Transcript: Obama On The Economy, Iran

President Obama told CNBC on Tuesday that the US is not in danger of overregulating the economy and that the outcome of the Iranian election will not make that much difference in his adminstration's policies toward that country.

Below is the full transcript from the interview with President Obama on June 16th, 2009.

Thanks so much for being with us. Mr. President.

President BARACK OBAMA: Thank you, John. Great to be here.

HARWOOD: You unveil your regulatory reform proposal tomorrow, and from what we know it's a little bit different than some had anticipated; less consolidation of agencies than had been predicted. We've heard about turf fights among regulators and committee chairs in Congress. Does that mean in the final decision making that you listened more to political advice about what you could get done rather than what made the most sense and was most efficient economically?

Pres. OBAMA: No. I think that what we focused on was, number one, do we have the tools to prevent the kinds of risks that we saw back in September? And our conclusion was we didn't, and we had to make sure that we had a systemic risk regulator. So that is in place. We asked, do we have the resolution authority if an individual institution like an AIG breaks down, to quarantine them so that they're not bringing the whole system down? We didn't have that authority; we wanted to put that in place. Did we have a means of anticipating problems and properly regulating the nonbank sector of the financial system, which obviously has grown massively over the last decade? And we concluded we didn't have that power. So we got those things in place.

Were we sufficiently focused on consumers? And it turned out that consumer protection, investor protection was scattered among a whole bunch of different agency; we wanted to streamline, consolidate and give somebody line responsibility for that. So what we've started off with was identifying what were the biggest problems that we had, and are we putting in place the tools to prevent the kind of crises that we've seen from happening again?

HARWOOD: But you don't...

Pres. OBAMA: Now...

HARWOOD: ...have a single bank regulator, and some people have talked about judge shopping among banks for favorable regulation.

Pres. OBAMA: This is something that we've been concerned about in the past. What we do have, under our proposal, is that for tier one institutions, the big institutions who, if they fail, require us to shore them up, for those folks they are going to be under a single regulatory body. When it comes to some of the smaller banks, community banks, the FDIC has done a good job on that, and we feel confident that they can continue doing what they do. So our overall concept has been not to completely abandon those aspects of the system that worked, but rather focus on those aspects of the system that didn't, try to close gaps. Did, you know, any considerations of sort of politics play into it? We want to get this thing passed, and, you know, we think that speed is important. We want to do it right. We want to do it carefully. But we don't want to tilt at windmills, we want to make sure that we're getting the best possible regulatory framework in place so that we're not repeating the mistakes of the past.

HARWOOD: We know that the dynamism of capitalism comes from the interplay of risk and reward.

Pres. OBAMA: Yeah.

HARWOOD: With this plan, you want to achieve what you think will be a healthier balance.

Pres. OBAMA: Right.

HARWOOD: You've talked about other interventions as—and used words like "temporary"...

Pres. OBAMA: Right.

HARWOOD: ..."reluctant to do it"...

Pres. OBAMA: Right.

HARWOOD: ..."surgical interventions."

Pres. OBAMA: Right.

HARWOOD: But when you add it all up—AIG, Citigroup, Fannie and Freddie, the auto companies, executive compensation guidelines—do you ever wonder that it's just too much messing with the engine of capitalism, and that it's going to get hard to stop messing with it?

Pres. OBAMA: No. And I'll tell you why. Most of these interventions didn't start on my watch. So the auto companies, let's take as a good example, when I came in, we had already put in—not me, but the previous administration had already put in $10 billion to shore up the auto companies and asked nothing for—in return. Now, I had three choices. I could continue giving them money without asking anything in return, I could let them liquidate in the midst of the worst recession since the Great Depression, or we could say, `We don't want to run your company. Would you show us a plan that allows you to stand on your own two feet, so that what we're providing is a meaningful bridge for you to get to a better future?' We chose option three. That's not something that we welcomed, and the sooner we can get out the better.

I would contrast that with this financial regulatory proposal that we're putting forward. There what we're trying to do is increase the transparency and the openness that has been the signature characteristic of our—sorry.

Sorry, I'm going to start over. I'm going to start at "I will contrast." Get out of here.

CONTINUED

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