Obama "Very Confident" In New Rescue Plan
President Obama today said he was "very confident" that the plan announced by Treasury Secretary Tim Geithner to remove toxic assets from the financial system will have the desired effects of unlocking the credit markets.
Mr. Obama called the plan "absolutely critical" in his administration's effort to combat the economic crisis and he touted the benefits of the public-private partnership the administration has outlined to acquire the assets.
"This morning, Secretary Geithner announced the latest element in this multi-pronged approach, and that is a mechanism that he… has initiated in order to allow banks to take some of their bad assets off their books, sell them into a market, but do so in a way that doesn't just obligate taxpayers to buy at whatever price they're willing to sell these assets, instead involves a public-private partnership that allows market participants who have every interest in making a profit to accurately price these assets so that the taxpayers share in the upside, as well as the downside," Mr. Obama said after his daily economic briefing, which was attended by Geithner and Federal Reserve Chairman Ben Bernanke.
The president also today used an analogy he's used before. He said the financial rescue plan, housing plans and the stimulus plan he signed last month were all "legs in the stool" to bring economic recovery. He also pointed to what he said were "glimmers of hope" in the housing market, which many point to as the key to overcoming the crisis.
"Because of the work that's already been done, you are starting to see glimmers of hope in the housing market that stabilization may be taking place," Mr. Obama said. "Mortgage rates are at a very, very low level, and you're starting to see some activity in the housing market."
As he has done many times before, Mr. Obama also tempered his comments by saying there is still a "long way to go."
"The good news is that we have one more critical element in our recovery, but we've still got a long way to go, and we've got a lot of work to do. But I'm very confident that, with the team that we've got assembled, we're going to be able to make it happen," he said.
President Obama: Well, good morning. As all of you know, we have been busy on a whole host of fronts over the last several weeks, with the primary purpose of stabilizing the financial system so banks are lending again, so that the secondary markets are working again, in order to make sure that families can get basic consumer loans, auto loans, student loans; that small businesses are able to finance themselves and we can start getting this economy moving again.As I've said before, there are a number of legs in the stool in the economic recovery. Step one is making sure that we had a stimulus package that was robust enough to fill the huge gap in demand that was created by the recession. Step two was making sure that we had a effective homeowners' plan to try to keep people in their homes and to stabilize the housing market. Because of the work that's already been done, you are starting to see glimmers of hope in the housing market that stabilization may be taking place. Mortgage rates are at a very, very low level, and you're starting to see some activity in the housing market.
We then took a series of steps to improve liquidity in what had been secondary markets that had been completely frozen. And we are now seeing activity in student loans and auto loans. We announced last week a small-business initiative that ensures that we have more activity and you start seeing small businesses being able to get credit again in order to sell products and services and make payroll.
And this morning, Secretary Geithner announced the latest element in this multi-pronged approach, and that is a mechanism that he, in close consultation with the Federal Reserve and the FDIC, has initiated in order to allow banks to take some of their bad assets off their books, sell them into a market, but do so in a way that doesn't just obligate taxpayers to buy at whatever price they're willing to sell these assets; instead, involves a public-private partnership that allows market participants who have every interest in making a profit to accurately price these assets so that the taxpayers share in the upside as well as the downside.
And we believe that this is one more element that is going to be absolutely critical in getting credit flowing again. It's not going to happen overnight. There's still great fragility in the financial systems. But we think that we are moving in the right direction. And we are very confident that, in coordination with the Federal Reserve and the FDIC, other relevant institutions, that we are going to be able to not only start unlocking these credit markets, but we're also going to be in a position to design the regulatory authorities that are necessary to prevent this kind of systemic crisis from happening again.
And I'm looking forward to traveling to the G20 so that we ensure that the activities that we're doing here in the United States are effectively matched with comparable action in other countries. And Secretary Geithner has already traveled and met with the finance ministers of the G20 states so that we can make sure that we're all moving on the same page.
So the good news is that we have one more critical element in our recovery. But we've still got a long way to go, and we've got a lot of work to do. But I'm very confident that, with the team that we've got assembled, we're going to be able to make it happen.
All right. Thank you guys.
Question: Can you offer any assurances to taxpayers who are skeptical?
President Obama: You know, I'll have a full press conference tomorrow night, and you guys are going to be able to go at it.
