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For Immediate Release
Office of the Press Secretary
November 24, 2008
Press Briefing by Deputy Press Secretary Tony Fratto
James S. Brady Press Briefing Room
11:08 A.M. EST
MR. FRATTO: Good morning, everyone. And those of you who were traveling to South America, welcome back.
The President early this afternoon will have a photo opportunity with recipients of the 2008 Nobel Awards. These are the American Nobel Laureates. The recipients who will be here are Dr. Martin Chalfie, the Chemistry Prize Laureate; Dr. Roger Tsien, Chemistry Prize Laureate also; and Dr. Paul Krugman, Economics Prize Laureate.
Later this afternoon the President will meet with Prime Minister Olmert of Israel. The President looks forward to discussing with the Prime Minister the strong bilateral relationship between the United States and Israel, our continuing mutual efforts to bring peace to the Middle East, and a wide range of regional and international issues.
And you just saw the President earlier, after his meeting with Treasury Secretary Paulson and some other Cabinet officials -- meeting in preparation for the U.S.-China Strategic Economic Dialogue over at the Treasury Department, and you have the President's comments.
And with that, I'll take your questions. Jennifer.
Q I wanted to ask you about one thing he said, that there could be other actions like the Citigroup action in the future. Is there anything under consideration at the moment? Was he referring to anything specific?
MR. FRATTO: We would never foreshadow any specific actions involving private firms. But I think it's safe to say that it's a very strong message from the President and from -- the joint statement from Treasury, the Fed, and the FDIC last night, that we take threats to our financial system seriously and we stand ready to take any steps necessary to prevent systemic events in our economy. And that was one that they announced last night; I think it's been told in the letter you're reporting overnight and this morning that a lot of work went into this over the weekend, people working into the late hours. I think they did a background briefing at midnight. I don't know if that's unprecedented, but I know they're trying to be as clear as possible with what they're doing to try to deal with potential systemic events in the economy.
Q It just seems unusual for the President and you guys to talk about the possibility of future actions -- I mean, other --like Bear Stearns and AIG were sort of treated as, you know, individual circumstances and not sort of foreshadowing --
MR. FRATTO: I think that's a really good point -- actually, I mean, just in the context of your question -- at that time, when we dealt with Bear Stearns, we were dealing with single, individual firms in almost a one-off way to stem what was then the early stages of a financial crisis. Since we put in place the TARP program and $700 billion, I don't think it should come as any surprise to anybody that this is an ongoing effort; that we did ask for $700 billion to deal with this financial crisis and that's what we have available to deal with it.
We don't want to wait until firms are in fact failing and it's impossible to rescue them. We want to prevent those events from taking place and limit -- not just limit damage to the economy, but also, remember, to support the capital positions of these banks so that they can play the very critical role they play in the economy, which is to be out there making loans and taking bets on America.
Q Democrats are talking about another -- I'm sorry --
MR. FRATTO: That's okay, Bill.
Q -- another stimulus bill in the neighborhood of $500 billion, maybe $600 billion. Does this administration have a view on that?
MR. FRATTO: Well, look, we've been trying -- we've tried to be focused on all of the efforts that we've taken to support the economy, certainly over the past year. We've done one large stimulus package already. We've taken historic actions with respect to the housing sector to prevent millions of foreclosures. We've taken historic efforts with respect to the financial crisis and the $700 billion plan and all the efforts that the Fed and the FDIC are doing to shore up our financial system.
That's what we've been focused on for now. For right now that is the most important thing we can do for the economy is to put those appropriated funds to use in a way that will support credit in our system and allow the economy to function.
The next administration has a lot of decisions to make. And they have policies that they are looking at, but what we're focused on right now are implementing the authorities that we have to support the economy in the best way possible.
Q But do you think a further stimulus is needed?
MR. FRATTO: Look, I'm not going to comment on what the next administration thinks they need to be doing. The best thing we can be doing right now and for the time that we have here to do for the economy is to shore up our financial system. That's what we have the authority to do and that's what we have the funding to do, and that's what we can get done right now.
Q Tony, in Lima over the weekend, President Bush spoke at length about the importance of free markets. Why don't all these bailouts undermine free markets by keeping troubled, distressed companies from failing?
MR. FRATTO: Well, not at all. I mean, what these efforts are doing are to prevent the financial system from failing. It's never been about any one particular company. We let thousands of companies fail in this economy every year. It's a -- actually, an important part of a healthy company is to have companies competing against each other, and some of them fail, and the winners win, and that's good.
But when you have systemically large companies that can bring down not just the entire U.S. financial system but the global financial system, and have a devastating effect on our broader economy, the government has to step in. And so we have an obligation to preserve that very important part of our economy, and that supports the free market system. Our firms can't get out there and do trade if they don't have trade financing. Firms can't get out there and distribute funds to their -- to companies who distribute products here and around the world if they don't have overnight credit financing.
So that part of our economy is critical. We need to keep it in place; we need it to be strong; we need it to fill all of the holes in our economy that need financing in order to be able to do their business in a free and open economy.
Q What guarantees do you have that they will do that, in terms of lending?
MR. FRATTO: That they will lend? That's the business they're in, and the banks have no --
Q That may be, but they're not doing it.
MR. FRATTO: Well, look, I think we're pretty confident in the guidance that we've given to banks to get out there and lend. They actually have been lending. They've had to shore up their balance sheets to make sure that they're in a good position. But banks only make money one way, and that's to be out there lending and making loans.
Now, it's a very difficult economy we're in right now, so there's a question of the demand side of people requesting loans from banks also and whether there are good bets out there. We want them to make good business decisions. But banks are only in the business of lending, so they can't be profitable companies going forward unless they are looking for opportunities to lend.
Q Why don't we help the automakers?
MR. FRATTO: We are helping the automakers -- or at least we have a plan to help the automakers. We had a bipartisan agreement on the floor of Congress -- well, actually, it never made it to the floor because the Democratic leadership decided not to bring it to the floor. But we had a bipartisan agreement that we believe would get bipartisan support. It was for $25 billion in the loan program that would have freed up that money in a way that would support the automakers in their efforts -- to help to support them as they become viable firms, because these are important parts of our manufacturing base. We want to see the automakers succeed.
There seems to be some misconception out there that we don't want to help the automakers. We do want to help the automakers. We had a bipartisan agreement to do just that, and we believe that's where those funds should come from. And by the way, the news overnight where -- this was a relatively unexpected effort by Treasury and the Fed. If you had said two weeks ago that they were going to have to take this action for Citibank, I think that would have seemed unlikely. This is a very dynamic situation we're dealing with, and the financial system is still fragile.
But that also speaks to the need to preserve the funds in the TARP for their intended purpose. We don't need to be taking funds out of the TARP program for other purposes -- and with respect to the automakers, especially when we have a $25 billion loan program that was specifically set up for their use.
Q Well, what's the hang-up? Is it because the money is coming out of the --
MR. FRATTO: That's a question for Congress, Helen. The money is there; we tried to work on both sides of the aisle to design it in a way that the automakers could access it and to help them move forward and be viable. So I would put that question to the Democratic leadership of the Congress.
Q Tony, on Friday the stock market rallied when Obama named Geithner as his choice for Treasury Secretary. He was apparently involved in this Citigroup rescue. Would the President -- given the extraordinary nature of this crisis, would the President consider naming Geithner early as Treasury Secretary in order instill confidence and continuity in the market?
MR. FRATTO: I would just say we have great respect for Tim Geithner. I've been able to watch his work for the past eight years, and when I worked at Treasury, I learned a lot about his work prior to my time there. He's obviously exceptionally talented and a very smart, and ably led the New York Fed these past number of years.
I'm not aware of any request for the President to do anything special with respect to nominations from President-elect Obama's team. So it is -- I don't want to speculate on sort of hypothetical requests.
Q Is there any consideration of doing that within this administration?
MR. FRATTO: Of?
Q Without having a request externally? I mean, would you consider it?
MR. FRATTO: We would never do anything with respect to President-elect Obama's nominations without discussing it with them.
Q Tony, when the President spoke to President-elect Obama last night on the way back from Peru --
MR. FRATTO: No, he spoke to President-elect Obama this morning.
Q This morning, okay. Did he receive explicit support from the President-elect for the Citigroup --
MR. FRATTO: I'm not going to read out President-elect Obama's side of the conversation; you can check in with his transition team for that. But the President wanted to make sure that President-elect Obama knew everything we were doing and that we maintain a very high level of communications between this administration and the incoming administration. It's very important that we're on the same page on all of this and -- but I'm not going to speak to the President-elect's views on any specific policy action.
Q Who initiated the call?
MR. FRATTO: President Bush did.
Q You said, and the President, as well, that today's action sends a message that you stand ready to do what it takes to protect the financial system. What does it say about the effectiveness of what you're doing when a company that a couple of weeks ago, by your own words, was considered one of the strongest financial organizations in the country, needs a $20 billion and maybe $100 billion bailout?
MR. FRATTO: I don't --
Q Is it working and what can you point to, to show us that it's working?
MR. FRATTO: I don't think I said two weeks ago it was considered one of the strongest in the country. I don't think I made that kind of judgment with respect to them. I just said that an action like this was not something that I think most people would have anticipated.
Look, I think what it says is we're dealing with a financial crisis that is unprecedented and a government -- a federal government policy response that is unprecedented. And you're going to not see improvement in a smooth or straight line all the time with the various parts of it.
Now, we have seen progress with respect to overnight lending, and bank lending rates have improved and the volume of bank lending has improved, and that's good. But it's not going to be a straight line. The road isn't always going to be smooth. But we are going to continue to look for creative ways to make sure that the financial sector can return and play the very important traditional role it plays.
Q Aside from Libor rates, at the risk of getting down there, what other improvement have we seen? What shows that it's ultimately going to work?
MR. FRATTO: Look, we're seeing an improvement in the -- on the balance sheets of a lot of these very important banks. We've seen some banks that are weak have found opportunities to merge with banks that are stronger. They're improving their balance sheets. They're improving their capital positions. And as I said earlier, that when they see opportunities and they have the balance sheet that will allow them to take risk and they see opportunity in the economy, they're going to get out there and start lending again. Like I said, that's the only business they're in, is to lend money to consumers and businesses. And so we expect them to return to that.
Q Can you talk about Geithner's role in the decision last night a little bit?
MR. FRATTO: No. No, because --
Q He was involved?
MR. FRATTO: As I understand it, he was, but I'm not going to try to characterize what his role was. He plays a very important part in all of these discussions involving the financial markets and financial institutions in his role as President of the New York Fed, and that frequently calls on actions by the New York Fed and information from President Geithner and from his staff at the New York Fed. But I wouldn't want to put too much --
Q Well, can you --
MR. FRATTO: -- commentary behind it.
Q -- does that as New York Fed, but I'm talking about Secretary Paulson. Does Secretary Paulson consult with him, especially on these --
MR. FRATTO: They talk as frequently as any two people in town, I think. As I understand it from Secretary Paulson, he and Tim speak frequently. He and Ben Bernanke and Tim Geithner speak frequently. And that's what you would expect, and that's not unusual from any -- actually from any previous Treasury Secretaries speaking with New York Fed Chairmen.
Q And he weighed in on the Citigroup decision last night.
MR. FRATTO: You can check with the New York Fed to see what their views are on that.
Q Tony, can you speak to the challenges that the administration faces as it's implementing these confidence-building measures when you've got a new administration coming in, in less than two months, and therefore investors might rightly -- rightfully have concerns about the continuity of the government response?
MR. FRATTO: They shouldn't. I think what they've seen is, you know, an extraordinary effort to maintain continuity, and it's not just confidence-building. I mean, confidence is one part of it, but we're actually doing, you know, substantial improvements, real improvements in the way banks are able to function right now and improving their capital positions and their balance sheets so that they can do their business.
But in terms of the transition from this administration to the next, I think you're seeing something that has never been done before. I don't think you've ever seen this level of communication and cooperation at all levels -- you know, from lower levels to senior staff to the President and the President-elect maintaining communications in ways that can only result in the smoothest transition and the best coordination between two administrations. I think it's really extraordinary. I think it's something that, you know, history writers will look back on as an important feature of this time period.
Q And on Citigroup, is this the last injection of federal dollars they'll be getting?
MR. FRATTO: I would never try to speculate as to what would be needed in the future.
Q Does this action make it more likely that you would tap the second $350 billion from the TARP program before you --
MR. FRATTO: I'll let Treasury make that determination. I think their views have been that they have programs that they've been working on that they've tried to develop. They've tried to look at the financial landscape as far out to the horizon as they can. They weren't ready to make a request last week; they didn't feel that they were in that position yet. But they may well in the future. And if they see that conditions warrant it and the development of the programs that are needed to address the financial crisis are ripe, then they wouldn't hesitate to go to Congress for the remaining $350 billion.
Q And what would you anticipate the response would be from Congress at this point?
MR. FRATTO: Well, I think Congress has already appropriated the money, so they certainly understand the need for it. And I think they would have respect for the request, given the fragile nature of our financial system right now.
Q What's left, Tony? What's left of the initial $350 billion?
MR. FRATTO: I think Treasury has committed somewhere in the range of $290 billion to $300 billion. I think that's what they've discussed publicly. So that would leave somewhere in the order of $50 billion to $60 billion.
Q Tony, some are concerned, particularly on the Hill, that this Citigroup bailout is smacking of AIG all over again. Some are asking for Citigroup to pull their name -- opt out of naming for the New York Mets Stadium -- $400 million and you just gave them $25 billion. I mean, people are saying that smacks of it, particularly Congressman Elijah Cummings from Maryland, would say -- do you think they should opt out of the naming rights contract?
MR. FRATTO: That's -- I'll be honest, this is the first time I heard of that. I didn't know that they were involved in that. I would presume that if there's a contract then that's a legal question as to what they can do. But I'll leave that for Citibank for now, and Treasury, and the regular -- their regulators, because you're telling me something I'm not aware of.
Q But you said just now at the podium, you said banks are only in the business of lending. This is more than lending; they are lending their name to a stadium at a cost, a very expensive cost.
MR. FRATTO: I think that's a -- I mean, firms do that as a marketing item, and certainly marketing is important for any business. I'm not commenting specifically on Citibank's decision as I'm just learning about it right now, April. I'm sorry.
Q But marketing with government funds?
MR. FRATTO: I'm not aware of that. Like I said, Mark, I'm just learning of that right now. I'd want to look at it a bit more.
Q If it indeed pans out the way I'm telling you, isn't that a contradiction? They're asking for money, yet they are making an extravagant purchase at the cost to the American taxpayer.
MR. FRATTO: I'm just not in the habit of commenting on things that I'm not aware of.
Q Can I get something from you later, once you find out?
MR. FRATTO: Sure, absolutely.
Q Yes, I mean, on the Middle East situation, how would you respond to critics who had said the Annapolis --
MR. FRATTO: Actually, any more on Citibank or financial crisis, and then we can --
Q One more.
MR. FRATTO: One more? Two more?
Q Yes, two more.
MR. FRATTO: Three more. Okay, Goyal.
Q Yes, I just wanted to follow on Katherine and what she said. What I'm asking is -- only two months left for President-elect Obama to take over. What's message, you think, President Bush, has for homeless, homeless homeowners, and also small business still in trouble, still they're on the road? And you think in the next two months after President Bush leaves, under the new President things will change?
MR. FRATTO: Well, I think we are going to see improvement over time. And our message to homeowners and small businesses and large businesses is that we are working on these problems in our credit markets so that you can have the resources and the loans and credit lines that you need to go out and buy the things you need, whether it's -- if you're a business, the components or products you need to do your business, or if you're an American family, the cars or home loans and student loans that you need for your own family needs.
So that has been our message, Goyal, and I think that will continue to be our message.
Q Yes. Sort of in the same vein, you've been asked a lot about market economic implications of the crisis. But people in the street -- people ask me here, what do I do with my savings? I mean, I keep them in dollars. Some people in Moscow do. What would you -- what's your advice to people about their personal savings? What's the best strategy for them? (Laughter.) If we're talking about your personal --
MR. FRATTO: I think the personal investment show isn't on for another 15 minutes -- (laughter) -- but you can come back for that. I don't give personal investment advice.
Q If you have a choice of keeping the currency or keep your -- (laughter) -- what would that be?
MR. FRATTO: I only use the U.S. dollar.
Q Is there a way to reassure small business owners that there will be regulations in ways that they will be able to get money to keep their businesses running?
MR. FRATTO: Regulations?
Q Yes, regulations in the future, so that small businesses will know that they can have money to keep their businesses running.
And what part will Iran play in the discussions today with Olmert?
MR. FRATTO: Well, to the first part of your question, I'm not sure that I completely understand the connection between regulations and availability of financing. Let me just say I think we're trying to restore health to our financial system so that there will be sufficient financing for small businesses and they can get it. One thing we're wary about with regulation is occasional tendency to over-regulate in ways that restrict the availability of things like credit in our banks. But that's going to be an ongoing debate over the coming year, I'm sure.
Q And what about Iran?
MR. FRATTO: And Iran -- will it be part of their discussions? I would be surprised if it wasn't. But I have nothing I can give you on that specifically.
Go to Jon, because I promised him I would.
Q Just on the Middle East situation. How would you respond to critics who say that the Annapolis Conference of a year ago -- now that Bush is meeting with Olmert today, probably for the last time, how would you respond to critics who said that was a failure because they didn't reach an agreement by the end of this year?
MR. FRATTO: Well, I think they would be ignoring a great deal of progress. You've heard Secretary Rice discuss this, I think, on her -- how many trips has she taken over the past year? Seven -- six or seven trips to the Middle East. I think she spoke about this last night in her gaggle on Air Force One, as well.
There has been a great deal of progress. We're much further along than we would otherwise be were it not for the start of the Annapolis process, and I think that one thing we have left in place is this very important process where the parties are talking to each other and they've put in place processes for improving security and economic assistance for the Palestinians.
So we're much further along the road than we otherwise would have been. And I think we're much further down the road than most people give the Palestinians and the Israelis credit for.
Now, we do have the elections coming up in Israel, and obviously that will delay or throw off the process a bit. I think that's -- everyone understands that. But there's no question that we're much further along than we otherwise would have been, and we're proud of that effort.
Q And what's the reason for the meeting today?
MR. FRATTO: The reason for the meeting? To discuss just this, I mean, have a chance to regroup on where things stand and where we see things going in the future. And there are still two months of at least -- this administration, and I think the strong encouragement with the official leadership of Israel to continue their efforts, and how critically important America looks at the future of the Palestinian and Israeli relationship. We want to see peace in the Middle East, and we want to continue to send that message. And we'll continue sending that message as long as we're here.
MR. FRATTO: Victoria.
Q Thank you. Can you confirm that Rashid Rauf was killed in an air strike in Pakistan on Saturday?
MR. FRATTO: No, that's not something I could --
Q Why don't you just confirm the air strikes are taking place?
MR. FRATTO: I'm telling you I know nothing about it, so there's -- there would be nothing for me to say about it, I'm sorry.
And Lester, and then we're done.
Q Thank you, Tony. Two questions. There's been extensive media coverage of where the two Obama daughters will attend school. And my question: The White House believes that they should be able to attend the school their parents select without criticism because it's private rather than public, don't you?
MR. FRATTO: I think we support all parents making that decision.
Q Good. The CEO of WorldNetDaily has called on the President-elect to release a birth certificate listing the hospital and names of parents. The White House believes that this would fully satisfy the constitutional requirement, don't you?
MR. FRATTO: I don't think I have anything to say on that, Lester, and I think we're going to end it right there.
END 11:35 A.M. EST