Barack Obama's president-elect press conference - 18 December 2008
As I said throughout the campaign, what will be just as important to our long-term economic stability is a 21st-century regulatory framework to ensure that a crisis like this can never happen again.
Today, I am pleased to announce two individuals who will be leading that effort: Mary Schapiro, as the chairman -- chairwoman of the Securities and Exchange Commission; and Gary Gensler as the chairman of the Commodity Futures Trading Commission. I'm also pleased to announce that Dan Tarullo will be bringing his years of expertise on regulatory and banking reform to the Federal Reserve Board as one of its new governors.
In the last few days, the alleged scandal at Madoff Investment Securities has reminded us yet again of how badly reform is needed when it comes to the rules and regulations that govern our markets. Charities that invested in Madoff could end up losing savings on which millions depend, a massive fraud that was made possible in part because the regulators who were assigned to oversee Wall Street dropped the ball. And if the financial crisis has taught us anything, it's that this failure of oversight and accountability doesn't just harm the individuals involved; it has the potential to devastate our entire economy. And that's a failure we cannot afford.
Financial regulatory reform will be one of the top legislative priorities of my administration. And as a symbol of how important I view this reform, I'm announcing these appointments months earlier than previous administrations have.
These individuals will help put in place new, common-sense rules of the road that will protect investors, consumers and our entire economy from fraud and manipulation by an irresponsible few. These rules will reward the industriousness and entrepreneurial spirit that's always been the engine of our prosperity, and crack down on the culture of greed and scheming that's led us to this day of reckoning.
Instead of allowing interests to put their thumbs on the economic scales and CEOs run off with excessive golden parachutes, we're going to ensure openness, accountability and transparency in our markets so that people can trust the value of the financial product they're buying. And instead of appointing people with disdain for regulation, I will ensure that our regulatory agencies are led by individuals who are ready and willing to enforce the law.
These are the -- precisely the reasons why I chose the outstanding public servants who are with me today. Mary Schapiro currently serves as the chief executive officer of the Financial Industry Regulatory Authority, the largest regulator for all securities firms that do business with the United States. Before that, she served as an SEC commissioner, and as chairwoman of the Commodity Futures Trading Commission.
Mary's known as a regulator who's both smart and tough, so much so that she's been criticized by the same industry insiders who we need to get tough on. For years, she's used her position to educate investors about market risks, warn seniors and employers about retirement scams, and call for increased regulation of mortgage brokers long before the current housing crisis hit. I know that Mary will provide the new ideas, new reforms, and new spirit of accountability that the SEC desperately needs so that fraud like the Madoff scandal doesn't happen again.
To chair the Commodity Futures Trading Commission, I've chosen Gary Gensler, who brings a wealth of expertise from both the public and private sectors to this position. In addition to serving as undersecretary of Treasury during the Clinton administration and a senior adviser to the Senate Banking Committee, Gary also gained a deep knowledge of our financial institutions during his -- his decade as a partner at Goldman Sachs. As the new chairman of a commission charged with regulating some of the unsound practices and excessive leverage that helped cause this crisis, I know he will restore sound judgment and strict oversight to our markets.
Along with Mary, Treasury Secretary-designee Tim Geithner and others, Gary will also serve as a key member of the team that will reform our outdated financial regulations.
I am also announcing Dan Tarullo, one of my trusted economic advisers, as a new governor of the Federal Reserve Board. The Federal Reserve's monetary policy function will continue to be critical in navigating us through these trying economic times. But as many of you know, the Fed -- Federal Reserve also serves a vital regulator.
Dan will bring a lifetime of experience to the Fed in economic policy and financial regulation. A professor of law at Georgetown, Dan previously served as a senior economic adviser in the Clinton administration, where he coordinated international economic policy and served as President Clinton's personal representative to multiple G-8 summits. His academic and policy work on financial regulation has anticipated some of the problems we've observed, and he has generated important ideas for how we should move forward. I have no doubt that his knowledge, experience and independence will make him a valuable addition to the Federal Reserve at this critical time.
For over two centuries, our market has created a prosperity that is the envy of the world, and rewarded the innovators and risk-takers who have made America a beacon of science, technology and discovery. But the American economy has worked in large part because we've guided the market's invisible hand with a higher principle: that America prospers when all Americans can prosper. That principle is why we put in place common-sense rules of the road to regulate our market, and it's why we need to restore and renew those rules today, so that every American from Wall Street to Main Street can have the chance to prosper once more. I have great faith and confidence in the ability of the team I've announced to make this possible.
And with that, I'd like Mary to step up and say a few words.
Schapiro: Thank you so much, Mr. President-elect. I'm honored and humbled to be considered for this position.
As the events of the past year, even the past week, have shown us, this is a perilous time for investors. Americans are looking to policymakers and regulators to restore stability and trust to our financial markets. As someone who has spent my entire career focused on investor protection, I'm looking forward to leading an agency -- the Securities and Exchange Commission -- whose mission is so critical to the future economic health of our country.
Obviously, there is much work to be done there. And I'm committed to leading an agency whose primary mission must always be to protect investors. But as you have said, Mr. President-elect, the current financial market crisis requires an aggressive, systemic response.
Modernizing America's financial regulatory system demands that federal agencies work collaboratively, aggressively and creatively to meet head on the realities of today's complex marketplace. I look forward to working with Tim Geithner, Larry Summers, Paul Volcker, Gary Gensler and Dan Tarullo and the rest of the economic team to help you put in place a regulatory structure that protects all investors.
Investor trust is the lifeblood of our financial markets. The only way to restore the trust that has been lost is through effective, thoughtful reform of our regulatory structure and the consistent and robust enforcement of our financial regulations. And this will be my top priority.
In closing, I'd like to thank my husband, Chas, and my two daughters, Molly and Anna, for the support and strength they give me every day. I truly believe there is no higher calling than public service, and I'm proud to be able to serve investors, my country and our new president in the days ahead.
Gensler: I wish to thank you, President-elect Obama, Vice President-elect Biden, for this great honor to serve our nation as chairman of the Commodities Futures Trading Commission. Subject to Senate confirmation, I am thrilled to join the great economic team the president-elect is assembling.
In these times of significant challenges, the work we do together to restore our economy and reform the financial system is of such importance. And I'm honored not only to serve as CFTC chair but to have been asked to play a senior role, along with Mary and others, to help reform our regulatory system.
The CFTC plays an essential role in our financial system, promoting and ensuring integrity of markets and protecting the public from fraud and manipulation. The trading of futures and options helps reduce risk and promote growth for farmers and in the commodities sector. It helps make mortgages and credit more available for homeowners and businesses.
On a personal note, I want to thank my three daughters, Anna, Lee and Isabel, for all their love and support. No doubt they will sacrifice much to allow me to serve and take this honor once again. I only wish that their mom, Francesca, could be here with us today. I know that she would have really been excited to meet you, sir, and the honor to see this country led by you.
Once again, I look forward to working with the president-elect and the great economic team he's assembled, in the future, helping the American people.
Tarullo: Thank you, Mr. President-elect, for the confidence you've shown in me by announcing your intent to nominate me to serve on the Board of Governors of the Federal Reserve.
As we're all aware, our country faces financial and economic challenges of a greater magnitude than we have seen for decades.
The Federal Reserve Board is, of course, the nation's central bank, with responsibility for setting monetary policy. But as you noted, it also plays key roles, in responding to the current economic situation and in financial regulation.
If confirmed by the Senate, I look forward to working with Chairman Bernanke, the other members of the board and the Open Market Committee and the outstanding staff at the Federal Reserve, in helping to steer the economy through these difficult times and in adjusting regulatory and supervisory practices, so as to maintain a stable and efficient financial system.
Obama: Okay. Let's start with Hans Nichols, Bloomberg.
Nichols: Thank you, Mr. President-elect.
Do you think it's necessary for Congress to approve the second 350-billion installment of the financial rescue package, to aid the autoworkers, before early next year?
Obama: I think it's important that the Treasury, the Fed and all of us do whatever's required to make sure that our financial system is stable and secure.
The Fed has not come -- the Treasury has not come forward with a formal request for the second part of the TARP. At the point where the Treasury comes forward, I would expect that they would provide a clear justification for why they need additional dollars and how they intend to -- to use it.
But I think that the bottom line, from my perspective, is that we cannot afford a collapse of our financial system. Main Street can't afford it. It's not just a few bankers on Wall Street that have a stake in our financial system. Obviously if small businesses and large businesses can't get credit, then we're going to have problems.
And I think that my top priority, in addition to a economic recovery plan that helps to spur demand and create new jobs; my second priority, which is reflected by this team here today, is to make sure that not only are we strengthening our financial system and the flow of credit, in the short term, but we're also creating the kind of regulatory structure that prevents the broad systemic risks that we've been seeing, over the long term.
Nichols Just a quick follow-up -- (off mike) -- would you then urge the Treasury Department to ask for that second installment?
Obama: My economic team has been in conversations with them. Obviously, they've got a lot on their plate. It's not just the financial system that they're focused on at this moment. We've still got the auto industry and how that's going to be dealt with.
I have not seen the data or been subject to all the material that they may have before them in terms of what kinds of risks might be coming up between now and the time that I take office. At the point where they give us some signal that they think this is necessary, then we would evaluate it. Okay?
Nichols: (Off mike.)
Obama: You are.
Nichols: Thank you, sir.
Obama: Okay. Peter Slevin?
Slevin: Good morning, sir. I have a question about Pastor Rick Warren. He holds a number of social views that are at odds with your own views and with those of some of your very strong supporters.
Slevin I'm wondering, what went into your decision to choose him for this prominent role as you embark on your own presidency, at a time when you're dotting every i and crossing every t, to send some important signals.
Obama: Well, let me -- let me start by talking about my own views. I think that it is no secret that I am a fierce advocate for equality for gay and lesbian Americans. It is something that I have been consistent on, and something that I contend -- intend to continue to be consistent on during my presidency.
What I've also said is that it is important for America to come together, even though we may have disagreements on certain social issues. And I would note that a couple of years ago, I was invited to Rick Warren's church to speak, despite his awareness that I held views that were entirely contrary to his when it came to gay and lesbian rights, when it came to issues like abortion. Nevertheless, I had an opportunity to speak. And that dialogue, I think, is part of what my campaign's been all about; that we're not going to agree on every single issue, but what we have to do is to be able to create an atmosphere when we -- where we can disagree without being disagreeable and then focus on those things that we hold in common as Americans.
So Rick Warren has been invited to speak. Dr. Joseph Lowery, who has deeply contrasting views to Rick Warren on a whole host of issues, is also speaking. During the course of the entire inaugural festivities, there are going to be a wide range of viewpoints that are presented. And that's how it should be, because that's what America's about. That's part of the magic of this country, is that we are diverse and noisy and opinionated. And so, you know, that's the spirit in which, you know, we have put together what I think will be a terrific inauguration. And that's, hopefully, going to be a spirit that carries over into my administration.
Where's Jessica? There you are.
Jessica: Thank you, sir. You suggest that you're outraged by the Madoff scandal. This year we also saw a meltdown on Wall Street and a crisis in the mortgage industry which both Congress and our regulatory agencies missed. So do you plan to overhaul the SEC? Was Congress asleep at the switch? And what specific steps will you take to restore the American people's confidence in the government's not just ability, but willingness to regulate the financial industry?
Obama: Well, it's a great question. We have been asleep at the switch, not just some of the regulatory agencies, but some of the congressional committees that might have been taking a look at this stuff. We have not been as aggressive, and we've had a White House that started with the premise that deregulation was always good. And so what I said during the campaign, I meant. We are going to have to greatly strengthen our regulatory apparatus and update it from what worked for a 20th century financial system so that it works in a 21st century financial system.
Now, this will be one of my earliest initiatives, and we will be releasing a very detailed plan on how we think that regulatory upgrade will take place. It's premature for me to give you all the details at this point. That's part of the reason that I've got all these experts working with me, is so that we can help design it.
I can tell you that, just in principle, for us to, for example, focus narrowly on bank regulation when huge amounts of money in the financial system are sloshing around outside of banks, that's a problem. Those are systemic risks that have to be dealt with. I know that one of the things that Mary and I have spoken about is the fact that the SEC has a role in protecting investors, but you also have the issue of how do you make sure that these financial institutions are operating in a way that encourages solvency. And sometimes those missions can be contradictory.
And so the need to potentially consolidate some of the regulatory agencies that are out there, to streamline them, to make clear who's got what mission so that things aren't falling through the cracks, those are all going to be part of the review that we do over the next several weeks. So that as part of my economic recovery plan, A, we're going to be focusing on jobs and getting businesses back on their feet; but B, we're also going to be focusing on updating the financial system; and C, we're going to be focusing on the budget to make sure that even as in the short term we deal with the potentially trillion- dollar plus deficit that we're going to be inheriting, and we are trying jump-start the economy, that we're also in the medium and long term looking at how we can get on a path of fiscal responsibility and sustainability. Okay.
[staffer]: Last question.
Obama: Where's Sylvester? Ebony? There you go. Good to see you.
[staffer]: Right here.
Ebony: I'd like to piggyback on that question. It seems that there is a crisis in confidence in -- among the American people in government, in our financial institutions. What do you plan to do in your administration to work on that?
Obama: Well, I think the American people right now are feeling frustrated that there's not a lot of adult supervision out there. Whether it's in the political world or in the financial world , there's a sense that anything's -- anything has been going on; that whatever's good for me, I do. And part of what we've tried to talk about during the course of this campaign is a restoration of a sense of responsibility; that all of us have responsibilities to operate honorably, to ensure honesty and transparency in our institutions; that we are advocating not just for ourselves but for what's good for the country; that we are operating not just out of greed but operating out of a sense of the common good.
And what I hope my administration can accomplish is through very specific actions show the American people that we are serious about the business of helping American families, putting people back to work, making sure the economy grows, making sure that some of the shenanigans that have been taking place on Wall Street no longer occur, making sure that we're changing our politics so that people have a sense of restored trust in government; that we are competent; that we do what we're -- we say we're going to do.
Now that doesn't mean that we're not going to make mistakes. It doesn't mean that there aren't going to be times where people vehemently disagree with what we do.
And you know, one of the things that I hope is that the American people will find when we make a mistake, we're willing to 'fess up to it and change. That's the kind of approach I think that people are looking for.
And we're going to work as hard as we can to restore that sense of trust in our institutions.
But I -- but government is not going to be able to do it alone. And so in the context of the financial markets, for example, there needs to be a shift in ethics on Wall Street.
And you know, we can have the best regulators in the world. But everybody from CEOs to shareholders to investors are going to have to be asking themselves, not only is this profitable, not only whether this will boost my bonus but is it right; does it conform to some higher standards, in terms of how we operate?
And that's the kind of approach that, I think, is going to -- that's what our grandparents and our parents, you know, embraced and what allowed us to create the country that we have. And it's -- now falls to us and this generation to make sure that we continue those best traditions instead of some of the worst.
Ebony: Thank you.
Obama: Okay. Thanks, guys.