(Archived Content)
TG-866
As Prepared for Delivery
Good morning. Thank you all for joining us.
A few hours ago Herb Allison announced his intention to step down as head of OFS. And as we look for a new Assistant Secretary, Tim Massad will be taking over as acting head.
This morning, I wanted to gather everyone to express my deepest gratitude to Herb and to OFS. Today, I'm going to do something that is unfortunately a rare thing in Washington: I'm going to praise and celebrate the work that OFS – and TARP – have done to stabilize the financial system.
Now, in doing so, I want to first recognize that while we have succeeded in putting out the financial fires that caused this deep economic crisis, we have not yet repaired all the damage.
This recession cost us dearly – millions of lost jobs, trillions in lost savings, thousands of failed businesses, homes foreclosed, retirements delayed, educations deferred. Across the country, families are still hurting. And it's going to take time for us to get everyone back on their feet.
We are headed in the right direction. Our economy is healing, it's growing, and it's gaining private sector jobs. But I want people to know that as we celebrate your accomplishments, we do so mindful that there is still a lot of work to do and a great many challenges still to meet.
Now, to Herb.
Why Herb took this job is beyond me. Here's one of America's great executives; someone who started his career at Merrill Lynch as an associate in investment banking; and who over 28 years eventually rose to become its President.
After Merrill Lynch, Herb became Chairman and CEO of TIAA-CREF, the leading provider of retirement and asset management services in the educational, medical and cultural fields.
Now, for most people, a record like that would have been enough. No one would have faulted Herb for heading to the beach and enjoying some down time. And – to his credit – that's what he did. He went to a beach on the Virgin Islands to finally get away, to finally get a break. But while there, in the fall of 2008, Herb got a call. It's a call immortalized in the book ` Too Big To Fail.'
On the phone was Ken Wilson, who was here at Treasury. Ken wanted to know if Herb would become the new CEO of Fannie Mae, which was about to go into government conservatorship.
This was Herbs reply: Look, Ken. I would like to. For reasons of public service, I'm interested in this job. I want to help you guys and so you have to let me know what to do. I don't have any clothes. All I have is shorts and flip-flops.
Always the negotiator, I think Ken ended up having to help Herb get a more Washington appropriate wardrobe as part of the deal.
But to know Herb is to not be surprised at his response.
Herb's career began in the US Navy, serving four years, including one in Vietnam. And it was that same sense of service, that same sense of duty that brought Herb to Fannie Mae and then to OFS.
In both places he has made a real and lasting difference.
The fact that TARP is now regarded by many experts as one of the most effective emergency programs in financial history is a direct result of Herb's leadership and all of your hard work.
This is not just our program to eulogize. The Bush Administration started the job. We finished it.
And stabilizing the financial system is not just our success to tout. TARP would not have worked without the creativity and force displayed by the Federal Reserve and the FDIC. But it's equally true that their actions would not have worked without TARP and OFS.
OFS was absolutely instrumental in keeping our nation out of a second Great Depression. That is a major achievement.
Two years ago when Congress created this office – and TARP – it did so reluctantly. At the time, the Emergency Economic Stabilization Act was called un-American, financial socialism and a deliberate path away from free market principles. One Congresswoman even said, I don't think it is too much of a stretch to say this may be the day America died.
So you didn't start off with the country entirely behind you. That was understandable. Americans were rightfully angry that the same financial firms that helped create this deep economic mess were getting taxpayer support to keep their doors open.
It wasn't fair. But it was necessary. And you all knew that.
You knew that financial crises were about tough choices. You knew that the right thing to do was unfortunately the unpopular thing to do. And you knew that even if you did the job well – even if you did it perfectly – Americans would still hate the fact that you ever had to do the job at all.
Now, a skeptical public was nothing compared to the actual task at hand.
Two years ago the financial system was falling apart.
The banks and financial institutions that Americans rely on to protect their savings, help finance their children's education, and help pay their bills were at risk in ways few had ever experienced.
The institutions and the markets that businesses rely on to make payroll, build inventories, fund new investments, and create new jobs were threatened like at no time since the Great Depression.
Across the country, Americans were starting to question the safety of their money in our nation's banks, and a growing sense of panic was producing the classic signs of a generalized run.
In that moment, this office was handed a task without precedent.
You were told to stabilize the financial system.
And in the middle of the worst financial panic since the Great Depression; on the eve of a Presidential election; through a transition from one party to the other; and during the first six months of a new Administration; you put in place an incredibly effective – creative – set of programs completely from scratch.
While TARP became a four letter word; while politicians decried its existence and doubted its effectiveness; you kept at it, working tirelessly to recapitalize the banking system and restart the basic lending markets critical to economic activity.
And I want you to know this: President Obama stood with you throughout that period. He made sure that the country had the ability to act even though he knew it would be deeply difficult politically.
Now, TARP was not perfect. But it has delivered in ways few could ever have imagined.
It's not just that people are confident today that their money is safe in banks; it's not just that household wealth is much higher than when the President came into office; it's that the cost of borrowing for businesses and municipal governments has come down significantly; it's that families can again buy a new home or car at low rates and put their kids through college.
We are going to largely get the taxpayers money back. The fear was that TARP would cost all $700 billion. The CBO now estimates TARP will end up costing us less than a tenth of that - $66 billion. And taxpayer returns already total $225 billion in revenue from TARP investments.
That is a striking number and it is testament to you and your hard work.
You were not just creative in maximizing the chance that we could use private capital – not taxpayer funds – to solve this problem. You were careful custodians of the taxpayer's interests. You got high returns. You put extremely rigorous careful compliance programs in place. You earned an unqualified opinion on financial statements from the GAO.
And – to make Herb truly proud – you were some really tough negotiators.
We will leave the financial system much stronger than when we came in. The weakest parts no longer exist. The firms that survived were able to raise capital on their own. They met a market test for solvency. And the financial system is much stronger today with higher levels of capital than before the crisis and more capital relative to global competitors.
Now, as you were achieving all that, you had the great benefit and pleasure of receiving advice from all sorts of people, from all walks of life, and, I think from all corners of the world.
You got advice from academics, from politicians, from journalists, from people often not burdened with the knowledge or experience about what it takes to solve a financial crisis.
I know that experience was not always pleasant but it is an essential part of governing and you should take pride in the fact that you did what was necessary and what was right.
And as TARP comes to its end, the skeptics are coming around.
Over the past few weeks national commentators have said that TARP was a heroic move, one of the most unfairly maligned policy initiatives of all time, and a success none dare mention.
So let me express my deepest gratitude to all of you, for unprecedented service to your nation.
Now, I want to close with this thought.
TARP is about to end. It will soon be completely behind us. That's a good thing. And I know across the country Americans will rejoice in its demise. That's understandable. TARP was something our country should never have had to do. And we've made sure it won't happen again through financial reform. But for all the baggage, there is something to embrace about TARP.
When TARP was created, the world around us was falling apart.
And in that moment; when our financial system was on the verge of collapse; when families and businesses were worried like never before about their basic economic security; leaders from both parties stood up, stood together, and, as Americans, did what was best for the country.
President Bush, Secretary Paulson and Neel Kashkari deserve enormous credit for the steps they took in the fall of 2008. They were courageous. They did what was absolutely necessary.
And they had the full support of Republican leaders in Congress. Remember, ESSA - the legislation that made all of this all possible – was championed by Senator McConnell and Representative Boehner.
I know many people who were for it at the time decided politically they had to be against it.
But I have no doubt that, over time, when they step back and look at the results, they will be proud of what they did. Now, I hope that happens sooner rather than later.
Right now, we need bi-partisan action to help reinforce this recovery; to help support small businesses; and to extend the tax cut for America's middle class.
And just as we saw in 2008, we need the other side to step up and do right by the American people.
It shouldn't take a once-in-a-generation crisis to spur bi-partisan action. Washington can and must do better. In the coming days I hope it will. The American people expect –and deserve – nothing less.
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