President Obama: Well, first of all, the special relationship between the United States and Great Britain is one that is not just important to me, it’s important to the American people. And it is sustained by a common language, a common culture; our legal system is directly inherited from the English system; our system of government reflects many of these same values. So — and by the way, that’s also where my mother’s side of my family came from.
So I think this notion that somehow there is any lessening of that special relationship is misguided. Great Britain is one of our closest, strongest allies and there is a link, a bond there that will not break. And I think that’s true not only on the economic front, but also on issues of common security.
And in our conversations here, we talked not only about the need to coordinate around economic policy, but also I expressed to the Prime Minister America’s extraordinary gratitude for their support in our efforts in Afghanistan, and the young men and women of Great Britain who have made enormous sacrifices there. Although there was a debate, obviously, around the issue of Iraq, nevertheless, whether you are for or against the war here in the United States, the recognition of Great Britain’s friendship and standing tall with us during that period is something that will never be forgotten.
And so rest assured that the relationship is not only special and strong, but will only get stronger as time goes on.
Prime Minister Brown: I’d like to thank President Obama for his welcome, for his hospitality, for his leadership of his country and the inspiration he’s giving the world at this very difficult time.
And I’ve come here to renew our special relationship for new times. It’s a partnership of purpose. It’s a partnership of purpose that is born out of shared bonds. It’s a partnership of purpose that is founded on a determination to rise to every challenge. And I think it’s a partnership of purpose that is driven forward now by the need for us all to work together in unity to deal with the world economic problems.
And I’m grateful for the conversations I’m having with President Obama about this and about other things. And I’m grateful, too, that Michelle and Sarah will be meeting later this afternoon and I know they’ll have an enjoyable time, as well.
President Obama: Absolutely. Okay.
Question: Prime Minister, your chancellor has said overnight that it is our collective responsibility, all of us have to have the humility to accept that over the last few years things have got out of alignment. Is that a form of apology from the government? Are you apologizing for the problems that there have been over the past 10 years in the financial system?
Prime Minister Brown: Well, there’s got to be deep regulatory change. We’ve just been talking, Barack and I, about the need for proper supervision of shadow banking systems, of areas where there was bank practices that were unacceptable, where remuneration policies got out of hand and weren’t based on long-term success, but on short-term deals. And these are the changes that we’ve already announced that we are going to make.
So we’ve learned from what has happened over these last 10 years. Things have happened in every part of the world that we’re having to learn about, as well, and you’ve got an international financial system that we’ve now got to show can be brought to work in the public interest.
So every country is learning and every country is taking action. And what we are talking about today is how by us taking action, Britain and America, we can help other countries that join us in making for a more stable and effective financial system.
President Obama: Caren.
Question: Thank you, Mr. President. The stock market has fallen to lows since — it’s not seen since 1997 this week, and an undercurrent of these declines is the fear that your plans to fix the banking sector might not work. And I’m wondering if you could talk about your plans and whether you think you can give reassurances that they will, in fact, work.
And, Prime Minister Brown, I wanted your view on whether you think your two countries have a handle on the banking sector problems that are affecting both your countries.
President Obama: Well, let me say this: I’m absolutely confident that they will work. And I’m absolutely confident that credit is going to be flowing again, that businesses are going to start seeing opportunities for investment, they’re going to start hiring again, people are going to be put back to work.
What I’m looking at is not the day-to-day gyrations of the stock market, but the long-term ability for the United States and the entire world economy to regain its footing. And, you know, the stock market is sort of like a tracking poll in politics. It bobs up and down day to day, and if you spend all your time worrying about that, then you’re probably going to get the long-term strategy wrong.
Now, having said that, the banking system has been dealt a heavy blow. It has to do with many of the things that Prime Minister Brown alluded to: lax regulation, massive over-leverage, huge systemic risks taken by unregulated institutions, as well as regulated institutions. And so there are a lot of losses that are working their way through the system. And it’s not surprising that the market is hurting as a consequence. In fact, I think what we’re seeing is that as people absorb the depths of the problem that existed in the banking system, as well as the international ramifications of it, that there’s going to be a natural reaction.
On the other hand, what you’re now seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long-term perspective on it. I think that consumer confidence — as they see the American Recovery and Reinvestment Act taking root, businesses are starting to see opportunities for investment and potential hiring, we are going to start creating jobs again.
One of the things that Prime Minister Brown and I talked about is how can we coordinate so that all the G20 countries, all the major countries around the world, in a coordinated fashion, are stimulating their economies; how can we make sure that there are a common set of principles, in terms of how we’re approaching banking, so that problems that exist in emerging markets like Hungary or the Ukraine don’t have these enormous ripple effects that wash back onto our shores, and we’re providing them with some help in a coordinated international fashion, as well.
All those steps, I think, are going to slowly build confidence. But it’s not going to happen overnight. And my main message to the American people is to just recognize that we dug a very deep hole for ourselves; there were a lot of bad decisions that were made; we are cleaning up that mess. It’s going to be sort of full of fits and starts in terms of getting the mess cleaned up, but it’s going to get cleaned up. And we are going to recover and we are going to emerge more prosperous, more unified, and I think more protected from systemic risk, having learned these lessons, than we were before.