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White House: Likely No Need for Bank Bailout II
April 19, 2009 11:18 AM
White House Chief of Staff Rahm Emanuel said on "This Week" Sunday that he believes the government has enough resources on hand that the Obama administration will not have to go back to Congress to ask for more bailout money for the nation's troubled banks.
Emanuel also said he believes the government will be able to avoid nationalizing troubled banks -- something high profile economists, including Nobel prize-winning economist Paul Krugman, have called on the administration to do.
I asked Emanuel: " We all know these stress tests are coming up at the end of the month. We've seen some positive reports from the banks in recent weeks. How confident are you that the banks are going to be able to get through this period without having the government come in and temporarily take over? And will you be able to get through this next period without coming back to Congress for more money?"
"George, let me take a step back," Emanuel said. "I want to address the particular, at the end, on the resources. Remember what the stress test is about. It's very important. You needed a clear demarcation. For the last year and a half, the credit markets have seized up. It was filled, in the financial system, with fear and confusion. Nobody was lending to each other and, therefore businesses, families that were trying to buy a home, kids who wanted to go to college, people that want to buy a car could not access the resources they need to do that because the banks were filled with fear and confusion between each other and weren't lending. And then, at the end of the day, the economy and the consumer got effected. The purpose of the stress test was to have a clear demarcation between that confusion and fear with --"
"And also figure out how much more money they're going to need from the federal government. Are you confident you will not have to come back to Congress?" I asked.
"Well, first of all, I haven't seen -- as you know, I haven't seen the stress test yet. What we do know is, in the first quarter, banks and the financial institutions, the major 19, are doing better. And I think we're all pleased that they're reporting profits," Emanuel said.
But that doesn't take away that some are going to need resources. We believe we have those resources available in the government as the final backstop to make sure that the 19 are financially viable and
effective. "
"Without coming back to Congress?" I asked.
"Right. The resources that we have on hand, we believe -- and it's not just that, George, is that we have those resources; we have a facility to buy these troubled assets off their banks. If they
need capital, we have that capacity. We have what we're doing on the home front. I'm basically helping homeowners basically access and buy a home and stay in a home and refinance their home.
And we also believe, as you see in April, consumer confidence is up," Emanuel.
"So you don't believe you're going to have to come back? Do you believe now?" I asked.
"I'd say that -- you know, I want to be careful here, George, because you're dealing with stuff -- and a lot of people are waiting in the next three weeks. It's a big issue. I believe we won't, but I haven't seen the stress tests, so it's -- I want to put a cautionary note there. I do think, based on everything, you know, in our discussions," Emanuel said.
"You are well-informed," I pointed out.
"I understand I'm well-informed. But that doesn't mean I've seen the stress tests. I do believe we have the resources to
handle what the results will be," Emanuel said.
"And you will avoid any kind of temporary nationalization?" I asked.
"I think we will be able to avoid that," he said. "And again, obviously -- I want to be careful, George, because this is very important, and rightfully so. I believe we have the resources. I believe, -- not only -- I believe we will not have
to deal with nationalization, and that's not the goal, nor do we think that's the right policy objectives here."
--George Stephanopoulos
April 19, 2009 in This Week with George Stephanopoulos | Permalink | Share | User Comments (8)
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I was appalled at sam donaldson commet about the torture . If that what you have to do save american lives then do it. do you think that the afagns and iraqis would nt torture americans .hell they beheaded ameicans . what do you call that?
Posted by: bryan duvall | Apr 19, 2009 11:55:45 AM
bryan duvall: I don't recall anything in this story about torture, but, since you brought it up, it just might be a good idea after all. Torture the bank CEO's and get them to divulge all the loopholes they used to rape the American people and move huge chunks of capital to off shore accounts without paying taxes. You might want to throw in a few hedge fund managers and the politicians who backed the Phil Gramm, Gramm-Leach-Bliley Act that allowed it to happen in the first place.
Posted by: devilkev | Apr 19, 2009 12:34:56 PM
A second bailout? Heck, they didn't need the first one or their profits wouldn't have been so great the first quarter of this year. They still have the "toxic" assets on their books. A few would have failed, but that's the way business works.
Posted by: ellsbells930 | Apr 19, 2009 1:03:19 PM
devilkev | Apr 19, 2009 12:34:56 PM....."backed the Phil Gramm, Gramm-Leach-Bliley Act that allowed it to happen in the first place." and signed by ?????? President Clinton. Why hasn't Obama done anything to those Wall Streeters who caused the crisis? Too much campaign money at stake. That's Washington looking out for you and I!
Posted by: deanbob | Apr 19, 2009 5:22:08 PM
Goldman Sachs changed its calendar so a $780 million loss in December didn't drag down its reported earnings for the quarter. Wells Fargo minimized possible future losses on its purchase of failed bank Wachovia.
And thanks to a recent rule change, many banks were able to pump up the values of the toxic assets at the heart of the credit crunch. The change is "like a gain that goes right to their bottom line," said Lawrence Brown, an accounting professor at Georgia State University.
Posted by: deanbob | Apr 19, 2009 5:26:40 PM
I'm sure the Financial world is very complicated....and while some have asked, 'why haven't Pres. Obama done anything to the Wall Street bankers". I'm sure the paper trail is difficult with the biggest crook out of office. By the way, I want Pres. Obama to prosecute Bush and Cheney for war crimes and wrecking the American financial system.
Posted by: sngeorgia | Apr 19, 2009 6:32:47 PM
Last week several of the majors - Wells and JP Morgan and others - posted their numbers for the first quarter. They also said that they never needed the bail out in the first place and had put the money aside and are glad to repay it any time Treasury lets them. Even BofA didn't want the money and still don't.
So what is there to bail out?
Posted by: Lone Star Rules | Apr 20, 2009 7:26:48 AM
sngeorgia--"By the way, I want Pres. Obama to prosecute Bush and Cheney for war crimes and wrecking the American financial system."--- there were no war crimes.. have you actaully read the reports -- We played loud music to causee them to lose sleep, slapped their faces, and threatened to place one of the captives in a box with a harmless catepillar (we found out he was afraid of bugs)- but we never actaully did it.. just showed him the box and the bug... as far a waterboarding.. we do that to our own seals in SERE training.. and we only did it three times (with medical supervision).. and this was done to the man who beheaded Danny Pearl and posted it on the web...
As far as the American financial system is concerned.. if anyone needs to be prosecuted , its the 92 senators who voted for Gramm/Leach/Bliley, or Clinton who signed it into law, or to the DEMOCRATS who sat on the Senate committee on commerce and did nothing to Fannie and Freddie (other than defend them) as they dragged the mortgage industry down..
After the crisis erupted, Nancy Pelosci stated that a full congressional investigation would be conducted and the responsible parties would be held accountable.. after a week of searching revealed no one but DEMOCRATS that could considered responsible, all talk of congressional hearings were dropped...
Imagine that...
Understand this... you can disagree with the war in Iraq.. that was Bush's decision, and you can disagree with the interrogation techniques which also came under Bush's watch, although they were approved by George Tenant who was a Clinton appointee held over by the Bush WH... but what you can't do is blame this mortgage crisis on republicans.. it just doesn't hold water.. this "crisis" was created by, enabled by and propogated by DEMOCRATS.. and this administration has (and this is only my opinion but time will tell) has only made it worse with their actions.. and our grand kids will pay for it...
Posted by: arkie vet | Apr 20, 2009 2:45:19 PM
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