INTERVIEW TRANSCRIPT
C-SPAN’S “NEWSMAKERS”
Guest: Austan
Goolsbee, Chief Economist to the Whitehouse
Reporters: Eamon Javers, Jim Kuhnhenn
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Tape Date: Friday, April 17, 2009
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C-SPAN/NEWSMAKERS
Host: Steve Scully
Guest: Austan Goolsbee, Chief Economist to the Whitehouse
Reporters: Eamon Javers, Jim Kuhnhenn
STEVE SCULLY,
NEWSMAKERS, C-SPAN: Joining us on
C-SPAN’s Newsmakers program from Chicago is Austan Goolsbee, Chief Economist to
the White House and Senior Advisor to President Obama. And here for the questioning is Jim
Kuhnhenn, Associated Press, and with the first question, Eamon Javers of
Politico. Eamon?
EAMON JAVERS,
FINANCIAL CORRESPONDENT, THE POLITICO:
Mr. Goolsbee, I’m wondering if you think that the administration has
sort of painted itself into a corner in some ways on this stress test issue
because you’ve got a sort of a dilemma.
On the one hand, you want to release the results of the stress test to
reassure Americans that America’s biggest banks are in good financial shape, or
those that are are in good financial shape.
But on the other hand, you don’t want to cause a run on any banks that
have low scores on the stress test or don’t appear to be doing as well. So there’s a dilemma about whether to
release these results and, if so, how much of the results to release. And I wonder what the administration’s going
to end up doing about that.
AUSTAN
GOOLSBEE, CHIEF ECONOMIST TO THE WHITEHOUSE, SENIOR ADVISOR TO PRESIDENT
OBAMA: Well I think the – the President
himself and, as we’ve gone through with the Fed and the Treasury, I think we’ve
got a pretty basic commitment to transparency and openness. I think you raise – there is a tension, I
agree, on – and there are several other tensions. But as a basic matter, the way we got into the problem we’re in
with a totally more abundant frozen credit market, has had as the central
element that people have lost public trust and they don’t know what’s in the
bank. So I think you’re going to likely
see them erring on the side of revealing information.
JAVERS: Is the danger though, if you do that that
you could cause a run or a concern about the health of one of the banks if it
appears that that bank has done more poorly on the test than the others?
GOOLSBEE: Well, look.
It depends how the – it depends what the outcomes are. If, by the question, you’re suggesting
there’s some bank that’s hugely insolvent, I guess I would find it a little
unusual if the stress tests or bank examinations were revealing a bunch of
information that people were not already thinking about.
SCULLY: Jim Kuhnhenn.
JIM KUHNHENN,
POLITICAL REPORTER, ASSOCIATED PRESS:
Dr. Goolsbee, I wanted to follow up on the bank issue, but first wanted
to ask you a question on something that started to emerge toward the end of
this week, some news about Steven Rattner, who heads the administration’s Auto
Task Force, reports that Quadrangle Group, the company that he – that he
founded is in the middle of an investigation by the SEC over payments to obtain
New York state pension business. And
I’m curious, has the administration made any further inquiries into the status
of this investigation and does the administration retain the full confidence of
Mr. Rattner at this point?
GOOLSBEE: Well that’s way out of my lane. I don’t know anything about it. I saw the news report that you’re referring
to. As I understand it, they have
cleared through this in a – in a vetting before he arrived. I do know Mr. Rattner’s been an outstanding
analyst of the auto industry and has been working very hard on the Auto Task
Force and other than that I don’t know anything about it.
KUHNHENN: OK, well thank you. And I wanted to follow up on the – on
Eamon’s bank question. We have J.P. Morgan Chase, Goldman Sachs, Wells Fargo
reporting profits and the banks say this is in part due to lower interest
rates, more activity, the capitalization that the government has been involved
in, but there’s also – there have also been changes in accounting rules and I’m
wondering if you have any idea or any – what your assessment is of how much
these new accounting rules, these mark-to-market rules may be responsible for
the better positioning that these banks are in right now.
GOOLSBEE: Well I think that’s a totally fair
question. I don’t personally know the
answer to it. I think that in these bank
examinations you’ve got some pretty well adept examiners and regulators who are
in there who are not going to be, if there was some element of gamesmanship, I
don’t think they’re going to be fooled by that. I hope that this is a good sign that the – through the policies
the government’s been pursuing, be it guarantees or the recapitalizations or
general methods to improve the state of the economy that we actually are in you
know starting to see some improvement in credit markets and I hope that that’s what
we’ll find when we come through the bank examinations.
KUHNHENN: So you think the stress tests will show us
to what degree mark-to-market may have affected these bottom lines and what
other influences may have been there.
GOOLSBEE: I don’t know specifically what they’ll
show. It’s clear the entire purpose of
the bank examinations is to give us a realistic sense of where are the banks
and each of the – obviously the banks are in very different positions. They’re a very diverse group of banks that
not everybody’s in the same situation.
But the point of the bank examinations is to say look, if conditions got
materially worse, what would the position of these – of each of these
institutions be? So I think we’re going
to learn a lot of information from these examinations.
SCULLY: Mr. Goolsbee, I’m going to back to something
that you said two years ago as a professor at University of Chicago on
deficits. And you said, quote, that
deficit reductions function as a crucial insurance policy, not only against
global financial shocks, but also on an over-reliance of foreign lenders. And yet, according to the latest budget
figures, the President’s budget deficit is $1.7 trillion and growing. So how do you bring those numbers down?
GOOLSBEE: Well, you got two questions there. In the piece that I wrote a number of years
ago that you’re citing, recall that the – one of the primary reasons I said it
was important to try to get the deficit down was that in an emergency we would
need to have the ability to run large deficits. And at that time it was – the examples were things like Hurricane
Katrina or things like that. This
economic crisis would warrant large deficit spending on any – by any
measure. I mean this is a kind of
economic crisis that we have not seen in 75 years or more, so I don’ think that
there’s anything contradictory with what I said in that article.
And how we
get the deficit down is, first, we look outside the two-year window. The two-year window in which we are in the
middle of crisis is absolutely not the time to try to balance a budget. That was one of the terrible mistakes that
Herbert Hoover made that helped turn a financial crisis and recession into the
original Great Depression and we certainly don’t want to repeat that.
I think for
the longer run, the way you get the deficit down is, while respecting what the
President is saying about needing to make the investments in healthcare, clean
energy and the education system, you pursue the second part of the President’s
agenda, which is cutting spending substantially, letting tax rates go back to
the rates they were at the end of the 90s for people making more than a quarter
million dollars a year and you get the deficit cut in half by the end of his
first term.
SCULLY: As you know though, many states relying on
some of the stimulus money to keep programs in place; in Maryland, Virginia,
New York, Texas, California. So what do
you say to those states two years from now, three years from now, who may come
back to the federal government and ask for more money to continue the programs
that are continuing this year?
GOOLSBEE: Well this is obviously a bit of a
hypothetical. The point of the, what
I’m calling the two-year window is that we’re in a – we’re in an economic
crisis and during that economic crisis; we’re trying to prevent the recession
from morphing into something worse.
When that crisis is over we are back to a more – and we are back to a
more normal state of affairs, it’s perfectly appropriate for the states to pay
for their own programs and everybody to tighten the belts however they need to
be tightened.
JAVERS: Sometimes it’s hard to tell how big the
storm is when you’re standing in the middle of it, but Time Magazine recently
called this economic mess the Great Recession. I’m wondering what, inside the White House, how do you guys refer
to this and where – how do you think that the situation we’re facing now
compares with what we’ve seen historically?
GOOLSBEE: Well, we don’t have a whole lot of time to
sit and ponder you know the linguistics of what it will eventually be called
because, as you point out, there are a whole bunch of things going wrong at the
same time. I think as a overview, the
fact that we had minus 6.2 percent growth in the fourth quarter of 2008, that’s
the third worst quarterly growth report in the last half-century. So this is; it’s clearly a
once-in-a-generation and maybe a once-every-75-years kind of a thing. That’s partly because we’ve had a – such a
severe slow down and have a jobs crisis, coupled with a financial crisis and a
credit crisis, all of that happening at the same time has made this a very
nasty situation. And I think that in an
environment like that, to bring it back to the policy, it’s why the President’s
pushing on multiple fronts at the same time.
So you can’t
just deal with banking crisis. You’ve
got to have a financial rescue, financial regulatory reform, coupled with the
recovery package, coupled with making the investments to get us off the
bubble-and-bust cycle, coupled with the small business lending facility, the
TALC credit programs. A whole series of
things, you’ve got to do them all at once, otherwise you know you just go from
one problem to the next problem.
SCULLY: Jim Kuhnhenn.
KUHNHENN: I wanted to ask you about unemployment, one
of the issues in the economy that affects Americans most directly. And back in January, two house – White House
economists said that an economic stimulus of more than 750 billion would
increase employment by more than 3.5 million.
They used forecasts that predicted unemployment without an economic –
without an economic stimulus, to peek at about 8.8 percent in the last quarter
of 2010. But in March we had, as we all
know, 8.5 percent unemployment. We do
have a stimulus package now and I’m curious, how high do you think unemployment
might go? As you know it is a lagging
indicator of recession. Could be – the
economy could be in recovery, but we would still have high unemployment
rates. How high do you think it will go
and how late do you think it will last?
GOOLSBEE: Well, I think there’s definitely an insight
into that point that you’re making that employment is usually a lagging
indicator, so it’s the last thing to come around. So we’re going to see a lot of glimmers of hope and hopefully
some full-blown hope, but even when we see that we’re still going to have a
struggle working on the job market, trying to get unemployment down. You’ve seen a disturbing rise in long term
unemployment. And since this recession
began in 2008 we’ve lost more than 5 million jobs.
So in the
four – let’s say the – there’s two kinds of estimates that people have
made. If we didn’t have a stimulus,
what would it have gotten to? You cited
8.8 percent; that was an early, early estimate. The conditions worsened very substantially and so the fact that
we hit in the high eight percents before the stimulus has even taken effect had
a lot of the private forecasters saying that without a stimulus, we were
looking at 11 or 12 percent unemployment, and possibly something even
substantially worse if we had a major deterioration. It’s clear the President has always been trying to keep
unemployment from reaching double-digits and we’re going to keep pressing on
that.
JAVERS: I’d love to get a little bit of investment
advice from you, actually. The – we’ve
seen a pretty good rally on Wall Street.
Over the past several weeks there’ve been increases, despite all the bad
economic news. But there’s an
expression on Wall Street called a dead cat bounce. That means if it’s bouncing up, it’s not going to be bouncing up
for much longer.
I’m wondering
what your take is on that. I mean is
this a real rally that’s under – that’s supported by real economics or is this
just an optimistic bounce by people who are playing the market?
GOOLSBEE: My investment advice to you is the
investment advice all economists are going to give you and it’s what the
President has also been saying, and that is don’t be basing your investments on
what weekly gyrations are happening in the stock market. So we don’t know what the circumstance
is. We know the stock market lost 40
percent of its value over 2008 and coming into beginning of 2009. It’s true we’ve had an up market you know
for several weeks now. The long run is
the way we want to look at this. We
want to see signs of progress, but I don’t think anybody believes that we’re
out of the woods yet and until you know and if we’re going to be losing 600,000
plus jobs a month, I think you know we’re a long way from getting out of the
tunnel, though we can see light at the end of a tunnel. And for right now you got to just keep your
seatbelts fastened and you know we got to get out of this thing.
JAVERS: So in your view, though, are stocks broadly
still undervalued or where are we going?
GOOLSBEE: Look, as I say, my investment advice to you
is, don’t get caught up in this – in these weekly gyrations in the stock
market. I’m not going to – I’m not
going to go out on a limb and even Warren Buffet probably wouldn’t give you an
answer to that one?
SCULLY: Can you give us an insight into what
discussions you’ve had within the White House?
The speech this past week at Georgetown University in which the
President said that there are glimmers of hope, in which you have a President
who may be talking about the sobering impact of the economy, but also trying to
talk up the economy to get people to spend.
GOOLSBEE: I don’t know. I don’t think I would characterize it as that he’s trying to talk
up the economy to get people to spend, but I do think he was discussing
glimmers of hope, coupled with long run challenges, because I think that has
basically been objectively what we’ve – what we’ve been seeing in the
data. That is end of 2008, beginning of
2009; most indicators were really kind of substantially in freefall. We were looking at a really terrible
situation. In a number of areas we’ve
backed off from the worst case scenario.
We’re seeing
glimmers of hope, but I thought the President did a very effective job at
saying look; we’re not out of this in any means. Here are a couple of good things. Here are a series of major policies that we’re being aggressive
and we’re acting on multiple fronts; on credit, on small business lending, on
jobs, on stimulus, on housing and refinancing, and we’ve got to stick with
those policies. Thus far, it’s at an
early stage, but we’re seeing returns like what we wanted to see. Those are glimmers of hope and there’s light
at the end of the tunnel, but you know we got to stick with this thing and it’s
not the time to back off too quickly.
KUHNHENN: Glimmers of hope; I think Ben Bernanke calls
them green shoots. I’m curious, which
ones should the public be specifically looking at for – to get that kind of
credibility and confidence that some things are indeed out there that give them
a sense of recovery?
GOOLSBEE: Well, the ones that we’ve seen – I wouldn’t
say, again, I would not say we were in recovery. We are not yet in recovery.
We are slowing the damage. We’ve
stopped the freefall in a number of areas and we’ve seen some good news. So the good news aspects are, if you look at
housing, for example. We’ve had a
really pretty historic boom in refinancing because of things that the Fed has
done and things that the administration have done that have enabled refinancing
and gotten interest rates down.
The major
effort on the part of the administration to prevent millions of people from
getting foreclosed on is now up and running.
You saw most of the biggest banks in the country sign their contracts
and so their now taking applications and modifying mortgages. The Fannie and Freddie program to allow
refinancing of ordinary mortgages for people whose loan-to-value ratios have
gone up as their house prices have gone down.
That thing is now up and running and taking applications, so housing’s
one area.
A second
area, in retail sales, we saw mixed data, but in January and February it
actually rose. March it went down a
little, but overall, in the first quarter retail sales were substantially
better than what people had expected they were going to be and I think you’ve
seen in a few other areas you know core capital good grew the most in the last
half year. So there are a few areas
where you’re seeing some turnaround, some stabilization.
It’s clear that
the job market remains very troubled and that there are a bunch of very
problematic parts of the economy that the President’s pushing ahead on all
fronts; let’s try to address those. But
there is some light at the end of the tunnel.
That’s what – that’s what he keeps saying and the policies that he’s put
in place are good policies and we’ve got to stick with that if we want to see
this thing through.
SCULLY: Let me follow up on that point because the
data also indicates that people are saving more. Are they saving too much and spending too little?
GOOLSBEE: You know I think it’s high hubris for me to
be telling people what they should or shouldn’t be doing you know in terms of
saving or consumption. It’s true
consumption has fallen. That’s the same
thing as saying savings has gone up.
And I think we – the – when people look at the consumer spending
patterns, the feeling has been that in fourth quarter ’08, first quarter ’09,
some element of that savings has been, if you will, forced savings that people
say jeez, we don’t know what the uncertainty is. What if I lose my job?
What if the economy gets substantially worse? And they’re trying to create some margin of error that has
effectively (ph) been lost in the squeeze on ordinary Americans in the last
eight years. Hopefully, if we see more
glimmers of hope and if we get ourselves into a recovery situation, that
precautionary worst case scenario part of the savings, people will not feel
that they need to do.
JAVERS: I’d love to turn to the auto crisis for a
second. Obviously the administration’s
been deeply involved in the fates of General Motors and Chrysler. But I’m wondering, now that we’re coming up
on a new set of financial deadlines for both those companies, if you look six
months out from now, will there be a Chrysler Corporation operational in the
United States of America?
GOOLSBEE: Well, you’re picking just Chrysler in that
question?
JAVERS: Well Chrysler seems to be the one that the
administration has given the least amount of rope to. The President came out and said that we’re not going to give any
more taxpayer money to Chrysler if they can’t get this deal done with Fiat, the
Italian automaker. General Motors seems
to have a little bit more running room from the administration in terms of
taxpayer dollars, but Chrysler seems to be the one in the most crisis right now
and I’m wondering if you think that the company can survive?
GOOLSBEE: Well, Chrysler’s – the problem Chrysler
faces, separate from the problem that everybody’s facing, which is the dramatic
decline in overall auto sales because of the health of the economy and because
people lost so much wealth in the housing market. The problem facing Chrysler in addition to that is that they are
much smaller than any of the other global big manufacturing players. So in an industry where there are economies
of scale, Chrysler’s in a tough spot if they’re trying to go it alone.
So I agree
the President had a tough message, but it was a message that gave an
opportunity to both Chrysler and to G.M. of slightly different forms. I think the question of whether there will
be a Chrysler depends on how they are able to partner up and whether they are
able to partner up to make a larger global production entity that is on the
same order of magnitude as some of the other successful big auto companies and
that involves their – whether they’re able to partner with Fiat.
JAVERS: Well you’ve got more intelligence on that
than we do. What are you hearing? Are they going to make this deal or not?
GOOLSBEE: Look, I’m not going to reveal any secrets
from the Auto Task Force for sure. They
– in the newspaper you see there’s a lot of discussion they’re working very
intently, trying to see if they can put it together.
KUHNHENN: Wanted to bring it back to our discussion on
unemployment and I’m – wanted to ask you, can you say confidently that that
$3.5 million target in created jobs is still – is still a reachable number of
are …
GOOLSBEE: Three point five million jobs, not dollars.
KUHNHENN: I’m sorry …
GOOLSBEE: But yes, look. I do think it’s realistic.
We’re clearly – the – it’s 3.5 million to save or create in jobs. We’re facing a much tough headwind we now
see than we even predicted you know through the transition and coming into
inauguration day. Before anything has
happened you’ve already seen the unemployment rate up in the high eight
percents. This is – we really haven’t
seen conditions like this, but every 20, 40, 60 years kind of – kind of
thing. But I think if we pursue ahead
with the policies, coupled with the credit, financial, housing and other
policies, I do think that we still will be able to reach those targets.
KUHNHENN: And give that, are you at all war-gaming the
possibility then of a – of a – of a second stimulus? Some – I’ve talked to some members of the Economic Recovery
Advisory Board, some of whom believe that that might be a good way to go.
GOOLSBEE: Now the Economic Recovery Advisory Board,
where I’m the Chief Economist, are outside thinkers, leaders, representative of
major industries. So they aren’t
speaking for administration policy.
KUHNHENN: Sure.
GOOLSBEE: It’s clearly the case that on the Economic
Recovery Advisory Board, there are some who think there needs more stimulus,
there are some who think we shouldn’t have passed the first stimulus and there
are some who think – that were going along.
I think the – where the administration is is that we have just put in
place a series of historically robust policies, the biggest stimulus in
American history, the biggest housing foreclosure prevention program and
mortgage affordability since the Depression, a major small business lending
facility, a thing to release auto, consumer credit, student loans. We’re embarking on this major budget push on
healthcare, on education and on clean energy.
All of this
stuff is now in place. Most of those
are up and running, but we’re at the very earliest stages and clearly we ought
to apply those policies and see how far they go before we start talking about
what the next policies are going to be needing.
JAVERS: Well speaking about talking about what the
policies are that are going to be needed, there’s been a lot of talk about the
TARP Program, obviously. That’s the
sort of centerpiece, as Americans look at this, of the bailout process and
there’s some question about how much money is left in the TARP Program and
whether that would be enough to finance the nation’s banks, particularly these
19 large banks, if they do need more money at the end of this stress test
program. So I’m wondering if the
administration’s got any plans at this point to go back to Congress and ask for
more money for the TARP Program or whether you think you’ve got enough to do
the job in what’s in reserve right now.
GOOLSBEE: Well there are no specific plans to go ask
for more money. There’s, I believe,
$130 to $150 billion in the TARP. I
can’t remember the exact number, but the Treasury had put out their specific
estimate. This question is completely
impossible to answer until we’ve completed the bank examinations. You’ve seen a lot of the financial
institutions coming forward and saying they’re in better shape than the markets
or the various people thought and they don’t believe that they’re going to need
more money. And I think we’ve got to
just wait until we’ve had the people thoroughly go through those bank
examinations before we know anything about that.
SCULLY: Well one of the recipients of the TARP
money, Goldman Sachs, in the news this past week. Do you have any concerns that it could be too big to fail?
GOOLSBEE: Concerns that it’s too big to fail, I don’t
– I don’t exactly know what that would precisely mean in this context. We – the government, it’s clear, has been
highly involved, through the TARP and through other interventions that started
in ’08 and going into ’09, in a whole series of financial institutions. The government is not intervening in these
markets because it wants to or because it wants to save financial institutions
for their own sake. The only reason
that the government is getting involved in this circumstance, in the Obama
administration’s view, is because we want to save credit markets so that the
overall economy can benefit and small businesses and other businesses are not
going to have to lay off thousands of people because they can’t get
credit. That’s the underlying thing
driving why the government’s involved.
The
government – the financial institutions got themselves into the messes that
they are in and the government is now trying to help them find their way out of
that and do that in a responsible way that’s not going to reward bad behavior.
JAVERS: And speaking of Goldman Sachs, that’s one of
the banks that the President brought in to meet at the White House. He brought in some of the top banks –
banking leaders to the White House and he told them there that he didn’t want
them to return the TARP money too early.
He said this is like a patient who’s taking antibiotics. You know if you – if you take the
antibiotics you know you feel better in the first day or two, but you need to
stay the course and go through all 10 days or whatever until the bottle of
medicine is empty.
Now Goldman
and some other banks are talking about returning that money as soon as they
possibly can. I’m wondering if the
administration still thinks that’s a bad idea or if you think they can go ahead
and return that money and you can use it for other purposes at this point.
GOOLSBEE: I’d say we’ll have to see what the story is
on that. A lot of people are saying things. We haven’t gotten the results from the bank
examinations yet, so I think everything that you’re hearing about matters like
that are premature. In this meeting
that you’re describing, yes, Goldman Sachs was there. A whole lot of bank executives were at this meeting with the
President. And the President, I think
by most accounts – I’m not going to reveal any private information – by the
accounts of the bankers the President had a pretty tough message to the – to
the leaders of Wall Street, but it was coupled with the basic core philosophy
that he has that look, we’re all in this thing together and if you guys are
going to be paying individuals some huge bonus or you’re – somebody’s trying to
make a quick buck at the expense of the taxpayer, at the expense of the
economy, at the expense of lending you know there’s going to be a huge backlash
against you and you’re going to get yourself in big trouble. So he was kind of giving them a
straighten-up-and-fly-right sort of a message on that day.
SCULLY: Austan Goolsbee is the White House Economic
Advisor joining us from Chicago today.
Thanks for being with us on C-SPAN’s Newsmakers program.
GOOLSBEE: Thank you for having me.
SCULLY: Jim Kuhnhenn, I want to bring it back to the
issue of jobs because some would argue that the unemployment rate already is in
the double digits.
KUHNHENN: Yes.
SCULLY: And so what are you hearing from the concern
that the administration has if the official numbers reach nine, 10 or 11
percent?
KUHNHENN: Well the – one of the – one of the problems,
as he pointed out, this is a lagging indicator. It’ll – we’ll have high unemployment numbers even after these
glimmers of hope start accumulating till you have a shining beacon, but
nevertheless you’re still going to have a high number of people
unemployed. And you’re right; there are
– the true numbers are even higher because the unemployment numbers do not
count people who are not in the job – in the job force and who are not actively
searching for jobs, but say that they would accept one if one came their
way. And it doesn’t count part-time
employees who say they would rather be working full-time.
So when you
add all that up, you’re dealing with a much higher number of folks who are
unemployed. It’s a – it’s a potentially
a political problem for the President because if you recall, the – in 1992, the
recession was already in recovery. The
– in fact the recession was over, but we still had high unemployment and Bill
Clinton ran against George Herbert Walker Bush on the theme of it’s the
economy, stupid. This could still be
something that the President is going to be telling the American people that we
are in – potentially that we’re in some kind of a recovery, but the unemployment
numbers will be pushing down on the public opinion when it comes to that – to
that message that he’s going to …
SCULLY: And, Eamon Javers, you asked the question
about the stress test and you’ve been reporting this weekend on politico.com
about what the administration is struggling with. What have you found out?
JAVERS: Well one of the issues with the stress test
is that they are really in a box. I
mean they can’t go out and release all these numbers because historically, bank
examinations have been very private things.
You don’t release those numbers to the public because you don’t want to
spook the public and you don’t want it to cause a race from one bank to the
other as everyone goes to the bank that scored a 75 percent, which is a C, and
go – takes the money out and puts it in the bank that scored an 85 percent and
got a B on the test. So they really
have a problem on their hands and it’s not clear what they’re going to do with
it.
I thought the
answer that he gave was very interesting though, on this issue of giving back
the TARP money. He said there are no
specific – I’m sorry – on the answer – on the question of getting more TARP
money from Congress. He said there are
no specific plans right now to get more TARP money from Congress. That sounds to me, if I can read the tea
leaves a little bit, like the White House is not ruling out the idea that they
might have to get more money from Congress.
That, as they know, would be very, very tricky in this climate. Post AIG, with all of the bailout fatigue in
Washington, it would be very difficult to get more money from Capitol Hill for
these banks.
So the thing
that they have to really finesse here going forward is how to continue to
support these banks without causing a political uproar, not going back for more
money. And they’re going to be looking
in every pot of money they can find before they go to Congress to get more
money for those banks.
SCULLY: And if you could follow up on the point
about Chrysler and the possible deal with Fiat and G.M., what’s next in that
and what will we hear in the next few days or next few weeks?
KUHNHENN: Well they’re – they have until the end of –
until the end of May. It was 30 days
for Chrysler and Fiat to cut their deal; 60 days for G.M. to come up with a plan that would either
avoid bankruptcy or put them in a – in a position where then could conduct a
very quick, prearranged bankruptcy, where they would split up the company
essentially into two components; the components that would survive and move
swiftly through a bankruptcy process and the other components, bad assets and
et cetera, that would stay within bankruptcy and be liquidated over time.
That is you
know so essentially, on the G.M. front, they have to operate on two
tracks. They have to operate on the
idea that perhaps they can avoid bankruptcy and settle out and make
arrangements with all there – with the unions, with their creditors, with their
bondholders, et cetera, and at the same time be operating in a – in a track
that sets them up for this bankruptcy proceeding.
On Chrysler
and Fiat, the story today, Chrysler is negotiating with its union on some – on
some elements that might make it easier to bring the – to bring the deal
together, but as he said you know they seem to have a little bit more knowledge
than we do as to where – what the likelihood of that deal coming through. But those are the – that’s where they stand.
SCULLY: Jim Kuhnhenn, whose byline appears with the
Associate Press, and, Eamon Javers, of Politico, thank you both for joining us
on Newsmakers and thanks for your questions to Austan Goolsbee.
END