Millions For Big Banks, Diddley For Everyone Else
Q For people who are losing their homes, or losing their jobs, and then they see the government helping engineer this $30 billion line of credit for Bear Stearns, and help for other financial investment firms on Wall Street, how do you reconcile the two?
MS. PERINO: Well, the way I would answer that question is in two parts. One, this isn’t about bailing anyone out. These actions are intended, as I said earlier today, to minimize financial market disruptions. And investors in Bear Stearns are taking large and significant losses in this transaction. And that’s not what happens in a bail-out.
Q But, Dana, how does this square with sort of traditional conservative economic principles of limited government involvement in terms of, sort of, maybe culling the herd a little bit, letting the firms that are going to fail, fail, and thus more can sort of live on the back end?
MS. PERINO: Well, I would point out again that, remember, investors — Bear Stearns basically went from a company that was doing quite well to failure, and at $2 a share, I should think that those investors are seeing — feeling today the consequences of that risk in a marketplace. But I would remind you that what’s right for the markets and stability for the financial system had to be taken into consideration.
Q But people who are facing, say, foreclosure, the individuals, the little guys who are facing a foreclosure are looking at the big guys getting government, if not brokered, certainly they’re overseeing deals that are engineered to sort of keep the big picture financial community afloat, and they’re saying, well, where’s my boost of liquidity?
MS. PERINO: They’re going to get that boost of liquidity in the form of a stimulus package and a tax rebate that’s coming to them the second week of May.
Q But that’s not going to save their houses.
Dana Don’t Know!
Q Is there no American taxpayer money involved in this intervention?
MS. PERINO: Well, the details of the action taken last night by the Fed, I would have to refer you to the Fed, because the deal and the transaction are quite complicated. But the Fed will be focused on making sure that the federal taxpayer is protected.
Q To follow on that, the Fed did not consult the White House; is that correct?
MS. PERINO: I think we were kept informed, but —
Dana REALLY Don’t Know!
Q Dana, is the U.S. economy in a crisis?
MS. PERINO: As we said, Elaine — I don’t know what kind of a question that is.
Really… Dana Don’t Know!
Q The President, in his radio address Saturday, said that the housing crisis was the root of a lot of the troubles. Mr. Frank and Mr. Dodd have the legislation on the Hill that will call for a write-down on some of the principal, and then have FHA come in and guarantee the rest of those mortgages. The market is looking for a floor. Wouldn’t that kind of legislation give the market a floor?
MS. PERINO: I’m not that detailed into it, Roger, that I could provide that. But I’ll refer you to Treasury.
Q The administration opposes that legislation; is that correct?
MS. PERINO: I think we’ve said that we would not support — I can’t remember exactly what that legislation says, so let me go back and either get back to you or refer you to somebody who can.
Good Thing The Bush Assminstration Acted Quickly
Q Does the White House believe that the administration was quick enough, going back over the last few months, several months, to recognize the role that securitization played in this economic crisis?
MS. PERINO: Yes, I think so.