Barack Obama Sept. 23 press conference. Transcript courtesy of Federal News Service.
SEN. OBAMA: Yesterday, the President said that Congress should pass his proposal to ease the crisis on Wall Street without significant changes or improvements.
Now, there are many to blame for causing the current crisis, starting with the speculators who gamed the system and the regulators who looked the other way. But all of us now have a stake in solving it and saving our financial institutions from collapse. Because if we don't, the jobs and life savings of millions will be put at risk.
Given that fact, the President's stubborn inflexibility is both unacceptable and disturbingly familiar. This is not the time for my- way-or-the-highway intransigence from anyone involved. It's not the time for fear or panic. It's the time for resolve, responsibility, and reasonableness.
And it is wholly unreasonable to expect that American taxpayers would or should hand this Administration or any Administration a $700 billion blank check with absolutely no oversight or conditions when a lack of oversight in Washington and on Wall Street is exactly what got us into this mess.
Now that the American people are being called upon to finance this solution, the American people have the right to certain protections and assurances from Washington.
First, the plan must include protections to ensure that taxpayer dollars are not used to further reward the bad behavior of irresponsible CEOs on Wall Street.
(Note: From this point onward the transcript is as transcribed.) There has been talk that some CEOs may refuse to cooperate with this plan if they have to forego multimillion-dollar salaries. I cannot imagine a position that's more selfish and more greedy at a time of national crisis. And I'd like to speak directly to those CEOs right now: Do not make that mistake. You are stewards not only of your companies, but of workers and communities all across our country who have put their trust in you. With the enormous rewards you've -- that you've reaped come certain responsibilities, and we expect and demand that you to live up to those responsibilities. This plan cannot be a welfare program for Wall Street executives.
Second, the power to spend $700 billion of taxpayer money cannot be left to the discretion of one man, no matter who he is or which party he is from. I have great respect for Secretary Paulson, but he cannot act alone. We should set up some sort of independent board that includes some of the most respected figures in our country, chosen by Democrats and Republicans, to provide oversight and accountability at every step of the way. I'm heartened that Secretary Paulson appeared to be softening on this position in his testimony this morning.
Third, if taxpayers are being asked to underwrite hundreds of billions of dollars to solve this crisis, they must be treated like investors. The American people should share in the upside as Wall Street recovers. Now, there are different ways to accomplish this, including putting equity into these firms instead of buying their troubled assets. But regardless of how we structure the plan, if the government makes any kind of profit on the deal, we must give every penny back to the taxpayers who put up the money in the first place.
And after the economy recovers, we should institute a financial stability fee on the entire financial services industry to repay any losses to the American people and make sure we are never asked again to foot the bill for Wall Street's mistakes. We can ask taxpayers to make an investment in the stability of our economy, but we cannot ask them to hand their money over to Wall Street without some expectation of being made whole.
Fourth, the final plan must provide help to families who are struggling to stay in their homes. We can't simply bail out Wall Street without helping the millions of innocent homeowners who are facing foreclosure -- or, for that matter, are seeing their home values decline.
Now, there are a number of ways we can accomplish this. For example, we should consider giving the government the authority to purchase mortgages directly instead of simply purchasing mortgage- backed securities. In the past, such an approach has allowed taxpayers to profit as the housing market recovered. This is not simply a question of looking out for homeowners; it's doubtful that the economy as a whole can recover without the restoration of our housing sector, including a rebound in the home values that have suffered dramatically in recent months.
Finally, the American people need to know that we feel as great a sense of urgency about the emergency on Main Street as we do about the problems on Wall Street. I have repeatedly called on President Bush and Republican and Democratic leadership to join me in supporting an economic stimulus plan for working families -- a plan that would help folks cope with rising food and gas prices, save 1 million jobs by rebuilding our schools and roads, help states and cities avoid painful budget cuts and tax increases, and help homeowners stay in their homes.
Now, let me be clear: I do not believe that we should include this stimulus package in the emergency legislation that's being negotiated. But as we solve the immediate crisis on Wall Street, we do need to move with speed and dispatch, with the same sense of urgency, to help Main Street.
It is absolutely wrong to suggest that we cannot protect American taxpayers while -- while still stabilizing our market and saving our financial system from collapse. I believe we can and we must do both.
In summary, there's no doubt negotiations over the next few days will be difficult. I will continue to stay in close contact with Secretary Paulson and Chairman Bernanke, as well as the leaders of Congress, to ensure that we can work in a bipartisan manner to get this done as quickly as possible.
Our country is being tested by a very serious crisis. We are all in this together, and we must come together as Democrats and Republicans, on Wall Street and on Main Street, to solve it. And with the proper spirit of cooperation, I am certain that we can.
With that, let me open it up. Dean.
Q Senator, will you vote against a recovery plan that does not include these protections for homeowners and taxpayers that you just outlined?
SEN. OBAMA: The principles I outlined are principles I believe any package needs to contain for me to support. And there are a number of ways of accomplishing it. I'm not trying to dictate one particular way, for example, to protect taxpayers. There are a number of ideas that are out there. But I need to be convinced that taxpayers are going to get an upside on this thing and can be made whole when the economy recovers.
I am not trying to dictate a particular way that we assure CEOs don't walk out the door after a taxpayer bailout with multimillion- dollar bonuses, but I'm going to want assurances that, in fact, that will not happen.
So the answer to your question is these principles, for me, are clear, they are designed to make sure that the taxpayers are protected, but they're also designed to make sure that this system works. We're trying to deal with an emergency situation and we don't have a lot of bullets left. And if we don't get this right, then not only are we going to have some immediate problems, but the next administration is not going to have the resources or the capacity to deal with other emergencies that may come up. And so it's critical from my perspective to make sure that this is done properly.
Q (Inaudible.) You mentioned this morning the possibility of phasing in some of the programs you talked about during the campaign. Can you give us any better idea of how much of a delay you think this crisis might force on some of your plans if you're elected?
SEN. OBAMA: Look, I -- Chris, I think it's very hard to say right now what the economy is going to look like in January of 2009 or March of 2009. But -- but recall what I said this morning, because I want to make sure everybody's clear on this. When it comes to the middle-class tax cuts that I've called for, that is something that I believe is absolutely necessary to strengthen an economy that is going to be sliding -- probably -- into a deeper recession. We are going to have to make sure that ordinary folks have money in their pockets, that they are able to pay gas and food costs, that retail sales are bolstered.
And so I think that it is, it is important for us to make sure that we are shoring up the economy at this time. And I think the middle-class tax cut, as I've talked about, 95 percent of Americans getting a tax cut is something that still makes sense in this kind of environment.
Let me finish. I'm going to answer your question.
When it comes to energy, I think, we still have an urgent problem. We saw the biggest spike in oil prices in -- on record yesterday. And so that problem is not going to go away. And the investments that I've been talking about in solar, in wind, in biodiesel remain, I think, absolutely critical.
Our health care system is still going to be a drag. And I think it is important for us, at a time when a huge portion of bankruptcies that are weakening family balance sheets arise out of the fact that they don't have medical care, we're going to have to make sure that we deal with those issues. And on education, the investments that we make in education right now are ones that are going to determine our competitiveness over the long term.
So there are some key structural problems in our economy that, I believe, have to be dealt with. And you know, contrary to what Senator McCain suggested earlier, I don't think actually the fundamentals of our economy right now are where they need to be. And the plans I've put forward are designed to bolster those fundamentals, even as we are also dealing with this immediate crisis.
Q Senator Obama, two questions.
Do you believe this bailout should cover other endangered loans dealing with automobiles, school loans and credit cards? Secretary Paulson suggested later in his testimony this afternoon that they ought to.
Secondarily there are some on Capitol Hill who believe, 700 billion is a large amount, and maybe what should be immediately provided is something less than that, with an assurance later that that amount could be there and made available if the first 200 billion or so works.
Could you evaluate those two ideas, please?
SEN. OBAMA: The -- given the problems in the financial markets, not all the troubled assets that are out there and all the problems that we're seeing are related to housing. The bulk of them have to do with mortgages, but not all of them. And I think that it is important for us to evaluate whether or not other underlying assets or securities that relate to other underlying assets also pose significant risk to the financial system. If they do, then it would make sense for us to examine those as well and for the government to take appropriate action.
So I, you know, to try to simplify my answer, I want to make sure that we are dealing with the problem of liquidity and the credit markets freezing up, regardless of the source. And you know, I think that the secretary of the Treasury, the chairman of the Federal Reserve would have to evaluate how big of a problem, for example, are student loans, relative to solving the liquidity problem.
Okay? And they haven't answered that question definitively.
When it comes to phasing in the bailout or phasing in a program, I do think that it's -- it's important to recognize that we've got a short-term problem of keeping the markets functioning and making sure that the small-businessman wakes up in the morning or the young woman who wants to go to college and who's expecting student loans, that that money's still there. And that requires some short-term intervention. How much of the request that Secretary Paulson's made deals with that short-term problem or how much is required to deal with that short-term problem hasn't been made clear. And it's something that I think that Secretary Paulson should answer.
If it is enough for us to look at a hundred billion dollars or $200 billion to cover that immediate emergency and there's an understanding that we're going to have to set up some institutional structures over the long term to deal with, for example, purchasing mortgages, which might take some time to set up, you know, I think that that is something worth exploring. The key is making sure, though, that however we structure this authority, that we're actually dealing with the immediate crisis. And you know, I think that it's going to be important for Congress to recognize that we don't want to do something too small that doesn't solve the problem and then just gets us back in the same fix later on.
Q (Off mike) -- handled in such a short period of time, Senator?
SEN. OBAMA: Well, here's what I -- here's what I believe, that however this plan is structured, what we should be looking at is a menu of things that are going to need to be done.
There's not going to be a one-size-fits-all approach to every aspect of the financial crisis. There may be some circumstances where purchasing troubled assets was appropriate. There may be some circumstances where purchasing an equity stake in the company and helping it recapitalize might be appropriate. There might be some other situations in which it makes sense for us to purchase mortgages rather than the mortgage-backed securities because that gets at the underlying weaknesses of the housing market.
Some of those can be done quicker. Some of those would require setting up a structure that would take more time. And I think what we -- the way we need to think about it is, is that we've got a leaky boat. We need to make sure that we get that boat into harbor. And then we're going to have to do a lot of repairs. And right now the most urgent step that has to be taken is restoring some confidence in the market, making sure that liquidity is there, making sure that credit is flowing and that the markets are functioning, and then making sure that we do (right/write ?) these larger institutional fixes that may be required.
Q Senator, your spending priorities. Are you saying that energy, health care, education, your middle-class tax cut, these will be somewhat non-negotiable, these are things you're going to plow forward with?
SEN. OBAMA: Well, look, here's what I'm saying. First of all, all these spending priorities that I had are paid for. And I've laid out the ways in which I would pay for them. So, for example, on the middle-class tax cut, that is in part paid for by rolling back tax havens and offshore loopholes that I don't think are helping the economy grow but are giving some sweetheart deals to certain companies.
So I think we need to reform our tax code in favor of nurses, bus drivers, teachers, folks who are working for a paycheck every day and haven't been able to keep up because their incomes have been going down. And so I will move forward on that initiative, in part because they are paid for.
When it comes to energy, for example, I've talked about the need to use a cap-and-trade system that would help generate money that would then be reinvested in clean and renewable energy. Again, that pays for itself.
So on a lot of these items, I'm not looking at outlays out of the budget that aren't offset with other spending priorities.
Now, you know, it would be irresponsible of me to say I am not going to take into account what things look like should I take office.
And one of the big question marks -- at least as big of a question mark as how this Treasury plan ends up being set up is what -- you know, whether we have an economic recovery or we slide deeper into a recession. That will have a big impact on what federal revenues are and what a budget looks like. So all those things are going to have to be taken into account.
The point I'm making, though, is -- is that these priorities that I've laid out -- not only have I identified ways of paying for them, but they are also priorities that we have to move on in order to strengthen the underlying economy and get us out of the mess that we're in.
STAFF: Last question.
Q Senator, just to be very clear on these four principles that you outlined that deal specifically with this bill, if the legislation does not address all four of those principles in a way that you deem adequate, will you vote against the legislation?
SEN. OBAMA: If the plan that emerges does not address the principles that I've discussed, then I will strongly recommend to Secretary Paulson that we go back to the drawing board and find an approach that does address them. And -- and the -- and -- and again, this goes back to my earlier point, Sheila (sp), which is, this is not one of those circumstances where the president can come out and simply say, "You do it my way, or nothing's going to happen."
You know, the president has had oversight over this economy for the last eight years. We now find ourselves in an enormous mess.
We should be working in a bipartisan fashion to figure out how to get us out of this mess, but what the American people and taxpayers rightly expect is that there is going to be accountability; that this is not a welfare program for corporate CEOs; that they are going to, in some fashion, be made whole or at least that the criteria and the structure of these programs protect them as much as possible; and that homeowners who have seen their home values plummet, oftentimes through no fault of their own, that they're getting some help as well.