Obama Town Hall: A lesson on banking and how AIG is like a suicide bomber
We grant you that the whole AIG bailout and bonus debacle -- the credit default swap mess, the mortgage-backed securities swamp -- are very difficult concepts to grasp in detail. Which is why we hope in the future that when President Obama gets a notion to explain them to folks in town hall meetings, he polishes his spiel.
Or maybe a nice PowerPoint presentation would help.
We were with him when he began by saying, "Let me talk about the larger issue -- banks -- for just a second. I am so frustrated with this banking situation."
Then, he went pretty wonky about over-leveraging and the weakened housing market and we just thought, OK, fine, let's see if he can describe the mess in a way that makes sense and doesn't make people want to go to sleep. Our on-the-scene colleague, Tony Barboza, reports that people sat still, listened and fanned themselves with paper. No one but us fell to the floor in a swoon.
Obama tried to localize the issue and summed up the reason the Feds had to step in to save the banks.
"If you just got one small bank, take the community bank -- what was the name of your community bank?" he asked the woman who had posed a question earlier. "If Fullerton Community Bank fails, we've got something called the FDIC -- the Federal Deposit Insurance Corp. -- that would take it over, guarantee the deposits and it would be able to kind of sort things out and sell the bank fairly quickly and it doesn't threaten the system as a whole.
"When you've got big big banks -- Citicorp or Bank of America or Wells Fargo -- that control 70% of the banking system and all of them are weakening, you can't afford to have all those banks going under, even though the deposits might be guaranteed. We had to step in, it was the right thing to do, even though it's infuriating. ..."
Well, OK, that all made sense, but then he compared AIG to a suicide bomber, and at that, we really perked up.
"Same thing with AIG," Obama said. "It was the right thing to do to step in. Like they've got a bomb strapped to them and they've got their hand on the trigger, you don't want them to blow up, but you've got to ease them off the trigger."
And the president held out his arm and pantomimed a hand on a trigger, and we were rapt, waiting for what would happen next.
But then he called for a final question from the crowd.
-- Robin Abcarian
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Photo: David McNew / Getty Images