billion to purchase mortgage-backed securities and to help support the market for -- it's to support the market for mortgages. That's exactly what it's for.
Q But what about the person who's going through the crisis? This White House said this crisis was started by the housing problem, predatory lending, the bubble burst. There are people still in this country going through foreclosure. Is there money to help restructure loans or anything directed towards that?
MR. FRATTO: April, there is some of that in this bill. But it wasn't that long ago that we just -- in fact, I think before they left for August passed a housing bill that did exactly that. It had the reforms in there for oversight of Fannie Mae and Freddie Mac, and it also greatly expanded a program with the Federal Housing Administration to help families and homeowners deal with foreclosure and to provide services to homeowners to avoid foreclosure. In fact, that's what we did for an entire year.
I'll take you back to August 31st of 2007 when the President announced a program specifically to deal with homeowners facing foreclosure. And so we had FHASecure set up, where the Federal Housing Administration is working directly with homeowners to help them avoid foreclosure and bring them into FHA-insured loans. We set up the HOPE NOW Alliance, which is dealing with hundreds of thousands of homeowners and to help them work with the lenders and mortgage service providers to modify loans. And also, then, there was another piece of that dealing with people going through bankruptcy to not have to deal with the debt from their home loans when they go through foreclosure.
So there has been a lot done over the course of the year, and then, yes, there is more in this bill.
Q So, to understand this, okay, housing issue caused the problem, but the money is basically going to support credit -- credit is the issue, and housing is dealt with in other bills.
MR. FRATTO: Let's think about this very clearly. What we have right now is a mortgage financing system that is not functioning properly. You can't go out and get -- it's very difficult to go out and get a mortgage today. In fact, it's not limited even to just individuals trying to get home loans. The auto industry is under a great deal of stress right now because dealers are having a hard time making loans -- auto loans for people to buy cars. This has put the auto industry under a great deal of stress. What this is intended to do is to restart that secondary market for mortgages so that banks can go out and make loans to Americans to purchase homes again. So that is exactly what this is about. It will fix this problem that involves mortgage-backed securities, help to restart the market so that banks out there throughout the country can make loans to prospective homeowners. And that's exactly what we need to do to fix this housing problem.
Q On the calls he's been making yesterday and today, the three dozen -- are those mostly Republican House members?
MR. FRATTO: Mostly, yes.
Q Okay. To follow on what Jennifer was asking about, the 770 point drop earlier this week -- was that the crystallizing moment, or as manufacturing numbers have come out or unemployment numbers have come out, as other numbers have come out -- as you look back, now that it seems as though they're moving toward a direction of getting some kind of bill, was that the critical moment in the week?
MR. FRATTO: It was -- boy, that was a pretty big moment in the week when that bill went down, and I know everyone watching it on TV and -- we don't like to use the Dow Industrial Average as sort of the scorecard for sentiment, but I think that afternoon members on the floor voting for this thing and seeing that there weren't enough votes there and watching the precipitous dive in the Dow sent a message not just to members, but to Americans that there was a real crisis underway if we did not act. Now, you've heard me talk about this week that that the equity markets aren't the only thing here, it's really the credit markets -- but that's a signal to people and it did have a strong impact.
Q I guess my question is that, that really shouldn't have been that big a surprise to people on the Hill. So why was that necessary to have to go through?
MR. FRATTO: Maybe it was something that their constituents needed to see more than members. I can't explain the decisions that members made on this legislation. They can explain that to you, but --
Q As you were watching --
MR. FRATTO: But that was a pretty --
Q I mean, weren't you thinking to yourself, "no kidding."
MR. FRATTO: I was white-knuckled at the time, yes. (Laughter.) Holding on like the rest of us were, just watching that. It was pretty dramatic. But, from my perspective, I go back two weeks ago and we had a white-knuckle week, with huge up and down swings in the market and a very real crisis in the credit markets where -- with what happened in the money markets. The economy came very close to a grinding halt about two weeks ago. And so we have been watching this very closely for some time. I know most Americans aren't hearing these kinds of things from small businesses and even large businesses and banks. But we're hearing about it all the time. And so maybe that was the kind of crystallizing moment that helped them to understand this better, that we really are in a crisis.
Q Tony, you talked a little bit about how the bill has changed. Obviously you've gone through that three-page proposal, 110 pages in the House, more than 450 pages now from the Senate. It's getting to be quite a big bill. Are you worried about those so-called sweeteners at all?
MR. FRATTO: Most of the things that have been added to the bill are things that have actually already passed the Senate, so we're familiar with them and they're things that we've supported already. So there's not a great concern there. In fact, there are things that we support: The AMT patch, the extenders for renewable energy are things that we support.
The bill grew on its own from the original targeted proposal to deal with the technical problem of giving Treasury the authority that it needed -- that grew from the three-page proposal to more than 100 pages of things that we also supported -- the strong oversight and taxpayer protections that were put in that original proposal. And I think everything else that's been added are things that we have supported in the past. So, no, we don't have any concern about that at all.
Q Can I follow on that?
MR. FRATTO: I'll go to Toby and I'll come back.
Q If the House passes this bill, how soon afterwards will the President sign it?
MR. FRATTO: That's completely out of our hands. The bill -- it's a House bill. When they complete enrolling the bill -- they need to enroll it -- that usually takes a few days. So when the President gets it he'll be able to sign it, and you can make sure --
Q Well, within a few days after the House passes it?
MR. FRATTO: They may -- I don't know what their schedule is for getting it done. They may be able to get it done very quickly. Ordinarily, with a bill of this size it takes a couple days.
Q And how soon after -- if it becomes law, how soon after that does the White House want the Treasury to start buying the bad debt?
MR. FRATTO: Well, I think Treasury wants to do it as quickly as possible, but they can explain to you how they will implement this going forward. It's a complicated thing that they'll be trying to put in place, and I'll let them explain it.
Q Are we talking weeks or months or --
MR. FRATTO: I think it's at least weeks.
Q And one last thing. In the last 24 hours, has the President heard from any foreign leaders about the financial crisis?
MR. FRATTO: I don't know, actually. I don't know. I'm sorry.
Paula had a follow-up.
Q Yes, as far as the sweeteners, whatever you want to call them, extenders, renewable energy -- as you know, there are some partial offsets in there that are drawing some concern by the Blue Dogs in terms of not paying for it. Do you anticipate, in terms of the vote tally, that will be a problem?
MR. FRATTO: I'll let the leaders and the Whip offices do their analysis on what any provision will do in terms of votes. I'm sure maybe some votes will be lost and some other votes will be gained. I could just tell you, as a general matter, we feel somewhat optimistic that the bill has a good chance of passing.
Q On the issue of secondary mortgages -- we need to get that addressed and restart that -- you mentioned how you've already helped hundreds of thousands of mortgage --
MR. FRATTO: I think I was just speaking about the HOPE NOW Alliance, but -- a few hundred thousand there, and FHASecure has worked with I think -- Carlton, over -- we'll get you a number. Actually, check in with Carlton after the briefing; he can give you the numbers on that.
Q There is a number out there in terms of the actual homes facing foreclosure. I think it's over a million.
MR. FRATTO: It's larger than that. I mean, it's -- it is a big number. We have never promised and no one should promise that every foreclosure will be prevented. Even in the best of times and the strongest of economies, when the economy is growing and incomes are rising, you're going to see upwards of 600,000, 700,000, 800,000 foreclosures in a given year. Remember this is a very large country, and you're going to see those kinds of numbers for whatever reason.
What we want to try to do is to prevent preventable foreclosures where people have a decent ability to be able to make payments to stay in their homes in a way that works out for them and for their lenders. It's in no one's interest to have foreclosures. It's bad for the bank and it's obviously bad for the homeowner.
Q And Tony, briefly -- the President --
Q One follow-up on the second -- I'm sorry, but you have mentioned that among those hundreds of thousands, a lot of them are second homes. So --
MR. FRATTO: Some number of them are.
Q But that still doesn't -- could you still clarify why you're opposed to bankruptcy judges being able to reset the terms?
MR. FRATTO: Because it's the basic math of it, Paula. We've been through this many, many times. If you force this on lenders, the impact will be to raise the cost of mortgage financing for everybody. And if you raise the cost of mortgage financing for everyone, you lower the number of homeowners who can get mortgages to buy homes.
Q Tony, of the three dozen or so lawmakers the President called, have you been tallying how many he's been able to convince, or give us a ballpark figure -- two-thirds, whatever? And Monday you were saying "confident." Today you're saying "somewhat optimistic."
MR. FRATTO: Well, I touched my fingers on the hot stove and won't make those kinds of predictions anymore. (Laughter.) So, like I said, we feel fairly optimistic. And I think I would just characterize it as that. We're hearing good things from the members, not just the President; the Vice President has been making calls, Chief of Staff Josh Bolten, Keith Hennessey, Joel Kaplan. Dan Meyer, our Assistant to the President for Legislative Affairs, and his team are up there working hand in hand with Roy Blunt and the Leader's office.
So, like I said, I would just keep it at "optimistic" for now. And your first question was --
Q The percentage that he's convinced.
MR. FRATTO: I'm not going to -- no, not even a ballpark.
MR. FRATTO: Go ahead, Goyal.
Q Two quick questions. One, as far as economic crisis is concerned, what the small businesses can expect from the President at this time?
MR. FRATTO: With -- I'm sorry, with respect to?
Q Small businesses can expect, because they are laying down workers and they are in trouble and their credit lines have been lowered or being closed down.
MR. FRATTO: Well, we're hoping that over time what this fix does is increase availability of credit so they can go to their local banks and get the lending they need, especially short-term, overnight lending, but also longer-term lending, to purchase equipment and maintain their funds for payrolls, the kinds of things that fund regular business operations on a day-to-day basis.
Q And second, as far as the U.S.-India Civil Nuclear Agreement is concerned, this was a very big dream for the Prime Minister of India and President Bush, because on July 18th I witnessed that -- in the White House here on 2005. Now, where do we go from here and when is he going to sign? And second, if he has called the Prime Minister of India, because he came here a few days ago, before this signing, and they were hoping that it would be done during the visit here at the White House.
MR. FRATTO: That's a good question. I don't know if the President and Prime Minister Singh have spoken since last night. I don't have anything on that. I won't be surprised if they do, and we would let you know if that happens. And of course, Secretary Rice traveling there this weekend to commemorate it -- because we're all very, very excited about this agreement. Our relations are -- the relations between the United States and India are very important to us. And I think the Indian community in the United States is also very proud of this agreement also.
We want to have and maintain strong relations with India. It's the world's largest democracy, and we hope that that relationship can grow.
Q A new beginning? This is a new beginning between the two countries?
MR. FRATTO: I think that's what -- I think, yes. I think that's what I said, a new beginning.
Q What about -- when is he going to sign it, which was his first question?
MR. FRATTO: I don't know the details of -- I think there's still some things to work out on -- some formalities to work out. I'm not familiar with them, and -- but we'll try to let you know as soon as we have a plan for that. There may be a plan for it; I have to apologize that I'm not familiar with it.
Q If the bill passes and is signed into law, what would you say to people in terms of when do you see the economy start to turn around? When can people start to have some hope that things are going to improve for them?
MR. FRATTO: Our economy is dealing with very severe challenges right now. We've had the long-term -- or I'm sorry -- the long correction in the housing market that is going to continue to take time to deal with. And I've heard outside experts say that it may be well into next year before the housing market turns around. Some have felt that we could be near bottom in housing. But that's going to take a lot of time and no one should underestimate what this particular shock of this credit crisis has done for our economy for this year and for the remainder of this year and probably into the next quarter, the first quarter of 2009. This was a significant shock, as were the shocks from the two hurricanes that affected the Southeast and Texas.
So, look, our economy is resilient and we'll certainly bounce back from this, but it will be a drag on our economy for sure.
Q Tony, I have some follow-ups on the economy.
MR. FRATTO: Okay.
Q Isn't there the slightest twinge of regret about some of these pork barrels -- wooden arrow, virgin rum or something? Didn't the President in the past vow to veto such bills?
MR. FRATTO: The President talked about spending -- earmarks in spending bills. I think if -- I think it's probably impossible to have that kind of standard on every single bill, but remember that we are facing a crisis and the core of this bill is critically important for our economy. We keep saying it. We don't want to take extra days to deal with this.
Some commentators out there have said, well, maybe they should just slow down and take a few more weeks to think about different ways to do this because there was some controversy with the program. And what I would say is, listening to those business leaders that we met with today, who met with the President today, we wouldn't want them to hang on for a few more weeks or months in this credit environment. That's going to -- the current environment we're in is leading to layoffs. It's leading to cancelled orders. You have -- even the orders that are being filled, the businesses are asking for much greater proof and bigger deposits on the items that are being purchased. And it's very difficult to do business right now in these conditions, and it has real impacts for Americans. So we want to see this get done.
I think everyone agrees that we need to do something. We agree that this is the right medicine for our economy right now, and we'd like to see it done quickly.
Q Thank you.
MR. FRATTO: Let me get Les, I promised.
Q Thank you. Thank you, Tony. Two questions. Since I'm sure you know about the President's years of leadership in baseball, could you tell us -- do you believe that if he learned that a World Series umpire had just written a book commending the other team that he would tolerate this? Or would he ask for a new umpire?
MR. FRATTO: Would tolerate what exactly?
Q Would he tolerate the umpire writing a book commending the other team? Or would he ask for a new umpire?
MR. FRATTO: I have to apologize, Les, because I've hardly been able to even note that it's still baseball season -- (laughter) -- and I haven't had that conversation with the President. So I don't know what his view would be.
Q Does the White House believe that nationally syndicated columnist Michelle Malkin was wrong to write, "There is nothing moderate" about moderator Ifill? Or do you agree with Michelle?
MR. FRATTO: Your questions are far too complicated for me today, Les. (Laughter.) I don't know what my view on that would be, nor the President's. (Laughter.)
Q All right.
MR. FRATTO: Thank you.
END 1:02 P.M. EDT