At his town hall meeting in Costa Mesa, Calif., Wednesday evening, President Obama compared embattled insurer AIG and other large failing banks to a suicide bomber.
"A lot of people say, 'Well, why not just let the banks fail?'" the president said. "'Why don't we just let them fail, let them go bankrupt, what's the problem?'"
The president said that if the local community bank, Fullerton Community Bank, failed, "We've got something called the FDIC, the Federal Deposit Insurance Corporation, that would take it over, it would guarantee all the deposits so you don't have to worry about your deposits. They are not at risk. And it would be able to kind of sort things out and then resell the bank fairly quickly and it doesn't threaten the system as a whole."
Bigger banks, however, "Citicorp or Bank of America or, you know, Wells Fargo that controls 70 percent of the banking system, and all of them are weakening, you can't afford to have all those banks all at once start going under. Even though the deposits might be guaranteed, you've got the entire economy resting on that credit."
The president said, "It was the right thing to do, even though it's infuriating, even though it makes you angry because you're thinking, 'I was responsible and these folks are irresponsible and somehow I'm paying for them.' The same is true with AIG. It was the right thing to do to step in."
"Here's the problem," Mr. Obama said, "It's almost like they've got -- they've got a bomb strapped to them and they've got their hand on the trigger. You don't want them to blow up. But you've got to kind of talk them, ease that finger off the trigger."
- Jake Tapper and Sunlen Miller