The following is a transcript from ABC News' Terry Moran's interview with President Obama. The president discussed his economic recovery plan with Moran in Fort Meyers, Fla., today.
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: 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 going to have to hold out the Band-Aid 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 a lot of work that has to be done to put these banks back on a firmer footing.
Can you say how much, ballpark figure, that will cost the American taxpayer? A trillion, a trillion-five, two trillion?
OBAMA: I can't say the ballpark figure. What I can say is --
MORAN: Why not?
OBAMA: Well, because ultimately, what happens is going to depend on how the markets respond over the long term, not today or the next day but a month from now or two months from now. How effective we are in actually cleaning out some of these bad assets out of these banks.
If we're doing a good job and we've got a template that creates transparency and accountability, clarity and consistency in terms of how we're applying this program, then what we'll end up seeing is private capital coming back into the marketplace.
If we do a poor job, then private capital will continue to stay out and frankly, at, at a certain point, the government can't replace all that private capital, so you know, our job is to get this right, get the model right. We've got 350 billion dollars of the TARP money that's been allocated but we also have the Federal Reserve Bank and the FDIC, all of whom were consulted in designing this plan.
And those resources -- I think the most important thing is to give both the market, but also the taxpayer, confidence that we're spending that money well. And if we do that well, then I think we can make an assessment down the road in terms of what else we might have to do.
MORAN: There are a lot of economists who look at these banks and they say all that garbage that's in them renders them essentially insolvent. Why not just nationalize the banks?
OBAMA: Well, you know, it's interesting. There are two countries who have gone through some big financial crises over the last decade or two. One was Japan, which never really acknowledged the scale and magnitude of the problems in their banking system and that resulted in what's called "The Lost Decade." They kept on trying to paper over the problems. The markets sort of stayed up because the Japanese government kept on pumping money in. But, eventually, nothing happened and they didn't see any growth whatsoever.
Sweden, on the other hand, had a problem like this. They took over the banks, nationalized them, got rid of the bad assets, resold the banks and, a couple years later, they were going again. So you'd think looking at it, Sweden looks like a good model. Here's the problem; Sweden had like five banks. [LAUGHS] We've got thousands of banks. You know, the scale of the U.S. economy and the capital markets are so vast and the problems in terms of managing and overseeing anything of that scale, I think, would -- our assessment was that it wouldn't make sense. And we also have different traditions in this country.
Obviously, Sweden has a different set of cultures in terms of how the government relates to markets and America's different. And we want to retain a strong sense of that private capital fulfilling the core -- core investment needs of this country.
And so, what we've tried to do is to apply some of the tough love that's going to be necessary, but do it in a way that's also recognizing we've got big private capital markets and ultimately that's going to be the key to getting credit flowing again.
MORAN: People are angry, there's so much taxpayer money going into the banks. Why shouldn't the government, why shouldn't you just fire the executives who wrecked these banks in the first place and tanked the world's financial system in the process?
OBAMA: Well, some of them are gone because their institutions have effectively collapsed. You know, keep in mind. though, there are a lot of banks that are actually pretty well managed; JP Morgan being a good example. Jamie Dimon, the CEO there; I don't think he should be punished for doing a pretty good job managing an enormous portfolio.
And so what we want to do is to say, if you're going to take money from the taxpayers, then you're going to be constrained in terms of how you give yourself compensation and shareholders are going to be empowered.
If you're not taking money, then we'll let shareholders and boards of directors handle things as they generally have handled them. I do hope that we're going to see a change in culture where everybody in the financial system starts recognizing that ... $100 million bonuses annually are not a birthright [LAUGHS] and that, you know, we've got to recognize that if you're going to reward people for success, you've also got to punish them for failure and that hasn't been happening.
MORAN: Take a step back, you've been sounding some very dire warnings about the economy in recent days. How close do you think the country is to a kind of economic catastrophe that you're warning them?
OBAMA: Well, you know, I'm constantly trying to thread the needle between sounding alarmist but also letting the American people know the circumstances that we're in. And the fact of the matter is that we are in not just an ordinary recession, we are in a perfect storm of financial problems and now, a decline in worldwide demand that is resulting in huge numbers of jobs being shed, the lowest consumer confidence we've seen, credit locked up.
And so this was a big difficult situation. Now, I think we've got to keep perspective. We're not going through the Great Depression. I know there have been some analogies there but when FDR took over, unemployment at that time was 30 percent, as opposed to 7.5 or 7.6.
And so, you know, I think it's important to recognize we've still got enormous assets, we've got the same workforce that we did that's as productive as it's ever been, we've still got some of the best universities in the country and, you know, a wonderful infrastructure and some great companies.
You know, I spoke with the CEO of International yesterday, who's investing billions of dollars in opening up new plants in the face of this recession. And so some of what we need is just a restoration of confidence and people's belief that in fact, we can harness all these resources to continue to be the most dynamic economy on earth.
But we're not going to get there by pretending that we don't have some very big problems and I think the American people understand that.
MORAN: The stimulus bill -- one of the things the Republicans are arguing, they look at this stimulus bill, they see a lot of spending in there ...The Republican argument is that you and Nancy Pelosi are using the need for a stimulus bill as an excuse to jack up spending under a traditional liberal Democratic agenda.
OBAMA: Let me, first of all, point out, I -- I think there are a number of different arguments that have been leveled at, at this recovery package. There are a set of folks who just don't believe in government intervening in the marketplace, period. I mean, they're still fighting FDR and the New Deal and you have -- these are the same folks who think we should be privatizing Social Security and you know, we -- there's no room for government to help people get health care and on and on and on.
So there's a big ideological battle that they want to fight. Frankly, I think that fight's already been won, the American people certainly think so. That's not the argument that makes much sense to them. There are then people who I think are making a sincere argument that if you look at the stimulus package, that maybe some things are more stimulative and some things are not.
Now, the only problem I've got is, you're actually getting a bunch of contradictory arguments from some of the same people. You've got some folks who say, "well, it doesn't spend out fast enough. That's why it's not stimulative. But by the way, we'd like to see more infrastructure spending." Well, it turns out that infrastructure spending provides terrific stimulus to an economy but most infrastructure projects may take three, four, five years to move forward.
There's some folks who complain that, you know, things like investing in energy efficiency for federal buildings or automobile fleets is a, you know, government program. Well, actually, there's no reason why if you're creating jobs, we might not as well save taxpayers $2 billion in potential energy costs every year.
You know, the, the idea that we're making -- the fact that they're federal buildings that we're making more energy-efficient or federal fleets that we're making more energy-efficient doesn't make it less stimulative. That's still creating jobs and requiring services.
So some of these arguments just haven't been real coherent. And you know, where there are good ideas for very effective job creation, I've adopted them. When the govern -- when the Republicans make suggestions about certain tax cuts that they think will work, some of them, you know, the evidence shows that they may be right.
But most of -- for the most part, they haven't really been making those arguments. What they've been doing is picking the 1 or 2 percent of the entire package that fell in the category of policy and then just going after that, ignoring the fact that 98 percent of the package is exactly the kind of stimulus that people would want.
A third of it's tax cuts, a third of it's counter-cyclical payments to states for things like unemployment insurance. Everybody agrees that, that those kinds of steps are appropriate. And a third of it's investments and infrastructure that is going to create jobs and lay the foundation for long-term economic growth.
MORAN: Not a single Republican vote in the House on your first major piece of legislation --
OBAMA: Oh, I'm getting, I'm getting a big honeymoon from the American people.
MORAN: But what happened in Washington --
OBAMA: Oh -- oh, what happened in Washington was, I think that they made a decision that they want to continue the same fights that we've been having over the last decade. The American people, on the other hand, realize that we want something different; hence, the results of the election.
And, you know, I think if you look at how people are doing right now and how the Republicans have responded to a great deal of overtures by me, I think it's pretty clear that the American people would like to see a different way of doing business. But old habits break hard and, and you know, I, I understand that and so we're going to keep on reaching out and eventually, I have confidence that it's going to pay off.
I think there are going to be other areas where we can potentially work together and I'm still hopeful that some Republicans take their cues from Republican governors and Republican mayors like Charlie Christ down here in Florida who recognize that not doing anything is simply not an option.
MORAN: I wonder, in coming into the presidency, maybe you were too nice. If I'm a Republican senator or a Republican Congress, I think you're a very nice guy but I don't have enough reason to fear you...
OBAMA: [LAUGHS] Well, I tell you what -- you know, that accusation -- I think, if I'm not mistaken, was leveled at me a couple years ago and I'm going to be flying out on Air Force One in a little bit. So, people shouldn't underestimate the, the value of civility and, and try to get people to work together.
Over the long term, it pays off. I think Washington has a very narrow way of keeping score. You know, who's up, who's down, who won this vote, who didn't and what kind of tactical maneuvers did they make, who's getting on cable. You know, who's dominating the chatter in mid-day with these not-so-vast audiences of, of political junkies.
The American people are keeping score. What they're asking is, does this person seem to be really trying to work for us, create jobs, help us keep our home, send our kids to college. That's the measure that they're looking at. And, and as long as I stay focused on that, I think the politics will take care of itself. MORAN: Nice guys don't finish last. OBAMA: I haven't so far.