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Press Gaggle by Tony Fratto
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For Immediate Release Office of the Press Secretary July 1, 2008

Press Gaggle by Tony Fratto Aboard Air Force One En Route Jackson,
Mississippi

˙˙Press Briefings


12:02 P.M. EDT

MR. FRATTO: Good morning. We're on our way to Jackson, Mississippi. The
President had his normal briefings this morning. At 12:55 p.m. local time
he'll attend a Senator Roger Wicker fundraiser, and it's also a Mississippi
Victory Committee luncheon. It's at a private residence, and as you know is
custom, it will be closed press.

At 3:25 p.m. this afternoon, the President participates in a roundtable on
housing counseling with a group called Family Service Agency. I'll come
back and say a few words about this group. And that's in North Little Rock,
Arkansas.

One note on that. Secretary Preston -- HUD Secretary Preston will meet us
in Jackson and travel with us the rest of the day.

At 5:05 p.m., the President attends an Arkansas Victory 2008 reception;
private residence in Little Rock, Arkansas. And then we return to the White
House at 9:40 p.m. this evening.

A little background on Family Services Agency. You've probably heard us
talk a lot about the HOPE NOW Alliance. The Family Service Agency and
certain other credit counseling agencies like them existed far before the
creation of the HOPE NOW Alliance. They have some affiliation now with the
network of the HOPE NOW Alliance, but these are people in local communities
who meet face to face with the citizens of those communities to help them
with their credit counseling trouble they may have, including problems they
may have in keeping up with their mortgage payments.

These are people who want to stay in their houses; they want to clear up
their credit histories, get back on a schedule that they can sustain and
improve their credit scores, and that kind of thing. So these are people
who live in a community, they're there face to face, meeting with people.
They've been affiliated with HUD, going back to 1942. There are about 1,700
of these kinds of offices across the country. This is the -- Family
Services Agency is one of the largest. Neighbor Works, which is another
HOPE NOW Alliance affiliated --

Q Is it independent, or is it government-run?

MR. FRATTO: It's not government-run, it's independent. It does get some
federal dollars. In recent years it's gotten about between $3.6 million and
$3.7 million for different programs. But most of the HUD -- million, with
an "m" -- this particular organization directly. It also gets funding
indirectly through other organizations that might -- where that funding
might originate as federal dollars, as well.

The President, in the roundtable, will have an opportunity to sit with a
number of the credit counselors, themselves, and the individuals who run
this particular office. There will be a homeowner -- one homeowner in the
group who will -- so he'll have the opportunity to hear the story of that
individual, and we'll have background information for you all in terms of
everyone participating in the roundtable later on.

I think that's it. So with that, I'll take your questions.

Q Well, this is a narrow one to start with, but why just one homeowner? I
thought that was part of the point, for him to hear the stories of these
folks who are struggling.

MR. FRATTO: Well, it's both. I mean -- and I have no idea why or how many
people they tried to reach out to. I think people are naturally somewhat
reluctant to talk about their troubled financial history, troubled credit
history. It's not the thing that most of us would want to sit around and
talk about in public. So I don't know, though, if they tried to get more,
or not. But certainly the people who are dealing with troubled homeowners
every day are in that room, and those are the people who handle these cases
and meet and talk to them. And they can relay the stories of many
individuals with credit problems.

Q Are negotiations proceeding over the break on the housing bill? Is there
any progress that's being made that the President plans to talk about?

MR. FRATTO: I can't speak to specific areas of progress, but discussions
continue, certainly. And members of the Senate know I think pretty clearly
where the President is on this and what our position has been on various
elements of housing legislation.

There are parts of the Senate bill that we really like and think are --
would make an important contribution to improving conditions in the housing
markets and in financial markets, and so -- the strong oversight of Fannie
Mae and Freddie Mac -- so the GSE part we really like. There are other
portions of the bill -- FHA modernization -- that we like, although we'd
like to see some critical elements added to FHA modernization.

And there are some elements of the bill that we don't like that we'll have
to deal with, and some of that is on the financing for the expansion of
FHASecure. This $4 billion of funding for CDBG -- block grants -- is
something we don't think will contribute to solutions or prevent
foreclosures, and in fact, it's funding that actually goes to those holding
these foreclosed loans, and that's the original lenders. And we prefer not
to be subsidizing lenders. We'd rather try to focus on ways we can help
homeowners who want to stay in their homes.

But the Senate will come back. We hope to see that bill come back with some
improvements in a way that we can get the President a bill that he can
sign.

Q Are you saying that it needs to be done next week, by the end of next
week?

MR. FRATTO: We'd like to see it done as soon as possible. The Senate put
off a lot of work. They've been in session for a long time and some very
critical pieces of legislation got put off for yet another recess, and now
this last session is getting pretty close to the August recess. So the
Senate is running out of time to get work done.

And as we know, they put off the Medicare physician payment fix; they put
off FISA, which we've been working on for a year now, to try to get
long-term legislation; housing has been put off; and we still haven't seen
action on other pieces of legislation we think important, like Colombia FTA
and some other issues.

So I think they understand that time is running out and they're running
short of legislative days and they need to get back to work quickly and try
to get these bills to the President.

Q Germane to that point is that things can get worse this summer before
they get better with subprime resets peaking. What else can the
administration do? What are you considering?

MR. FRATTO: Well, we've already taken steps on our own to expand FHASecure
so that we -- so that FHASecure can go out and reach more troubled
homeowners. And so those are -- those administrative changes that we've
been able to do are being implemented by Brian Montgomery over at the
Federal Housing Administration. They're doing those things. The HOPE NOW
Alliance is expanding their network and expanding their reach and dealing
with lenders in ways to show how lenders can be -- take a more standardized
approach to helping the individuals.

So all of those things continue. All of the initiatives that the
administration took are continuing and, in fact, expanding and trying to
reach more people. So that will continue.

But there's no question that it is -- we are now approaching a year since
the President called on Congress to pass housing legislation. I'll remind
you, it was August 31st of last year. It's hard to believe that we've gone
10 months now waiting for Congress to act, from that urgent call that the
President made on August 31st of last year to pass FHA modernization, pass
GSE reform. And that was the day that he announced the creation of
FHASecure.

Now here we are in July of the following year and Congress still has not
sent the President legislation that he can sign. So like we -- so, yes,
you're right; every day that we wait, the problem gets worse, more people
go into foreclosure. We could really use the extra tools and some of the
extra authorities that are contained in this legislation. We would really
like to see the GSE oversight part of this become law. That would be a
major contribution not just to housing, but also to the long-term risk
factor for the federal government. So it's -- this is critical legislation,
and we need to see them move on it.

Q And, sir, I'm sorry for hogging, but how concerned, though -- with the
stock market tumbling again, the bear market coming close, and then the
subprime resets, how concerned is the President that maybe after appearing
to have weathered the storm, we could be going into an even more turbulent
time?

MR. FRATTO: I'm not going to try to predict the future of markets. There
are people out there in the private sector that do that. What we're focused
on is trying to improve the economic fundamentals. And you're speaking
about one of them -- that's the housing sector, which has an impact not
just on financial markets, credit markets, but also on the real economy.
People aren't out there buying homes; they're not going out to home
improvement stores and buying equipment; they're not hiring people to come
and work on those homes; they're not filling those homes with furniture;
people aren't building equity up in their homes. So it has ripples that
move throughout the economy, and you want to try to stem that as much as
possible.

Now, in terms of the President's concern, like I said, he's been speaking
about this on a regular basis for well over a year now, about the
importance of getting this legislation done so that we can avoid
turbulence, so that we can mitigate problems for homeowners out there in
the real economy, and for investors out there in the financial sector, so
that we can have some stability there and the financial industry can do the
job that it does best, which is supplying the funds to help to grow this
economy.

Q Tony, on a different subject, how will the weak dollar impact the
President's discussions out at the G8, going into those?

MR. FRATTO: You know we don't talk about the value of the dollar. I think
the President commented on it in an interview yesterday. There's always
someone who will bring it up, and I'm sure if they bring it up the
President will be happy to make them aware of our policy on it.

But, as you know, the G7 -- well, G8 finance ministers met recently. Hank
Paulson, who leads our policy on currency, he has spoken to it, as well.
And if the President feels that he has something he needs to say, he will.

Q Tony, do you have any reaction to the report today that -- citing
Pentagon officials that Israel is stepping up its plans to attack Iran?

MR. FRATTO: Nothing on that. I'll refer you to the Israelis on that.
There's nothing for me to report.

Q There's an expectation that U.S. auto sales are going to hit a 15-year
low. Any reaction to that?

MR. FRATTO: It's a tough time for automakers. I think the changes in -- the
slowdown in the overall economy -- we're now in a period of slower growth,
and that was going to have an -- that was always going to have an impact on
that important sector -- combining that with the very high gasoline prices
that we've seen in recent years and, most recently in recent weeks, are
causing customers to change the kinds of vehicles that they want to buy.
And that means that the automakers are going through a real transition.
They're changing their vehicle fleets to try to respond to the tastes of
customers out there. And so there's no question it's a tough time, not just
for U.S. automakers, but even for foreign automakers making cars in the
United States are experiencing some of the same challenges.

Q I had questions on two other quick topics. What's the reaction from the
White House so far about what's happening at the meeting of African
leaders? There does not seem to be any kind of public -- doesn't seem to be
any kind of public rebuke of Mugabe. Is that the kind of reception -- now
that you've had some time to see what's happening, is that the kind of
reception that the White House was looking for?

MR. FRATTO: Actually, I really wanted to -- look forward to what happened
today out at the AU-EU meeting. I don't have a new report on what was said
out there. But I think what you saw yesterday was a number of African
leaders who spoke out actually quite forcefully about what was happening in
Zimbabwe. And I think, in particular, Ellen Johnson Sirleaf from Liberia
was very strong in her remarks, and a number of other African leaders. That
alone is a major change for how the African community has traditionally
responded to concerns on the African continent. I think Prime Minister
Odinga in Kenya also addressed this issue, and he, having recently had to
deal with a controversial election, I think has a lot of credibility on
that issue, as well.

We'd like to see all leaders in Africa and outside of Africa characterize
what is going on in Zimbabwe for what it is, and as the President described
in his statement the other day, that it is a sham; it's unfair to the
people of Zimbabwe that they don't have the opportunity, through a normal
democratic process that is free and fair, to select their leader absent of
corruption and intimidation.

We're going to continue to press on it. Secretary of State Rice made it
clear that we're going to keep it on the agenda at the U.N. Security
Council. And so we'll continue to press on it.

Q Okay, and one other point. It appears Senator Obama is planning to speak
today about carrying on the President's faith-based programs and perhaps
expanding it. What's the White House reaction to this support from him, and
are you surprised at all?

MR. FRATTO: Yes, I saw those reports. I haven't seen what Senator Obama
intends to say. But obviously all of you who've covered the President know
how important the faith-based initiative is to him. And you've seen from
events that we've had in recent weeks, whether dealing with recidivism in
prison or dealing with global health issues like PEPFAR, the contribution
that faith-based -- the faith-based community makes here in our country and
across the world. If the future potential presidential candidates support
it, I think that's something that we all would be very happy about.

Q Can I ask you one other thing? The White House -- some OMB staffers
refused to open e-mails from the EPA over global warming. I realize you
guys have not been commenting on this, I believe, but I'd like to ask for
comment. And if you can't comment, what would be the legal or other reason
for not opening an e-mail? Can you clear that up, at least?

MR. FRATTO: Look, we don't talk about our internal communications on policy
matters. I'll just say this: The issue that you're asking about is an
advanced notice of proposed rulemaking that the EPA Administrator, Steve
Johnson, will soon be publishing and announcing, and we look forward to
that. I think it's important to remember what an advanced notice of
proposed rulemaking is. It's the agency coming out and saying this is what
we intend to consider as we move forward in possibly publishing a rule, and
we're going to put this out in the public space so that everyone with a
view on this topic can make their views known. Okay?

So if you'd step back 30,000 feet and take a look at what is going on here,
what you're seeing is very early in a rulemaking process the opportunity
for the public to get involved in making that rule. And so the public will
have that opportunity, will have an opportunity to see what the EPA's
thinking is. I would expect that you'll also see a lot of views that may be
contrary to EPA's thinking, and you'll see other people in support of EPA's
thinking. And that's the way we do these things, and we'll see how the
process goes forward.

Thank you.

END 12:21 P.M. EDT

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