President Barack Obama said he believes the global financial system remains at risk of implosion with the failure of Citigroup or AIG, touching off “an even more destructive recession and potentially depression.”
“You're sitting here. And you're— you are laughing. You are laughing about some of these problems. Are people going to look at this and say, "I mean, he's sitting there just making jokes about money—” How do you deal with— I mean: explain. . .” Kroft asks at one point.
“Are you punch drunk?” Kroft says.
“No, no. There's gotta be a little gallows humor to get you through the day,” Obama says, with a laugh.
The interview is Obama’s most detailed explanation yet of his view of the world economic crisis, and he makes clear that he’s afraid the nation hasn’t seen the worst of it – even invoking the possibility of a “depression” if a series of financial institutions collapses all at once.
He is quick to add that he’s “optimistic about that not happening. Because I think we did learn lessons from the Great Depression.”
But Obama makes clear in the interview with “60 Minutes” that he believes Wall Street’s high-risk, high-reward culture was a main cause of the economic meltdown. He takes aim at traders and executives in extremely personal terms – calling them ironically at one point “the best and the brightest” – and says that even today, those same executives don’t get just how much their recklessness contributed to a recession that he says deteriorated more quickly than even he expected.
“I mean there were a whole bunch of folks who, on paper, if you looked at quarterly reports, were wildly successful, selling derivatives that turned out to be. . .completely worthless,” Obama says, with a chuckle.
“Gosh, I don't think it's me being anti-Wall Street just to point out that the best and the brightest— didn't do too well on that front, and that— you know, maybe the incentive structures that have been set up— have not produced the kinds of long term growth that— that I think everybody's looking for.”
He also said he doesn’t think Wall Street has gotten the message yet, and that he must do a better job conveying it to them.
“One of the things that I have to do is to communicate to Wall Street that, given the current crisis that we're in, they can't expect help from taxpayers but then enjoy all the benefits that they enjoyed before the crisis happened,” Obama said. “You get a sense that, in some institutions that has not sunk in. That you can't go back to the old way of doing business, certainly not on the taxpayers' dime.”
Yet Obama this week will be turning to some of those very same executive for help in bailing out banks and other financial institutions whose “toxic assets” are stopping up the global market for credit. He’s quick to add that he needs to do a better job conveying the market that he believes in them and wants them to succeed.
“Part of my job is to communicate to them, "Look, I believe in the market. I believe in financial innovation. And I believe in success." I want them to do well,” Obama said.
He also acknowledges that the recession has grown more serious more quickly than he expected, particularly regarding job losses. But he expresses hope that that quick decline might also make for a quicker-than-expected turnaround.
“There’s a potential silver lining, which may be that things are so accelerated now, the modern economy is so intertwined and wired, that things happen really fast. . . but things may recover faster than they have in the past,” Obama said.
The economy dominated the interview, which also ranged from topics such as his upcoming Afghanistan policy review to his daughter’s new swing set.