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Q Dana, on Fannie Mae and Freddie Mac, you've outlined the risk to taxpayers and the economy if these companies were to fail. But what about the risk to taxpayers now that the government has taken them over and assumed that debt? Is that a risk that the White House is concerned about?
MS. PERINO: President Bush thinks that the move that Secretary Paulson worked on is the right move at the right time. And this is not action that we wanted to take, it's action that we needed to take. The goal is to prevent additional risk to the taxpayers, and in this plan Secretary Paulson has moved forward to make sure that the taxpayers would be paid back first. If you're a shareholder or you're top management of these companies today, it's not a very bright day for you. And taxpayer money will be safeguarded to the greatest extent possible.
Secretary Paulson and others made the determination in working through the options, and then finally talking with the President, that this was the best way to prevent a broader financial problem for our capital markets here in the United States, but also globally.
Q And just to follow up on that, about the administration not being anxious to take that step, why is that? Could you flesh out a little bit more what the concern is or why this is a step that the administration was hesitant to take?
MS. PERINO: Well, going back years, this administration has advocated for reforms of Fannie Mae and Freddie Mac. Congress has been reluctant to move forward on those for many years, and in fact, didn't even take it real seriously until this crisis emerged -- and we finally got some of that legislation I think in early August or late July.
The reason that we're -- we didn't want to have to take this action is we prefer for Congress to take care of its own business. Remember, these are congressionally chartered companies, and it's appropriate that Congress have a role in saying how they're going to move forward in the future. And that's why Congress will have a chance when they get back over this next period and also into the next administration to decide how to move forward with them.
Q Dana, could you expand a bit, in terms of the President's sort of philosophical underpinning -- this is not exactly limited government, this takeover. So how concerned was he -- just in terms of conservative political ideology, how concerned was he about doing something that seems to be sort of the opposite of all of that?
MS. PERINO: Well, it's again -- President Bush initiated a call years ago to try to reform this system because he did not want the status quo to continue. Unfortunately, Congress didn't act on that. And the systemic risk that was posed by Fannie Mae and Freddie Mac to our entire economy was one that the President felt it was more important to deal with now, and start to work on now, so that the next administration would be able to work with the Congress and figure out a way to make sure that this would not be allowed to happen again. And so far, cooperation with Congress since this announcement has been very good.
Q But, I mean, I imagine it's -- there are -- does this mark a change in the President's thinking, in terms of there are times where you do need big government action and intervention?
MS. PERINO: Remember, these are congressionally chartered companies, so the government is involved in these companies whether we've liked it or not.
Q There's a difference between charger and take over.
MS. PERINO: It became clear that these companies were not going to be able to continue to function the way that they were, and that the whole system was at risk -- not only here in our country, but also affecting global markets. And so given that they were already part of a quasi-federal government agency, it's only appropriate that the President take this action. And Secretary Paulson, he believes, came up with the right mix with this conservatorship -- which I'm not an expert in, but Secretary Paulson has spoken about it today.
Q Was there ever -- or to what degree were you hearing, was the White House hearing from opponents of the idea? How much push back was there about doing something like a big takeover?
MS. PERINO: As I said, I think that the cooperation we've had from members of Congress and from the companies, themselves, is emblematic of the fact that people recognized that the status quo was not going to suffice anymore.
And the turmoil that would have resulted from a failure of these two companies would have directly impacted households everywhere -- household wealth, our buying power, our ability to save for college or our savings for retirement, ability to get loans -- not just home loans, but auto loans -- everything that makes our economy work. So the President thought it was absolutely appropriate that we move forward. And as I said, the cooperation so far has been very good.
Q It's up to about $200 billion that's being guaranteed by this. What's the expectation of the administration about how much will -- how much taxpayer money will actually have to -- you'll actually have to come up with to help secure these companies?
MS. PERINO: I'll refer you to Secretary Paulson, who said this morning that -- he said it would be as little as possible, and I think the initial request was for $5 billion, but up to $200 billion. He said he doesn't know yet what that would ultimately be. But what he does know is that as soon as these companies start to turn around, it is the taxpayers who will be paid back first, not the shareholders.
Q And the money, however much it ends up being, is just going to be borrowed or is there another way to --
MS. PERINO: I'll refer you to Treasury for details; I don't know.
Q And what happened -- about six weeks ago, toward late July you said that there was not an expectation that you would have to do this. What happened in the interim that made it necessary for this to occur?
MS. PERINO: I think -- I would refer you to Treasury for details as to what they were looking at. But remember, we asked for a strong regulator who would go in and be able to look at the books in a full, transparent way. And over the past several weeks it became clear that they were not going to be able to continue to function and that this action was necessary.
Go ahead, Sheryl.
Q Just sort of following on Jim's question, you talked about the next administration would determine what the appropriate role is for these companies. Was the President uncomfortable at the outset with even the idea of these as quasi-governmental agencies? Is there a philosophical uneasiness with having the government play even a limited role? And I'm wondering is this kind of a bitter pill for him to have to swallow, that now the government has to take over the whole thing?
MS. PERINO: Well, look, he didn't create government-sponsored entities, these were -- he inherited them.
Q Right. Was he uneasy with that?
MS. PERINO: Well, he was uneasy with the whole system, which is why in 2002, I think it was, that he first recommended wholesale changes of GSEs -- Fannie Mae and Freddie Mac -- because he fundamentally thought that it didn't work.
But it's not something he invented, and so he was trying to work best with the Congress to figure out a way to reform it so that we wouldn't have to take such actions. As I said, this is not action that we wanted to take, it was action that Secretary Paulson and others, working with the President, determined that we needed to take.
So I would refer you back to what he had -- years ago he and members of his administration thought that we needed to make some changes. We do believe that the best way for this to move forward is to have Congress look at how they really want to be involved in the future. This was allowed to get out of control. And President Bush believes that however Fannie Mae and Freddie Mac are addressed by either this Congress or the next administration, it is crucial that they not be set up in the same way as they were before.
Q Can you talk to us about some of the steps the President took since 2002, other than simply saying he wanted Congress to reform, to actually --
MS. PERINO: We proposed legislation -- we proposed legislation. We tried to move forward. I mean, there's lots of different ways, but there's only so much in our system that an executive branch can do when these are congressionally chartered agencies. You have to have congressional buy-in, you have congressional action.
And just the intrinsic nature of the way that the housing industry was woven into the fabric of inside the beltway was hard to break loose. But I think that, going to Jim's question, as you said, the fact that we have had good cooperation since this announcement was made, I think is symbolic of the fact that everyone releases that this was not a game that could continue to be played. And it had to be changed fundamentally.
