A gamut of reforms for Obama team
Lawrence Summers, former Treasury Secretary of the United States.
TEXT OF INTERVIEW
Steve Chiotakis: President Obama is getting together with his economic team
today at The White House to talk about the fallout. And what still needs to be done to reverse it. Let's bring in Marketplace's Steve Henn to talk about this meeting. Steve, good morning -- what's on the agenda?
Steve Henn: Well, most of the president's big economic advisers are going to be there -- Larry Summers, the Treasury Secretary Tim Geithner, the Fed Chairman Ben Bernanke, as well as the nation's top bank regulators, Sheila Beir, and the controller of the currency, John Dugan. So what they're going to be talking about really it sounds like it will run the gamut of all of the administration's reform initiatives thus far. They're going to review their efforts to stabilize the housing market, they're going to talk about efforts to clean up bank balance sheets and provide banks with enough capital to weather this financial storm. And of course, one of the big pending pieces of business out there that the markets are really waiting for is any word on how the nation's biggest banks are fairing with these so-called stress tests that are going on right now.
Chiotakis: So let's talk a little bit about those tests, then. What's the end game there?
Henn: Well you know, when these tests were initially designed, they were set up in many ways as a test that banks really couldn't fail. So what regulators are trying to get a sense of is how well-positioned the country's major financial institutions are to withstand a big economic storm. So they're looking at how their assets would fair if unemployment rose above 10 percent or if housing values fell another 25 percent. And the idea is that if banks show signs of real distress in that environment that regulators are going to ask them to go to the private markets and raise more money, probably through issuing new stock. And if they can't do that than the government has said that taxpayers will come back and invest in these institutions again. You know, it's a delicate issue -- they don't want to sort of tar any bank with a black brush and say, "this bank is doomed," but they want to make sure that if the economy continues to sour that all these big banks have the resources they need to get through the storm.
Chiotakis: All right. Marketplace's Steve Henn joining us from Washington. Steve, thanks.
Henn: Sure thing.