the WHITE HOUSEPresident Barack Obama

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The White House
Office of the Press Secretary
For Immediate Release

Briefing by White House Press Secretary Robert Gibbs and PERAB Chief Economist Austan Goolsbee, 1/21/10

1:19 P.M. EST

MR. GIBBS:  So, Austan Goolsbee is here.  And why don't we take questions if you all have questions on the President's proposal today, policy questions that Austan can certainly help us with.

Take us away.

Q    Austan, let's start with what the banks are saying about this.  They say that this is sending the industry back to the 1930s by going back to old regulations.

MR. GOOLSBEE:  Well, I would say two things about that.  Clearly, first, it's not returning to Glass-Steagall.  This is about reining in them doing investments with the backing support or other types of guarantees given by the American taxpayer.  That would apply to owning hedge funds, owning private equity funds, and proprietary trading that is not for any client-related business. 

It's clearly not nearly as far as Glass-Steagall; it's something quite different from that.  So I think that's not exactly accurate.

Q    What about their assertion that this is going to put them at a disadvantage with banks that don't have to face similar limits overseas?

MR. GOOLSBEE:  Well, there is a question in all of our regulatory apparatus.  We want to do this in coordination with our allies.  You've seen England moving in some of these similar directions, as very small number of firms that this would apply to.  And these rules would be applied to foreign subsidiaries in the U.S.

MR. GIBBS:  Mark, let me just add this.  This is a proposal to stabilize the financial system, to put that system -- to remove some of the excessive risk-taking and put it on a firmer foundation for shareholders and all Americans.

We think that what this will do long term obviously has many benefits.

Q    Robert, what are the realistic chances of this actually becoming law?  There are some people who believe that this is really more about adding to the President's new strategy, populism, beating up on Wall Street, and it's really for sound and fury more than actually any chance of getting it passed.

MR. GIBBS:  Well, Chip, financial regulatory reform is making its way through Congress.  The President believes that that proposal -- that the proposal to lay down new rules of the road will be an important aspect of our agenda this next year.  We can't continue to operate in an atmosphere that doesn't set new rules and regulations forward for how our financial system operates so that we get into the same type of situation that we found ourselves in in September of 2008.

Again, I think this is a -- as Austan has said, as the President has said, as Paul Volcker has said -- it's a common-sense proposal to ensure the stability of the financial system.

Q    Is there a realistic hope of bipartisan support on this?

MR. GIBBS:  I certainly would hope so.  They will -- the economic team will talk to members of Congress, particularly on the committees where -- in which the Senate has to deal with this legislation.  I know there's concern about these topics from -- concern for what the President's proposal addresses from both parties.

MR. GOOLSBEE:  And on that part of the proposal, I'd also highlight the support of Paul Volcker.  You've seen Republican former Secretary of the Treasury Nicholas Brady calling for a very similar thing; John Reed, the former CEO of Citibank.  These are not -- this has not been a partisan issue.  It's more of a good policy, in the view of the President.

MR. GIBBS:  Caren.

Q    Austan, when the administration released its broad proposals for regulatory reform last June, this wasn't part of the proposals.  And I'm just wondering what happened between then and now to cause you to bring this up?  And I know that there were criticisms at the time that you weren't addressing "too big to fail."

MR. GOOLSBEE:  Well, I would say two things about that.  The issues of excessive risk-taking by financial institutions too big to fail, and the broader regulatory effort is totally central to the white paper that we released in June.  It's central to the House bill, which specifically authorizes regulators to be able to do exactly this type of regulation, on scope, on scale, and the size of institutions.

Over the course of the last year, certainly Paul Volcker, members of the President's Economic Recovery Advisory Board, have been in frequent and constant contact with the economic team, and the President, in the fall, thought about these issues quite a lot, worked with Representative Kanjorski when drafting the bill.  I think another factor has been -- you saw coming out of the rescue the government provided a safety net to financial institutions that they used and they have in recent months started making considerable profits off of their proprietary trading for themselves, not for their clients.  And that is certainly a factor in convincing a lot of people that we've got to make sure that issues like that are not going to be pervasive going forward.

Q    Austan, just to follow up, why didn't the President take this action six to eight months ago when there was definitely populist anger about the kinds of bonuses that those on Wall Street were getting, and some of the President's greatest allies were saying, "Do something now"?  Now it just looks like it's political expediency.

MR. GOOLSBEE:  Well, I would say, and I'll defer to Robert -- this is -- I'm here only to talk about the policy matter of this.  We've been thinking about this as an economic team -- Tim and Larry and the rest of the economic team have been in constant contact with Chairman Volcker and with other experts.  And I think you have seen these issues were central in the regulatory white paper that was put out.  They grow naturally out of things that are in the House bill, and I think you've seen this -- the actions of these banks.

MR. GIBBS:  But, Suzanne, just to address one aspect of your question, as Austan said, these are issues that have been discussed for months here.  The notion somehow, though, that -- again, financial reform is going through the process, right?  We don't have anything for the President to sign into law.  So this is still an active -- still a very active legislative issue.  Not having proposed it six to eight months ago, I don't think -- obviously we're still dealing with the issue of regulatory reform.  That's not done; that continues.  And this is part of that proposal.

Jake.

Q    The Dow dropped 200 points after the announcement, led by bank stocks, and I'm wondering how you walk the line between getting tough on Wall Street and yet not wanting to alienate those who create jobs.

MR. GIBBS:  Well, I would say this, Jake.  As we've discussed in here, based on different proposals, I'm not going to comment on the individual daily fluctuations of the stock market or the fluctuations daily of stocks and the factors that might or might not drive them.  In what I said to Chip, this is a proposal to add some stability to our financial system, to help shareholders, to help taxpayers, to help all of those involved provide that long-term financial stability.

So what the market does in reaction one day or the next is not for me to comment on.  What the President is focused on as part of financial reform is a set and a series of rules of the road going forward that provide the stability in our financial system that we lacked only a few years ago.

Q    I think the question is about timing and the fact that this wasn't included in the President's proposal six months ago.  The underlying hypothesis is that Scott Brown was elected to the Senate on Tuesday, there are a lot of angry voters out there, Democrats and the White House are upset and worried about it.  You said yesterday -- when I asked you about how the administration would appeal to angry voters, you mentioned regulatory reform as one of the three things that you would talk about.  And was this hastily --

MR. GIBBS:  No.

Q    I mean, Volcker obviously has been talking about this for months if not years, but was this hastily added to the schedule?

MR. GIBBS:  No, no, no.  This was -- this is an issue that -- I know Austan has been in meetings, I've been in meetings about this, dating back several months.  I think one of the -- the President had a fairly conclusive conversation moving forward on this before he left for Christmas.  It's obviously a complex proposal and we wanted to get that part of it right. 

But this is not something that was done as a result of anything that's happened this week.  This proposal is a result of what has happened over the course of many years in allowing, as Austan said, the rules of the road in many ways to be gained for -- in favor of the type of firms whose actions we seek to limit today.

Wendell.

Q    Robert, when President Clinton took office, the largest bank in the U.S. was like 22 in the world, which is one of the reasons that Secretary Rubin pushed for the eventual repeal of Glass-Steagall.  What makes -- what prevents the larger financial firms in the U.S. from once again becoming not competitive with international financial organizations?

MR. GOOLSBEE:  Well, I would say, first, remember, this is not going back to Glass-Steagall.  The second part of the two proposals the President outlined today -- one was about what risky activities banks would be able to do on their -- for their own accounts, and the second was about limiting the way the FDIC currently limits deposits where no one bank can be so large that it exceeds their national deposit threshold; that we would expand and build on that to a broader definition of liabilities. 

And I think we have seen from this crisis you don't want to be in a circumstance in which all of the power and all of the size is concentrated in a very small number of institutions.  And so I think that's logical.

I do not believe that either the broad regulatory effort the President has described or these two individual components within it will make U.S. financial institutions uncompetitive in the world financial market. 

And far from it, we saw in this crisis not to have sensible rules of the road.  Ultimately deeply undermines public trust in the capital markets and really threatened the collapse of almost all the big financial institutions.

Q    What's different about what the President is proposing and what Senators McCain and Cantwell are proposing?

MR. GOOLSBEE:  Well, the McCain/Cantwell bill, as I understand it, is literally going back to Glass-Steagall.  What the President's -- and Glass-Steagall forbid underwriting securities or investing in securities by any commercial bank.  This is not that.  This says a bank cannot own a hedge fund, cannot own a private equity fund, or do trading for its own account that is not related to its client business; that we want to get back to the fundamental nature of the bank, which is serving its clients rather than investing for its own profit.  It's actually quite substantially different, and it grows out of what's in the House bill, as I say, and what's in the regulatory white paper on page 32 where central to it is the notion of limiting risky activities and trying to protect the system.

MR. GIBBS:  Roger.

Q    Austan, kind of a technical question.  Is proprietary trading with customer benefits, is that still allowed under this proposal?

MR. GOOLSBEE:  Yes, that if it is client-based, that they would be able to do trading or a whole bunch of other functions as a bank as long as it was for a client.

Q    Okay, and a follow-up.  The President mentioned the Volcker rule -- didn't say the Goolsbee rule or the Summers rule or anybody else's rule.

MR. GIBBS:  The Goolsbee rule was a close second to the Volcker rule.

Q    But Mr. Volcker has been an advocate of this for a long, long time.  Why did you just seemingly decide to listen now?

MR. GOOLSBEE:  Well, as we outlined, this is not a brand-new issue.  It's true that Volcker talked to the President about issues like this as far back as the financial regulatory speech the then-presidential candidate gave in the spring of 2008.

Q    But he seemed -- said in speeches that nobody seemed to be listening.

MR. GIBBS:  When he said it in speeches nobody seemed to be listening?  Well, I agree.  Again, remember the first time the President talked about a looming financial collapse was a speech around Labor Day of 2007 at the NASDAQ on Wall Street.  I remember that.  I don't -- I remember a lot of people being worried about a lot of other issues at the time and people not paying attention to the then-presidential candidate illuminating our looming housing crisis and some certainly problems that he expanded on at Cooper Union in March, and regrettably -- not all of which, obviously, but some of which we saw come to fruition in September of 2008.

Q    But back to Goolsbee -- back to Mr. Volcker, this idea has not always been embraced.

MR. GOOLSBEE:  Yes, you saw Chairman Volcker there at the meeting as well as Bill Donaldson, the former head of the SEC.  I would say, as I tried to outline, the ideas of reducing risky activities, protecting the system as part of a broader regulatory reform where we're going to end "too big to fail," which is quite central to the white paper, was specifically allowed in the -- and authorized in the House bill, that they could consider these things.  And then when you add on top of that that we have seen in microcosm as they come out of this rescue the American taxpayer-provided safety net support, and you've seen these -- some of these financial institutions get -- using the cheap money they can get because of that safety net to do proprietary trading for their own profits, not for any client.  I think those things -- we've been talking with Chairman Volcker all along, Secretary Geithner, Director Summers, and I think the economic team --

Q    He was the engine for this?  He was the engine for this?

MR. GOOLSBEE:  He was the engine -- I would say he -- we have been talking with him and the members of the PERAB -- the Economic Recovery Advisory Board -- really for the entire year, but the whole economic team I think is -- was quite involved.

Q    In addition to the political angle for the "why now" question, there's also the economic angle for the "why now" question.  A lot of people today are saying there are simpler ways to do this, to keep these institutions away from the so-called public safety net, the taxpayer safety net.  But by doing this now, in addition to the fees and all the other things that seem to be punitive or retributive in nature, you're dampening what is right now a very tenuous economic situation and growth is just beginning.

MR. GOOLSBEE:  Well, I guess I disagree.  A, this is not punitive in any way.  This was done because we believe that this will contribute to the soundness of the financial system and the economy.  As Robert said, in the long run ultimately we must get to that point that people can trust the capital markets and the financial system or else it cannot succeed.  We saw that in this crisis.

In this circumstance, it's clear and we have said in the outlining of the policy that with all of our regulatory reform efforts there would be transition so that everyone can adjust to what the rules of the road are.  But I think the fundamental argument, which is perfectly sound and perfectly in keeping with both the white paper and the House bill, that we want to try to get banks back to the core function of relating to clients and not taking excess risky activities in the financial system.  I don't see how you can wait on that.  I think that's really quite fundamental.

MR. GIBBS:  And whether it's this proposal, whether it's the proposal to pay taxpayers back for money lent to financial institutions to stabilize the financial system, both of these are things that the President has thought about for quite a long time, spoken about before. 

In addition to -- I'm reminded that -- let's take the bank fee.  You're talking about a fee, structured over about a 10-year period of time, dwarfed by bonuses on Wall Street.  Are the same firms that you're hearing from saying that the bonuses on Wall Street threaten the fragile stability of our newly growing economy?  Or is that something that they started saying today?  I haven't heard that from them before. 

The proposals that the President makes are to put our economy back on a firm foundation, but to ensure that we never face the crisis that we did in September of 2008 and that we never have to take the actions that taxpayers did in October of 2008 in loaning hundreds of billions of dollars to cover risky losses.  That's what the President -- a good portion of the latter part of that campaign, the last two months, we spent talking about these issues almost every day.

Mark.

Q    Austan, has President Obama ruled out just telling the banks, "No more bailouts on my watch"?

MR. GOOLSBEE:  The point -- there's not a technical answer to that question.  That is absolutely what is behind -- that is what is behind the regulatory effort to end "too big to fail," that if you are in a circumstance where you have adopted the program that we are putting forward, so there is no "too big to fail," there's resolution authority, consumers are protected, we've got regulation of credit default swaps and over-the-counter derivatives -- when you have that, there is no -- when they mess up, they die.

MR. GIBBS:  Mark, you're creating a condition where that doesn't enter into the equation.  I mean, remember, we didn't get to this point because of something that didn't result in their actions causing, right?  Making a series of risky housing loans, packaging them up into securities, selling those securities, cutting those securities up hundreds of ways and selling those in order to make money ultimately causes a tremendous bubble that bursts, resulting in a financial crisis that taxpayers have to then come fix.

If you remove the front end of that equation, you never get to the back end.  That's why the foundation of stability is important for our long-term economic growth.  It will help our economy and it will help taxpayers and shareholders to have confidence in a system that they can invest in and they know that as a result of greedy risk-taking that is excessive isn't going to cause somebody to -- sitting in this area to watch their housing value plummet by some significant percentage overnight not because of anything they did but because of some risky investments that were made hundreds of miles away.

MR. GOOLSBEE:  And as a member of the economic team, let me just say how proud I am of Robert Gibbs for his financial analysis on that one.

Q    Won't there always be a moral hazard hanging over the system unless a President says, "No more bailouts"?

MR. GOOLSBEE:  Look, that's the point of the regulatory reform that we've outlined is exactly to get away from that.  And in the sub-proposal that we're putting out today, with these two components, it's precisely to get at the function that because there are explicit government supports for commercial banks, they should not be able to use that to turn around and invest for their own profit.  They should be doing things to facilitate their client business or serve the clients in some way, that it shouldn't just be for their own profits.

MR. GIBBS:  The best way to ensure that we never get to that point is to ensure that the Senate and the House pass very, very strong comprehensive financial reform.  If that passes and the President is able to sign it, then we go a long way to ensuring that we never have that conversation again.

Yes, sir.

Q    You've talked, Austan, I think in passing about hedge funds.  Could you elaborate a bit more?  And particularly, can you talk about what you're doing about these so-called dark pools, all the money that is largely not regulated and I don't think you're really touching upon?  People have blamed that, too, for a big part of the credit crisis.

MR. GOOLSBEE:  Okay.  Let's take that in three parts.  In this proposal what it's saying about hedge funds is that commercial banks cannot own or invest in hedge funds, private equity funds, because this is frequently, A, putting them in direct conflict with their clients; and, B, if they are the owners in these funds, if they do well they are themselves profiting when they're able to attract a low cost of capital partly because the government is giving them support.  So that is the relevance on this.

On hedge funds in general, one key point in our regulatory white paper, and that is coming out of the House bill that we hope to be passed in the Senate, is the function that as you start to get big enough to menace the system, that there be controls on liquidity, on capital, for the institutions but also for the types of products, if it's over-the-counter derivatives, where you have this risk of contagion that could bring down the system, that we get those out in the open with disclosure, we get them into clearinghouses and things where they can't -- where they can no longer menace the system.

So I think we are addressing the fundamental -- as we call them, the systemic risks associated with hedge funds, derivatives, and some of those others.

Q    But hedge funds don't have the kind of regulation that even closely approaches regulation for commercial banks.

MR. GOOLSBEE:  Well, yes and no.  Remember, under our proposal if a small -- thousands of hedge funds have failed over the years with no impact on the rest of the system.  If they messed up they die, and that is the end; they do not receive any bailout.  The point is for any institution that is too big to fail or that poses a systemic risk, our regulatory white paper is about how to limit that -- eliminate the systemic risk, put in tight capital liquidity requirements on the institutions, so that they can fail if they mess up.

Q    And quickly, you said excessive risk-taking.  How does the U.S. government define "excessive"?  Is that sort of like pornography -- you know it when you see it?  How do you define excessive?

MR. GOOLSBEE:  Well, look, we will obviously be working with the regulators but we told you what the specific --

MR. GIBBS:  Don't even go close to that analogy. 

MR. GOOLSBEE:  It's nothing like pornography.  (Laughter.)  And I will say, in this proposal today that builds on the wider themes of the white paper, it's defined as owning or investing in a hedge fund, owning or investing in private equity, or doing proprietary trading that is not related to client activity, that is just for your own company's account.

Yes, ma'am.

Q    What about Fannie and Freddie?  I mean, correct me if I'm wrong but I haven't heard the President mention them in any of these discussions of his financial proposals.  I mean, why is that?  Were they not -- do you guys not think they were part of the problem or --

MR. GOOLSBEE:  No, I don't think it's accurate to say they haven't been mentioned in the regulatory white paper.  It says that the President -- they're going to convene to look at the broader mortgage market as a whole, which includes Fannie, Freddie, FHA, and think about a broad expanse of things and what we do in the mortgage market.  Obviously it wasn't mentioned today because it's not a commercial bank and it's not in this circumstance.

Q    But you haven't come up with any proposal since that white paper, though -- nothing has --

MR. GOOLSBEE:  I don't have any comment on the specifics on that.

MR. GIBBS:  Kirk.

Q    Thanks, Robert.  Austan, you have taken pains to say this is not re-imposition of Glass-Steagall, but why not go for the whole --

MR. GOOLSBEE:  The spirit of this, which is separating risky activities from banks, which is trying to eliminate some conflicts of interest, and which is about trying to limit the amount of subsidy or backing from the American taxpayer that's getting translated into their bottom-line profits, those are themes that people were trying to address back in the Depression when they passed Glass-Steagall. 

But the specifics of Glass-Steagall, which were created in 1934, underwriting securities and trading in securities are no longer in the current financial system the things that pose the greatest risk.  I do think that if you re-impose Glass-Steagall in its entirety, you would put some very severe restrictions on U.S. financial institutions that would put them in a difficult spot. 

The point is, in the current financial system where financial institutions are more broadly defined, we want to eliminate conflicts of interest where we can, we want to eliminate these cross-subsidies or "heads I win, tails the taxpayer loses".  But we -- we're not going back to the 1934 rule because on a technical level I think that's not really central on that.

MR. GIBBS:  Yes, sir.

Q    The President has called on banks to be cooperative, supporting financial regulatory reform.  He's called on the banks to increase lending to small business.  At the same time over the past few weeks the President has increased his rhetoric against banks, calling them greedy and posing what some banks may feel as unfair burdens upon them -- punishing them, essentially.  How do you get them to cooperate and support these proposals when some of the things that the President has proposed over the past few weeks, they may not view that favorably?

MR. GOOLSBEE:  I wish that they would take a broader expansive view of financial markets.  Indeed, I wished back in September of 2007, as Robert talked about, the speech that the President gave at the NASDAQ -- the President said it doesn't make you anti-capital markets to be for more robust oversight of financial markets because we fundamentally need public trust in our financial institutions for them to succeed.  If we don't have it, the capital markets will fail. 

And that is exactly what happened in this crisis.  People could not trust what's on balance sheets, they can't trust the numbers that they're getting.  I think if the financial sector takes a step back and looks at the unbelievable amount of direct and indirect public support that they received, not because the administration wanted to help banks but because we wanted to prevent the next Great Depression, I think paying back what the losses are in the TARP is not a punitive measure that is in the legislation and it's totally reasonable. 

And trying to eliminate conflicts of interest and trying to eliminate the situations where government taxpayer support or guarantees is going for them making profits for themselves -- I think that's -- that in the long run is in their interest because it restores public trust to financial institutions, and I hope they will bear that in mind.

MR. GIBBS:  David.

Q    Following up on that, though, don't you anticipate a major fight on this?  And how would you compare that to the opposition you're going to get on this?  I mean, the Republicans already have said that this would add too much uncertainty and they're against it.  Eric Cantor put out a statement I think before the President finished speaking saying that he was against this.  So my question is, have you talked to Republicans on the Hill already or the institutions themselves to get a sense whether you can sell any of this to them or whether they will just come out lock, stock, and barrel against it?

MR. GOOLSBEE:  Well, look, as I said, I'm not a legislative strategist, I'm just a policy guy.  And if you look at the financial figures that have come out for things like this, they include very respected financial figures on both sides of the aisle.  I'll let Robert speak to the legislative politics of that, but I think this is in no way a strictly partisan issue on policy grounds.

MR. GIBBS:  David, I think as Austan has said here, you go through the examples of those that believe this is in the long-term financial interest of this country, I think supporting this demonstrates that clarity.  I would say that you heard the President discuss that there is a massive lobbying effort to derail or water down financial reform. 

I think it is very clear that the -- many of the circumstances that existed two years ago are still possibilities in our financial system.  We have to do all that we can and the President will ensure that we do all that we can to change those rules of the road going forward. 

If that -- I don't doubt that there will be some that oppose this.  There will be some in the financial community who will.  There will be some on Capitol Hill that will.  But putting a measure of stability back into our financial system -- building on what Mark said, if we want to go back to the type of bailouts that Congress approved in October of 2008, then let's keep the rules of the road the same.  But if we want to take that step forward and ensure that the taxpayers and the shareholders and our economy is protected from that excessive risk-taking, then let's get a new road map for those rules.

Q    But quickly, are you anticipating and preparing for a major political battle on this as well as --

MR. GIBBS:  David, I don't doubt that -- this happened before we broke for Christmas, that when some of these activities were being voted on, that scores of lobbyists were called to Capitol Hill to generate activity in opposition to financial reform.  I have not sensed a retrenchment by those lobbyists on this issue and I think the special interests, in order to protect the good that they have, will do all they can to derail what's good for the American economy.

Sheryl.

Q    Robert, just following on that, the President does have personal relationships with some of these top bankers; he's met with them.  Did he call them and speak to them to give them a heads-up that this was coming?

MR. GIBBS:  Not that I'm aware of.

Q    Did you calculate that it would be better just to kind of pick a fight?

MR. GIBBS:  No, we calculated it was better to ensure that we had different rules of the road.  It was that we turn a corner away from the type of excessive risk-taking that got us into having to ask the taxpayers to loan banks hundreds of billions of dollars.

Q    But just pursuant to this question, wouldn't it have been better to try to get some kind of buy-in from the institutions themselves, or did you just figure that was not going to happen?

MR. GIBBS:  Well, look, I'll let them decide where they come down on this proposal.  I'll let them decide where they come down on whether taxpayers should be paid back for what they lend.  That's for them to decide.  And the President has talked to them in the several meetings that he has about getting on board on financial reform.  They're going to have to decide, lobbyists are going to have to decide, Congress is going to have to decide, but the President has been firm that we have to change the rules of the road going forward.

Q    And then just one final -- so has he concluded, has the President concluded as a result of those meetings that the banks are not on board, in much the same way that you concluded earlier this year that on health care Republicans were not on board?  Has he sort of reached a decision after those meetings that --

MR. GIBBS:  Well, I think we concluded that Republicans weren't on board based on the statements that Republicans made saying they weren't on board.

Q    So has he concluded that the banks are not on board?

MR. GIBBS:  I have not seen whether or not -- like some had in saying they weren't on board the President's health care plan, I have not seen what banks have said about this -- I'm not sure the analogy is as clear as you drew.

MR. GOOLSBEE:  On one policy matter, there are some 8,000 banks in the United States and the vast majority of those banks do not engage in proprietary trading that's not client-related, so they wouldn't have a dog in that.

MR. GIBBS:  Yes, sir.

Q    Austan, hi, glad to see you.  I spoke with your buddy James Galbraith last month and he sends his greetings, the economist, and of course we talked about the economy.  And he says it's going to be about 250,000 to 300,000 jobs for the next 60 months -- five years -- before the economy gets back to full employment.  And I'm just curious what your response is to that, in relation also to what Larry Summers said about the recession ending.

MR. GOOLSBEE:  Well, look, Jamie Galbraith is a friend and I've known him for a long time.  I've tried to stay out of the prediction business.  I know that the President has been putting tremendous focus on job creation.  Robert knows that.  Every day we -- every day we're thinking about those issues.  He does not believe that a 10 percent unemployment rate is acceptable.  We're pressing -- he called for a jobs package and we're going to keep pressing as hard as we can on those jobs issues.

MR. GIBBS:  I don't -- I'm not good at math, that's why I'm here -- (laughter) -- but I don't think 250,000 jobs for 60 months -- I think that's greatly in excess of the number of jobs that have been lost over the course of the recession, and that may actually include even a greater number than those --

Q    There's 15 million.

MR. GIBBS:  -- exactly -- that are traditionally underemployed.

Q    The number of unemployed.

MR. GIBBS:  I'll take one more there --

MR. GOOLSBEE:  He did get that calculation correct -- it does say 15 million.

Q    Well, he was working on it for 10 minutes.  (Laughter.)

MR. GIBBS:  That was completely unnecessary, wasn't it?

MR. GOOLSBEE:  I'm going to get that guy.

MR. GIBBS:  Yes, sir, one last question and then we'll let Austan go, while I move my abacus.

Q    Robert, what's the presidential message to the small businesses today?  They are still in trouble as far as hiring is concerned, especially in connection with the health care bill, and they are still expecting that President will be rescuing them because they are the small -- small businesses are the more job creators.

MR. GIBBS:  Well, and you've heard the President discuss this repeatedly.  The economic team is continuing to work on ways to improve primarily the flow of capital and lending to small businesses.  I think you'll hear the President talk about that in the State of the Union address. 

Goyal, as you said, the -- we know that hiring is going to take place in a lot of different firms when it comes back, but the primary job creator is small business.  We have to continue to create an atmosphere through different proposals that the President has laid out to create that environment for private sector hiring.  That's what the President has worked on and what he'll continue to work on throughout --

Q    -- health care bill is going to come out because they are expecting more jobs or more hiring --

MR. GIBBS:  Well, look, I -- there are -- there's no doubt -- and the President has heard from many of them, small businesses, that are being crushed by health care costs that increase each and every day.  We'd do one more, Roger, and then I'll let Austan get back to doing my math problems.

Q    Thank you.  A follow-up on some of Sheryl's questions.  The President may not have given a heads-up, but didn't Secretary Geithner meet with some of the bankers last night?

MR. GIBBS:  I don't know the answer to that, but we can have somebody find out.

MR. GOOLSBEE:  I mean, I want to say, the policy team, we talk to and have talked to over the last year everyone -- heads of banks, heads of consumer organizations, consumers, lenders, small businesses, everybody.

Q    But I mean as of last night to give them a heads-up.

MR. GOOLSBEE:  I don't know, I wasn't involved in that.

Q    When did the economic team decide on this and when did the President sign off on it?

MR. GIBBS:  I think the last sign-off, if I'm not mistaken, again, was before Christmas.  We talked about this event I think a week and a half ago.

Q    And were you going to actually put it in the State of the Union initially and move it -- did you move it back or was it always planned to be a separate --

MR. GIBBS:  I'm sure the President will highlight this in the State of the Union, but the event logistically got scheduled probably a week or a week and a half ago.

Thank you, sir.

MR. GOOLSBEE:  Thanks, everybody.

Q    So, Robert, can we come back to health care, then, talk about that and Nancy Pelosi's --

MR. GIBBS:  If that's what you'd like to talk about next, Mark, let's go there.

Q    I think that's a fair assumption.  Nancy Pelosi is now saying that she does not have the votes to take the Senate bill and run it through the House.  Are you looking now at a long, drawn-out period of negotiating a scaled-down package?

MR. GIBBS:  Well, look, Mark, the President obviously knew from the beginning of this that finding a solution to a very complex problem would be a challenging one.  This, as I said, is a -- it is a very complex issue.  The President has heard from millions of those -- or has heard from those that represent millions that -- as I said a minute ago, small business owners that are dealing with the skyrocketing costs, families that are dealing with premium increases, dealing with preexisting conditions -- conditions, quite frankly, that are only getting worse. 

He's seen both before he was elected and after what health care costs do to the federal budget.  Lots of hard work has gone into getting us to this point.  Lots of hard work has gone into getting a bill through the House and through the Senate.  And many hours have been spent here trying to merge those small differences together.

Obviously Tuesday resulted in new political circumstances.  The President believes that the Speaker and the Majority Leader are doing the right thing in giving this some time and figuring out the best way forward.  We welcome the input, as I talked about yesterday, from members of Congress from any political party that are serious about dealing with, as the President has been, and as Republicans and Democrats have been in the committee process and in the House and in the Senate, who are focused on dealing with those issues.

Obviously as the Majority Leader and the Speaker look for the best way forward, the President has -- continues to have a very full plate.  Financial reform was something he talked about; getting our economy back on that firmer foundation; dealing with Iraq and Afghanistan; the problems of terror.  So there's plenty of work for the President to do in the time being.

Q    So does that mean health care is now on the back burner while he works on those other issues?

MR. GIBBS:  No, again, I repeat simply that the President believes it is the exact right thing to do by giving this some time, by letting the dust settle, if you will, and looking for the best path forward.

Understand this, Mark, as I said yesterday.  Families dealing with, small businesses dealing with skyrocketing health care costs; insurance companies that won't cover people because of preexisting conditions; as a result of economic conditions people losing their health care -- that problem existed two years ago, it existed a year ago, it existed yesterday.  If we don't do anything, it will only get worse in the days to come.

Q    But didn't you tell us yesterday that in an election year, time is working against you?

MR. GIBBS:  Look, I think the political process works against any solution.  We've seen it happen -- when insurance companies invest millions and millions and millions of dollars in advertisements to stop something from happening, that works against you, too.

The President believes it's the right thing to do to let the dust settle and give those on Capitol Hill some time to search for the best path forward.

Q    Robert, I wanted to go back to the broader message of the Massachusetts election.  The tone of your comments yesterday seemed to suggest that you were absorbing the message from that and that there was anger and frustration.  But does that mean that there's any kind of regrouping going on, any kind of change in the agenda, or is there a feeling that the agenda is perfectly fine as it is but it's just a matter of communicating it better?

MR. GIBBS:  No, look, this isn't a "Cool Hand Luke" problem, right?  It took a while.  Mark, come on, help me out a little bit, right -- "failure to communicate."

Q    I had no idea what that meant.

MR. GIBBS:  See?  (Laughter.)  No?  Thank you, David.  Thank you, David.  You know -- took you, like, 10 --

Q    I thought you were eating hard-boiled eggs or something.  (Laughter.)

MR. GIBBS:  Took you, like, 10 minutes to get that joke, so I'm just saying. 

No, look, I think you'll see -- obviously, Caren, the President will have an agenda coming out of the State of the Union.  I always think this year was going to be a year of implementing a recovery plan, ensuring that we had, as I talked about a minute ago, an environment that the private sector is creating -- that the private sector is creating and adding jobs; that we were working on things like financial reform.

I don't think the message coming out of the election was to stop doing those things.  I think the President knows what has been on the concern of the American -- the minds of many Americans and is moving forward to answer that call.

Q    So he thinks his agenda perfectly matches the sentiments of the American public and that there's no change needed as a result?  And also, too, you mentioned that he was going to -- he plans to mention the election in the State of the Union, but has there been any rewriting -- or broader rewriting of the address based on it?

MR. GIBBS:  Well, again -- I mean, Mark asked me this the other day and I talked about many of the policies -- the drafts of the State of the Union written before Tuesday didn't include Tuesday, so I can tell you that if we add --

Q    I'm talking about broader rewriting, though.

MR. GIBBS:  No, I --

Q    Broader rewriting of the tone --

MR. GIBBS:  I can certainly check with the speechwriters, but not that I'm aware of.

Q    How many drafts?

MR. GIBBS:  I have no idea.

Q    Tomorrow will be the one-year anniversary of President Obama saying that Guantanamo will be shut down; obviously you're not going to make the deadline.  Do you have any idea when the process will be done?

MR. GIBBS:  I don't know when the process will be done.  I know they've made great progress on -- look, establishing first and foremost case files and recognitions of who indeed was still there and why, the -- there have been progress on that; there's been progress on issues of siting a new detention facility.

The President won't meet the deadline he laid out a year ago, but the President, his national security team, our generals in Iraq and Afghanistan, understand the support for al Qaeda that Guantanamo provides them in recruiting, in attracting those that seek to do us harm.  To keep the American people safe, the President pledged to close Guantanamo Bay, and he'll do that.

Q    Does he have to amend the executive order?

MR. GIBBS:  I can check on that.

Q    Can I just ask one more question about today's announcement?  I understand that this was cast within the whole context of the financial meltdown.  Correct me if I'm wrong that there's nothing that the President is proposing today that will create any jobs.  I mean, this isn't going to do anything to Wall Street other than try to prevent future disasters, but it wouldn't do anything on the job-creation front.

MR. GIBBS:  No, no, this is -- that's not what the proposal was intended to do.  This was -- this is about rules of the road for banks that engage, as you heard Austan describe, in activities that, before so long ago, weren't traditionally the purview of banks.

Q    Do you think you need to be doing more to talk about creating jobs and not just --

MR. GIBBS:  I think the President will talk about that later today in front of the U.S. Conference of Mayors.

Q    It's over.

Q    He did it already.

MR. GIBBS:  It is?

Q    All done.

MR. GIBBS:  Voila.

Q    Marginally related --

MR. GIBBS:  Before you asked.

Q    -- to Gitmo -- who made the decision to try Abdulmutallab in federal court?  Was the President aware of this decision when he began being processed in the legal system?

MR. GIBBS:  Well, again, understand that the decision to try him was handed down in an indictment that I think took place many days afterward.  So, yes, all the team was involved in that.

Q    So the decision was made over a period of days.  I mean, there was a time between which he was taken into custody on Christmas Day and a time in which the decision was made that --

MR. GIBBS:  Well, understand this, there was a period of time in which he was taken into custody, a period of time in which experienced FBI agents interrogated him, received valuable intelligence from him.  He was arraigned at a later period of time, and later than that was indicted.

Q    And who made the decision to try him in federal court?  Did the President make that call?

MR. GIBBS:  I believe that decision is made by the Attorney General.

Chip.

Q    From the President's tone yesterday and yours yesterday and today, I just don't get the sense -- a lot of people I've talked to don't get the sense that you all see this election and losing the vote, 60 votes, as the crushing blow --

MR. GIBBS:  Is somebody's phone -- sorry.

Q    -- as the crushing blow that a lot of people see it, that this is a hugely decisive moment, when the President's primary domestic priority went down.  And he may get something, he may get something, but isn't comprehensive health care reform, truly comprehensive health care reform, dead?

MR. GIBBS:  No.  No.  Maybe that's why we don't see as that -- the way you describe it.

Q    How is it not dead?  So you don't see it as a crushing blow?

MR. GIBBS:  Well, I don't -- I said this on Monday, that the outcome of Massachusetts was not going to stop the President from pursuing health care reform because of the reasons the President pursued health care reform.

Q    The bill is dead, though.

MR. GIBBS:  Hold on, hold on, let me -- let me just finish the -- because of skyrocketing premiums, what businesses and our budgets were facing, that -- look, has the political environment changed to get that done?  Yes.

Q    Well, it's not just the political environment, but Nancy Pelosi is saying that they're not going to pass the Senate bill, the comprehensive bill that came that close to getting passed --

MR. GIBBS:  Do it again, do that again.

Q    -- is dead -- is dead.

MR. GIBBS:  I don't think that's what the Speaker believes and I don't think that's what the Majority Leader believes; I don't think that's what millions of Americans believe, and it's not what the President believes.

Q    So the President still believes that he can get something passed that is very similar --

MR. GIBBS:  Yes.

Q    -- to what the House and the Senate --

MR. GIBBS:  He does.

Q    -- were already working on?

MR. GIBBS:  He does.

Q    Could I -- the topic I contacted you earlier about, the Copenhagen entourage.  Have you been able to find anything out on the number of administration officials -- there were over 100 in the House.  How many in the administration went and what -- do you have any idea what the cost was?

MR. GIBBS:  I think Ben is working on finding some information for you, Chip.  Obviously the President and members of his Cabinet that deal with clean energy issues and creating a clean energy economy travelled to Copenhagen.  As many of you are aware, we were -- the President himself was on the ground for less than 24 hours.  We didn't spend the night.  And a very small number of White House staff were on the ground prior to him getting there.

Q    But Congress had more than 100 people there.  They had more than 300 hotel nights.  It took three large government planes to get them there, plus a lot of other people flew commercial.  Does cost even enter the equation on something -- and let me add to that, that there is evidence that there was a much larger contingent from the administration, more than 100.  So you're talking about more than 200 people there for a summit --

MR. GIBBS:  Well, I know Ben is working on information for you on that.  I'll let members of Congress discuss their travel.

Q    Well, could you just comment, do you think it's appropriate to spend that kind of money on having more than 200 people attend such a summit that the President so briefly attended?

MR. GIBBS:  I think the President and members of Congress and the administration and the American people believe creating a clean energy economy is an important task of this administration, of creating a foundation to create millions of jobs and put people back to work, and find an agreement that's possible that enables developing and developed nations to take the steps necessary to create a framework for developed and developing nations on greenhouse gases.

Q    And does the cost of sending people to something like this not even enter the equation?

MR. GIBBS:  People that were representing the administration were there to do a job.

Q    Can you provide that information to all of us?

MR. GIBBS:  I'd ask you to contact Ben LaBolt.

Q    So you don't think the President would be upset to find out that more than 200 people went at enormous cost to the taxpayer?

MR. GIBBS:  Chip, again, administration representatives went to do their job.

Mike.

Q    Back on health care, you said that it's good that the Speaker and Majority Leader are taking time to let the dust settle.  How much time are you willing to give them?

MR. GIBBS:  Well, again, I think it's -- they've got to figure out a path forward legislatively.

Q    Is it incumbent on them to figure that out?  You had several hours of meetings here in the West Wing.

MR. GIBBS:  Right -- no, no, look, I think we've had meetings here to come to an even better bill that merges the House and the Senate product.  Each of them knows their chamber better than anybody else and how one gets the votes to do it.

Q    The reason I ask is because there is some criticism from prominent people on the left that the President again has not exercised the leadership that's necessary.  Paul Krugman in the Washington Times --

MR. GIBBS:  Washington Times -- wow.

Q    Pardon me. 

MR. GIBBS:  Are you pardoning Paul or the Washington Times?  (Laughter.)

Q    And so I'm just -- I'm wondering, if the criticism thus far has been the President has not stepped in in a timely way and twisted arms or whatever people want a President to do, now more than ever would be the time, would it not, for the President to show them the way forward?

MR. GIBBS:  The way forward will be determined by the President, by members of Congress, by Democrats and Republicans that are interested in getting this done.  I think lots of those conversations are ongoing about how best to proceed, including involving the President.

Q    The President said that it's time to coalesce around the core elements of the package.  What would be the non-core elements that were being discussed?

MR. GIBBS:  Well, look, I think there were ideas that were different in one bill, there were ideas that were different in the House bill than from the Senate bill and the Senate bill from the House bill, that as a result of negotiations might not ultimately come through in a package --

Q    Because they were all based on a principle that the President had set forth, whether it be to cover the uninsured or to keep costs at certain levels --

MR. GIBBS:  Look, obviously those core elements -- I don't have a -- I don't have in front of me the differences in each bill and where they left off the negotiations.

Q    And can I just -- one other -- any reaction to the Supreme Court on campaign funds?

MR. GIBBS:  I don't -- is the President's statement out?

Q    Yes.

Q    Oh, I'm sorry, I didn't see it.

MR. GIBBS:  I would point you to -- it went out late but I would point you towards that.  I know that they're still -- it's a lengthy opinion that they're still --

Q    Robert, he says in that that he will work with Congress on some kind of legislative fix.  What does the President have in mind?

MR. GIBBS:  Something that doesn't allow unfettered access by special interests to unduly influence the electoral process.  What was unwound today by the Supreme Court -- obviously you see what the President has said.  Look, I don't think anybody thinks that we spend too little money on political commercials and on political campaigns.  And certainly the solution to those problems is not to allow huge sums of money to come into the system, some of which is hard to account for.

Q    Does he worry about this year's elections?

MR. GIBBS:  I think everybody should be worried that special interest groups that have already clouded the legislative process are soon going to get involved in an even more active way in doing the same thing in electing men and women to serve in Congress.

Q    Do you call it legal corruption, lobby or special interest?

MR. GIBBS:  Say again?

Q    Do you call lobbyist or legal corruption -- lobbyist or special interest?

MR. GIBBS:  Look, I think the President didn't accept money from lobbyists in his campaign and doesn't now.

Q    What does the President think of Scott Brown?  When Brown said he had a conversation with the President he said that President Obama said he believed he was very open-minded.  Can you give us a sense what the President believes about Scott Brown?

MR. GIBBS:  Other than what I put in the readout, I'd have to go back and ask the President based on what Senator-elect Brown -- I haven't seen --

Q    And are they going to be meeting while he's in Washington, kind of in his courtesy calls --

MR. GIBBS:  I meant to check on that yesterday and I will do so.

Mark.

Q    Republicans have chosen Governor Bob McDonnell to respond to the President's State of the Union on Wednesday night.  Any comment on that?

MR. GIBBS:  Looking at many of the -- watching many of the ads that he ran in Virginia that I saw on my television in Alexandria, they looked a lot -- a lot of the themes looked similar to what the President ran on.  So we certainly look forward to what he has to say.

Q    Thank you, Robert.

Q    Thank you.  Has the President made calls to members of Congress on health care in the last day or two?

MR. GIBBS:  I'd have to check on what his call list was.  I have not seen it.

Q    Is that information that you're willing to share with us?

MR. GIBBS:  Possibly.

Q    And following on that, you said lots of conversations are ongoing about how best to proceed, including involving the President.  This is his highest priority.  Can you give us a sense of what he's doing?

MR. GIBBS:  Sheryl, let me just -- I don't know if you heard what I said to Laura, but I said I'd check, so give me a second to do that, okay?

Q    But internally I assume there are also conversations, and if you can give us a sense of his engagement and what he's doing.

MR. GIBBS:  I can assure you he's spent time talking to many of the same staffers that talk to you about health care moving forward, as he has done many, many days over the past year.

Thanks, guys.

END
2:22 P.M. EST