We’ll recover from this recession, but it will take time, it will take patience, and it will take an understanding that when we all work together, when each of us looks beyond our own short-term interest to the wider set of obligations we have towards each other — that’s when we succeed; that’s when we prosper. And that’s what is needed right now. So let’s look towards the future with a renewed sense of common purpose, a renewed determination, and most importantly, a renewed confidence that a better day will come.
All right, with that, let me take some questions. And I’ve got a list here. Let’s start off with Jennifer Loven, AP.
Q Thank you, Mr. President. Your Treasury Secretary and the Fed Chairman were on Capitol Hill today asking for this new authority that you want to regulate big, complex financial institutions. But given the problems that the financial bailout program has had so far — banks not wanting to talk about how they’re spending the money, the AIG bonuses that you mentioned — why do you think the public should sign on for another new, sweeping authority for the government to take over companies, essentially?
THE PRESIDENT: Well, keep in mind that it is precisely because of the lack of this authority that the AIG situation has gotten worse. Understand that AIG is not a bank, it’s an insurance company. If it were a bank and it had effectively collapsed, then the FDIC could step in, as it does with a whole host of banks, as it did with IndyMac, and in a structured way, renegotiate contracts, get rid of bad assets, strengthen capital requirements, resell it on the private marketplace.
So we’ve got a regular mechanism whereby we deal with FDIC-insured banks. We don’t have that same capacity with an institution like AIG. And that’s part of the reason why it has proved so problematic. I think a lot of people, understandably, say, well, if we’re putting all this money in there, and if it’s such a big systemic risk to allow AIG to liquidate, why is it that we can’t restructure some of these contracts; why can’t we do some of the things that need to be done in a more orderly way? And the reason is, is because we have not obtained this authority.
We should have obtained it much earlier so that any institution that poses a systemic risk that could bring down the financial system, we can handle, and we can do it in an orderly fashion that quarantines it from other institutions. We don’t have that power right now. That’s what Secretary Geithner was talking about.
And I think that there’s going to be strong support from the American people and from Congress to provide that authority so that we don’t find ourselves in a situation where we’ve got to choose between either allowing an enormous institution like AIG — which is not just insuring other banks but is also insuring pension funds, potentially putting people’s 401(k)s at risk if it goes under — that’s one choice. And then the other choice is just to allow them to take taxpayer money without the kind of conditions that we’d like to see on it.
So that’s why I think the authority is so important.