Obama On Banking Crisis: We Can't "Prolong The Agony"
Barack Obama is taking a rip-off-the-bandaid approach when it comes to dealing with the banking crisis, telling ABC Nightline that the process of restoring financial normalcy will require some hard choices and introspection on Wall Street.
In an interview set to air Tuesday night with Terry Moran, the president asked to comment on Wall Street's sour response to the bank relief proposal laid out by Treasury Secretary Timothy Geithner.
TERRY MORAN:So, Treasury Secretary Geithner today has laid out the plan for the banks, and judging by the reaction in the markets Wall Street really doesn't like it.
PRESIDENT OBAMA: [LAUGHS] Well, you know, Wall Street I think is hoping for an easy out on this thing and there is no easy out. Essentially what you've got are a set a banks that have not been as transparent as we need to be in terms of what their books look like.
And we're gonna have to hold out the bandaid a little bit and go ahead and just be clear about some of the losses that have been made because until we do that, we're not going to be able to attract private capital into the marketplace. And so, you know, I think that you have two choices in this situation: you can prolong the agony and shareholders will be happy until they're not happy and that could be a year from now or two years from now or in the case of Japan, eight years later.
Or you can just go ahead and acknowledge that yeah, there's, there's a lot of work that has to be done to put these banks back on a firmer footing.
The Dow Jones Industrial average fell 380 points on Tuesday following Geithner's speech, which, as the Wall Street Journal notes, was interpreted by traders as too little too late. The proposal calls for up to or more than $1 trillion in public and private support to help prop up struggling banks and restore functionality to credit markets. The markets, of course, are only one indicator of how the economy is responding to the administration's approach. The Dow Jones could be up tomorrow depending on how banks begin to digest Geithner's plan.