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Press Briefing by Deputy Press Secretary Tony Fratto
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For Immediate Release Office of the Press Secretary November 24, 2008

Press Briefing by Deputy Press Secretary Tony Fratto James S. Brady Press
Briefing Room

˙ /news/releases/2008/11/20081124-1.wm.v.html ˙˙Press Briefings
˙˙Audio


11:08 A.M. EST

MR. FRATTO: Good morning, everyone. And those of you who were traveling to
South America, welcome back.

The President early this afternoon will have a photo opportunity with
recipients of the 2008 Nobel Awards. These are the American Nobel
Laureates. The recipients who will be here are Dr. Martin Chalfie, the
Chemistry Prize Laureate; Dr. Roger Tsien, Chemistry Prize Laureate also;
and Dr. Paul Krugman, Economics Prize Laureate.

Later this afternoon the President will meet with Prime Minister Olmert of
Israel. The President looks forward to discussing with the Prime Minister
the strong bilateral relationship between the United States and Israel, our
continuing mutual efforts to bring peace to the Middle East, and a wide
range of regional and international issues.

And you just saw the President earlier, after his meeting with Treasury
Secretary Paulson and some other Cabinet officials -- meeting in
preparation for the U.S.-China Strategic Economic Dialogue over at the
Treasury Department, and you have the President's comments.

And with that, I'll take your questions. Jennifer.

Q I wanted to ask you about one thing he said, that there could be other
actions like the Citigroup action in the future. Is there anything under
consideration at the moment? Was he referring to anything specific?

MR. FRATTO: We would never foreshadow any specific actions involving
private firms. But I think it's safe to say that it's a very strong message
from the President and from -- the joint statement from Treasury, the Fed,
and the FDIC last night, that we take threats to our financial system
seriously and we stand ready to take any steps necessary to prevent
systemic events in our economy. And that was one that they announced last
night; I think it's been told in the letter you're reporting overnight and
this morning that a lot of work went into this over the weekend, people
working into the late hours. I think they did a background briefing at
midnight. I don't know if that's unprecedented, but I know they're trying
to be as clear as possible with what they're doing to try to deal with
potential systemic events in the economy.

Q It just seems unusual for the President and you guys to talk about the
possibility of future actions -- I mean, other --like Bear Stearns and AIG
were sort of treated as, you know, individual circumstances and not sort of
foreshadowing --

MR. FRATTO: I think that's a really good point -- actually, I mean, just in
the context of your question -- at that time, when we dealt with Bear
Stearns, we were dealing with single, individual firms in almost a one-off
way to stem what was then the early stages of a financial crisis. Since we
put in place the TARP program and $700 billion, I don't think it should
come as any surprise to anybody that this is an ongoing effort; that we did
ask for $700 billion to deal with this financial crisis and that's what we
have available to deal with it.

We don't want to wait until firms are in fact failing and it's impossible
to rescue them. We want to prevent those events from taking place and limit
-- not just limit damage to the economy, but also, remember, to support the
capital positions of these banks so that they can play the very critical
role they play in the economy, which is to be out there making loans and
taking bets on America.

Mike.

Q Democrats are talking about another -- I'm sorry --

MR. FRATTO: That's okay, Bill.

Q -- another stimulus bill in the neighborhood of $500 billion, maybe $600
billion. Does this administration have a view on that?

MR. FRATTO: Well, look, we've been trying -- we've tried to be focused on
all of the efforts that we've taken to support the economy, certainly over
the past year. We've done one large stimulus package already. We've taken
historic actions with respect to the housing sector to prevent millions of
foreclosures. We've taken historic efforts with respect to the financial
crisis and the $700 billion plan and all the efforts that the Fed and the
FDIC are doing to shore up our financial system.

That's what we've been focused on for now. For right now that is the most
important thing we can do for the economy is to put those appropriated
funds to use in a way that will support credit in our system and allow the
economy to function.

The next administration has a lot of decisions to make. And they have
policies that they are looking at, but what we're focused on right now are
implementing the authorities that we have to support the economy in the
best way possible.

Q But do you think a further stimulus is needed?

MR. FRATTO: Look, I'm not going to comment on what the next administration
thinks they need to be doing. The best thing we can be doing right now and
for the time that we have here to do for the economy is to shore up our
financial system. That's what we have the authority to do and that's what
we have the funding to do, and that's what we can get done right now.

Yes, Mark.

Q Tony, in Lima over the weekend, President Bush spoke at length about the
importance of free markets. Why don't all these bailouts undermine free
markets by keeping troubled, distressed companies from failing?

MR. FRATTO: Well, not at all. I mean, what these efforts are doing are to
prevent the financial system from failing. It's never been about any one
particular company. We let thousands of companies fail in this economy
every year. It's a -- actually, an important part of a healthy company is
to have companies competing against each other, and some of them fail, and
the winners win, and that's good.

But when you have systemically large companies that can bring down not just
the entire U.S. financial system but the global financial system, and have
a devastating effect on our broader economy, the government has to step in.
And so we have an obligation to preserve that very important part of our
economy, and that supports the free market system. Our firms can't get out
there and do trade if they don't have trade financing. Firms can't get out
there and distribute funds to their -- to companies who distribute products
here and around the world if they don't have overnight credit financing.

So that part of our economy is critical. We need to keep it in place; we
need it to be strong; we need it to fill all of the holes in our economy
that need financing in order to be able to do their business in a free and
open economy.

Q What guarantees do you have that they will do that, in terms of lending?

MR. FRATTO: That they will lend? That's the business they're in, and the
banks have no --

Q That may be, but they're not doing it.

MR. FRATTO: Well, look, I think we're pretty confident in the guidance that
we've given to banks to get out there and lend. They actually have been
lending. They've had to shore up their balance sheets to make sure that
they're in a good position. But banks only make money one way, and that's
to be out there lending and making loans.

Now, it's a very difficult economy we're in right now, so there's a
question of the demand side of people requesting loans from banks also and
whether there are good bets out there. We want them to make good business
decisions. But banks are only in the business of lending, so they can't be
profitable companies going forward unless they are looking for
opportunities to lend.

Q Why don't we help the automakers?

MR. FRATTO: We are helping the automakers -- or at least we have a plan to
help the automakers. We had a bipartisan agreement on the floor of Congress
-- well, actually, it never made it to the floor because the Democratic
leadership decided not to bring it to the floor. But we had a bipartisan
agreement that we believe would get bipartisan support. It was for $25
billion in the loan program that would have freed up that money in a way
that would support the automakers in their efforts -- to help to support
them as they become viable firms, because these are important parts of our
manufacturing base. We want to see the automakers succeed.

There seems to be some misconception out there that we don't want to help
the automakers. We do want to help the automakers. We had a bipartisan
agreement to do just that, and we believe that's where those funds should
come from. And by the way, the news overnight where -- this was a
relatively unexpected effort by Treasury and the Fed. If you had said two
weeks ago that they were going to have to take this action for Citibank, I
think that would have seemed unlikely. This is a very dynamic situation
we're dealing with, and the financial system is still fragile.

But that also speaks to the need to preserve the funds in the TARP for
their intended purpose. We don't need to be taking funds out of the TARP
program for other purposes -- and with respect to the automakers,
especially when we have a $25 billion loan program that was specifically
set up for their use.

Q Well, what's the hang-up? Is it because the money is coming out of the --

MR. FRATTO: That's a question for Congress, Helen. The money is there; we
tried to work on both sides of the aisle to design it in a way that the
automakers could access it and to help them move forward and be viable. So
I would put that question to the Democratic leadership of the Congress.

John.

Q Tony, on Friday the stock market rallied when Obama named Geithner as his
choice for Treasury Secretary. He was apparently involved in this Citigroup
rescue. Would the President -- given the extraordinary nature of this
crisis, would the President consider naming Geithner early as Treasury
Secretary in order instill confidence and continuity in the market?

MR. FRATTO: I would just say we have great respect for Tim Geithner. I've
been able to watch his work for the past eight years, and when I worked at
Treasury, I learned a lot about his work prior to my time there. He's
obviously exceptionally talented and a very smart, and ably led the New
York Fed these past number of years.

I'm not aware of any request for the President to do anything special with
respect to nominations from President-elect Obama's team. So it is -- I
don't want to speculate on sort of hypothetical requests.

Q Is there any consideration of doing that within this administration?

MR. FRATTO: Of?

Q Without having a request externally? I mean, would you consider it?

MR. FRATTO: We would never do anything with respect to President-elect
Obama's nominations without discussing it with them.

Matt.

Q Tony, when the President spoke to President-elect Obama last night on the
way back from Peru --

MR. FRATTO: No, he spoke to President-elect Obama this morning.

Q This morning, okay. Did he receive explicit support from the
President-elect for the Citigroup --

MR. FRATTO: I'm not going to read out President-elect Obama's side of the
conversation; you can check in with his transition team for that. But the
President wanted to make sure that President-elect Obama knew everything we
were doing and that we maintain a very high level of communications between
this administration and the incoming administration. It's very important
that we're on the same page on all of this and -- but I'm not going to
speak to the President-elect's views on any specific policy action.

Q Who initiated the call?

MR. FRATTO: President Bush did.

Wendell.

Q You said, and the President, as well, that today's action sends a message
that you stand ready to do what it takes to protect the financial system.
What does it say about the effectiveness of what you're doing when a
company that a couple of weeks ago, by your own words, was considered one
of the strongest financial organizations in the country, needs a $20
billion and maybe $100 billion bailout?

MR. FRATTO: I don't --

Q Is it working and what can you point to, to show us that it's working?

MR. FRATTO: I don't think I said two weeks ago it was considered one of the
strongest in the country. I don't think I made that kind of judgment with
respect to them. I just said that an action like this was not something
that I think most people would have anticipated.

Look, I think what it says is we're dealing with a financial crisis that is
unprecedented and a government -- a federal government policy response that
is unprecedented. And you're going to not see improvement in a smooth or
straight line all the time with the various parts of it.

Now, we have seen progress with respect to overnight lending, and bank
lending rates have improved and the volume of bank lending has improved,
and that's good. But it's not going to be a straight line. The road isn't
always going to be smooth. But we are going to continue to look for
creative ways to make sure that the financial sector can return and play
the very important traditional role it plays.

Q Aside from Libor rates, at the risk of getting down there, what other
improvement have we seen? What shows that it's ultimately going to work?

MR. FRATTO: Look, we're seeing an improvement in the -- on the balance
sheets of a lot of these very important banks. We've seen some banks that
are weak have found opportunities to merge with banks that are stronger.
They're improving their balance sheets. They're improving their capital
positions. And as I said earlier, that when they see opportunities and they
have the balance sheet that will allow them to take risk and they see
opportunity in the economy, they're going to get out there and start
lending again. Like I said, that's the only business they're in, is to lend
money to consumers and businesses. And so we expect them to return to that.

Yes, Roger.

Q Can you talk about Geithner's role in the decision last night a little
bit?

MR. FRATTO: No. No, because --

Q He was involved?

MR. FRATTO: As I understand it, he was, but I'm not going to try to
characterize what his role was. He plays a very important part in all of
these discussions involving the financial markets and financial
institutions in his role as President of the New York Fed, and that
frequently calls on actions by the New York Fed and information from
President Geithner and from his staff at the New York Fed. But I wouldn't
want to put too much --

Q Well, can you --

MR. FRATTO: -- commentary behind it.

Q -- does that as New York Fed, but I'm talking about Secretary Paulson.
Does Secretary Paulson consult with him, especially on these --

MR. FRATTO: They talk as frequently as any two people in town, I think. As
I understand it from Secretary Paulson, he and Tim speak frequently. He and
Ben Bernanke and Tim Geithner speak frequently. And that's what you would
expect, and that's not unusual from any -- actually from any previous
Treasury Secretaries speaking with New York Fed Chairmen.

Q And he weighed in on the Citigroup decision last night.

MR. FRATTO: You can check with the New York Fed to see what their views are
on that.

Yes, Kathleen.

Q Tony, can you speak to the challenges that the administration faces as
it's implementing these confidence-building measures when you've got a new
administration coming in, in less than two months, and therefore investors
might rightly -- rightfully have concerns about the continuity of the
government response?

MR. FRATTO: They shouldn't. I think what they've seen is, you know, an
extraordinary effort to maintain continuity, and it's not just
confidence-building. I mean, confidence is one part of it, but we're
actually doing, you know, substantial improvements, real improvements in
the way banks are able to function right now and improving their capital
positions and their balance sheets so that they can do their business.

But in terms of the transition from this administration to the next, I
think you're seeing something that has never been done before. I don't
think you've ever seen this level of communication and cooperation at all
levels -- you know, from lower levels to senior staff to the President and
the President-elect maintaining communications in ways that can only result
in the smoothest transition and the best coordination between two
administrations. I think it's really extraordinary. I think it's something
that, you know, history writers will look back on as an important feature
of this time period.

Q And on Citigroup, is this the last injection of federal dollars they'll
be getting?

MR. FRATTO: I would never try to speculate as to what would be needed in
the future.

Yes, John.

Q Does this action make it more likely that you would tap the second $350
billion from the TARP program before you --

MR. FRATTO: I'll let Treasury make that determination. I think their views
have been that they have programs that they've been working on that they've
tried to develop. They've tried to look at the financial landscape as far
out to the horizon as they can. They weren't ready to make a request last
week; they didn't feel that they were in that position yet. But they may
well in the future. And if they see that conditions warrant it and the
development of the programs that are needed to address the financial crisis
are ripe, then they wouldn't hesitate to go to Congress for the remaining
$350 billion.

Q And what would you anticipate the response would be from Congress at this
point?

MR. FRATTO: Well, I think Congress has already appropriated the money, so
they certainly understand the need for it. And I think they would have
respect for the request, given the fragile nature of our financial system
right now.

Q What's left, Tony? What's left of the initial $350 billion?

MR. FRATTO: I think Treasury has committed somewhere in the range of $290
billion to $300 billion. I think that's what they've discussed publicly. So
that would leave somewhere in the order of $50 billion to $60 billion.

Yes, April.

Q Tony, some are concerned, particularly on the Hill, that this Citigroup
bailout is smacking of AIG all over again. Some are asking for Citigroup to
pull their name -- opt out of naming for the New York Mets Stadium -- $400
million and you just gave them $25 billion. I mean, people are saying that
smacks of it, particularly Congressman Elijah Cummings from Maryland, would
say -- do you think they should opt out of the naming rights contract?

MR. FRATTO: That's -- I'll be honest, this is the first time I heard of
that. I didn't know that they were involved in that. I would presume that
if there's a contract then that's a legal question as to what they can do.
But I'll leave that for Citibank for now, and Treasury, and the regular --
their regulators, because you're telling me something I'm not aware of.

Q But you said just now at the podium, you said banks are only in the
business of lending. This is more than lending; they are lending their name
to a stadium at a cost, a very expensive cost.

MR. FRATTO: I think that's a -- I mean, firms do that as a marketing item,
and certainly marketing is important for any business. I'm not commenting
specifically on Citibank's decision as I'm just learning about it right
now, April. I'm sorry.

Q But marketing with government funds?

MR. FRATTO: I'm not aware of that. Like I said, Mark, I'm just learning of
that right now. I'd want to look at it a bit more.

Q If it indeed pans out the way I'm telling you, isn't that a
contradiction? They're asking for money, yet they are making an extravagant
purchase at the cost to the American taxpayer.

MR. FRATTO: I'm just not in the habit of commenting on things that I'm not
aware of.

Q Can I get something from you later, once you find out?

MR. FRATTO: Sure, absolutely.

Yes, Jon.

Q Yes, I mean, on the Middle East situation, how would you respond to
critics who had said the Annapolis --

MR. FRATTO: Actually, any more on Citibank or financial crisis, and then we
can --

Q One more.

MR. FRATTO: One more? Two more?

Q Yes, two more.

MR. FRATTO: Three more. Okay, Goyal.

Q Yes, I just wanted to follow on Katherine and what she said. What I'm
asking is -- only two months left for President-elect Obama to take over.
What's message, you think, President Bush, has for homeless, homeless
homeowners, and also small business still in trouble, still they're on the
road? And you think in the next two months after President Bush leaves,
under the new President things will change?

MR. FRATTO: Well, I think we are going to see improvement over time. And
our message to homeowners and small businesses and large businesses is that
we are working on these problems in our credit markets so that you can have
the resources and the loans and credit lines that you need to go out and
buy the things you need, whether it's -- if you're a business, the
components or products you need to do your business, or if you're an
American family, the cars or home loans and student loans that you need for
your own family needs.

So that has been our message, Goyal, and I think that will continue to be
our message.

Andre.

Q Yes. Sort of in the same vein, you've been asked a lot about market
economic implications of the crisis. But people in the street -- people ask
me here, what do I do with my savings? I mean, I keep them in dollars. Some
people in Moscow do. What would you -- what's your advice to people about
their personal savings? What's the best strategy for them? (Laughter.) If
we're talking about your personal --

MR. FRATTO: I think the personal investment show isn't on for another 15
minutes -- (laughter) -- but you can come back for that. I don't give
personal investment advice.

Q If you have a choice of keeping the currency or keep your -- (laughter)
-- what would that be?

MR. FRATTO: I only use the U.S. dollar.

Q Is there a way to reassure small business owners that there will be
regulations in ways that they will be able to get money to keep their
businesses running?

MR. FRATTO: Regulations?

Q Yes, regulations in the future, so that small businesses will know that
they can have money to keep their businesses running.

And what part will Iran play in the discussions today with Olmert?

MR. FRATTO: Well, to the first part of your question, I'm not sure that I
completely understand the connection between regulations and availability
of financing. Let me just say I think we're trying to restore health to our
financial system so that there will be sufficient financing for small
businesses and they can get it. One thing we're wary about with regulation
is occasional tendency to over-regulate in ways that restrict the
availability of things like credit in our banks. But that's going to be an
ongoing debate over the coming year, I'm sure.

Q And what about Iran?

MR. FRATTO: And Iran -- will it be part of their discussions? I would be
surprised if it wasn't. But I have nothing I can give you on that
specifically.

Go to Jon, because I promised him I would.

Q Just on the Middle East situation. How would you respond to critics who
say that the Annapolis Conference of a year ago -- now that Bush is meeting
with Olmert today, probably for the last time, how would you respond to
critics who said that was a failure because they didn't reach an agreement
by the end of this year?

MR. FRATTO: Well, I think they would be ignoring a great deal of progress.
You've heard Secretary Rice discuss this, I think, on her -- how many trips
has she taken over the past year? Seven -- six or seven trips to the Middle
East. I think she spoke about this last night in her gaggle on Air Force
One, as well.

There has been a great deal of progress. We're much further along than we
would otherwise be were it not for the start of the Annapolis process, and
I think that one thing we have left in place is this very important process
where the parties are talking to each other and they've put in place
processes for improving security and economic assistance for the
Palestinians.

So we're much further along the road than we otherwise would have been. And
I think we're much further down the road than most people give the
Palestinians and the Israelis credit for.

Now, we do have the elections coming up in Israel, and obviously that will
delay or throw off the process a bit. I think that's -- everyone
understands that. But there's no question that we're much further along
than we otherwise would have been, and we're proud of that effort.

Q And what's the reason for the meeting today?

MR. FRATTO: The reason for the meeting? To discuss just this, I mean, have
a chance to regroup on where things stand and where we see things going in
the future. And there are still two months of at least -- this
administration, and I think the strong encouragement with the official
leadership of Israel to continue their efforts, and how critically
important America looks at the future of the Palestinian and Israeli
relationship. We want to see peace in the Middle East, and we want to
continue to send that message. And we'll continue sending that message as
long as we're here.

MR. FRATTO: Victoria.

Q Thank you. Can you confirm that Rashid Rauf was killed in an air strike
in Pakistan on Saturday?

MR. FRATTO: No, that's not something I could --

Q Why don't you just confirm the air strikes are taking place?

MR. FRATTO: I'm telling you I know nothing about it, so there's -- there
would be nothing for me to say about it, I'm sorry.

And Lester, and then we're done.

Q Thank you, Tony. Two questions. There's been extensive media coverage of
where the two Obama daughters will attend school. And my question: The
White House believes that they should be able to attend the school their
parents select without criticism because it's private rather than public,
don't you?

MR. FRATTO: I think we support all parents making that decision.

Q Good. The CEO of WorldNetDaily has called on the President-elect to
release a birth certificate listing the hospital and names of parents. The
White House believes that this would fully satisfy the constitutional
requirement, don't you?

MR. FRATTO: I don't think I have anything to say on that, Lester, and I
think we're going to end it right there.

Thank you.

END 11:35 A.M. EST
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