Clinton: Clear There's No Desire to Nationalize Banks

PRESIDENT CLINTON:

I don't think, you know, if you don't get a floor under these assets and also give people some way to get through this, that's what the unemployment benefits, the food stamps, the tax cuts-- the money to state and local governments to prevent more layoffs in schools and healthcare areas and the energy-related jobs, the infrastructure jobs, that's what they're trying to do. It's actually quite a fine bill I think.

BECKY QUICK:

Well, you talked about the stabilization plan. You mentioned mortgages are one place where they happened to put the price controls in or at least for the floor for that. We're still wrangling around with the banks. And that's what has Wall Street so worried at this point. Watching the market down again today.

PRESIDENT CLINTON:

Yeah, they apparently believe that if the banks are nationalized they will be worthless and-- to the investor. And, therefore, they're getting out now.

BECKY QUICK:

Right.

PRESIDENT CLINTON:

And, of course, by betting against the banks, they make it almost more likely the national government will have to do more. But it's clear that the Treasury Department and the White House don't want to nationalize the banks.

BECKY QUICK:

Right.

PRESIDENT CLINTON:

I think what they do wanna do is to, if you will-- nationalize is the wrong word but have the federal government take out of those banks some of the really bad assets and hold them in a federal repository until the economy starts to come up again. Then let them come back on the market. And I think that could be a very good thing.

I think that Sheila Bair at the FDIC has taken over some banks and managed them and then privatized them again. And it may come to that. But the problem is the FDIC is not equipped to do that with the mega banks.

BECKY QUICK:

Right.

PRESIDENT CLINTON:

So they're still hoping and I'm hoping with them that they can stabilize these banks with-- some sort of-- asset gathering plan and then finding ways for them to make loans again and get back in the winning business. Gonna be interesting to see. We'll go through a couple of tough weeks here. We'll see how it comes out.

But they'll do whatever they have to do. And then it'll be all right in the end. But it's clearly-- let me just say, as messy as this is, what I like about this is that it is clear that we are not going to do what our friends in Japan did in the 1990s. That is in every year in the '90s the Japanese had a big stimulus program from the government.

And some of those years as a percentage of their income, their stimulus is bigger than the one than President Obama and the Congress made. But they were holding back from trying to fix the banks. These guys have waded into this. They are trying to turn the banking sector around. And since it's fundamentally a private sector economy, that's the right decision.

And I know that investors are now looking and betting on Wall Street based on what form this fix will take. What should be most important to us as Americans is that they're dealing with it and that they are pragmatic and they make it work. Nobody thinks the federal government's gonna be the banker of America over the long run.

BECKY QUICK:

Although you mentioned that what we're seeing on Wall Street right now could almost make this a more likely scenario. Is there a chance that we could get pushed into nationalizing the banks? And would that be Japan all over again?

PRESIDENT CLINTON:

No, it would not.

BECKY QUICK:

It would not?

PRESIDENT CLINTON:

No, it would not because if you look at what the FDIC does, they're not running these banks for the long run, right?

BECKY QUICK:

No.

PRESIDENT CLINTON:

They are moving them. So I don't know. I take the administration at its word. They are doing everything they can to avoid-- having to do a takeover of the very largest banks. They believe that the banks that the FDIC and Sheila Bair, who I think has done a fabulous job, I think she's great.

But the banks they took over were in, you know, they were wrecked, rot, they couldn't be rescued. So I think the administration is trying to create conditions in which the-- no other banks will descend that low. And they won't have to take over any more, particularly the mega banks.

• Slideshow: Surprising Stock Market Indicators

But the point I wanna make to everybody is whatever happens will probably be all right as long as we deal with it this year. That is, I would rather them do what they're doing, which is trying to honestly deal with these banking problems this year and just get through it. 'Cause in the end, we're not gonna have a national banking system. We're gonna have a system we got now. We're gonna have the FDIC and all the backups and the Federal Reserve. And we'll have private banks again. It'll be all right whatever happens, if we'll just go on and deal with it now carefully. And I appears to me that they're doing that.

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