Published February 26, 2009

Obama's balancing act

He acknowledges anger over banks but explains that he must help them

By LEON HADAR
IN WASHINGTON

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ADDRESSING a joint meeting of the US Congress on Tuesday night, President Barack Obama intriguingly left his options on Citigroup and Bank of America open - saying that the government would do whatever was necessary to make sure that the banks had 'enough confidence and enough money' to keep lending.

Mr Obama: Helping banks right now is an unpopular move, but 'in times of crisis, we cannot afford to govern out of anger, or yield to the politics of the moment'

He said his administration would 'assure the continuity of a strong viable institution that can serve our people and our economy'.

Some saw this as preparing the ground for greater government involvement in the banking sector at a time when part-nationalisation has been mentioned as an option.

'I know how unpopular it is to be seen as helping banks right now, especially when everyone is suffering in part from their bad decisions. I promise you - I get it,' he said. 'But I also know that in times of crisis, we cannot afford to govern out of anger, or yield to the politics of the moment.'

The president struck a more optimistic tone than in recent addresses, balancing a sense of realism about the difficult economic challenges with assurances about the ability of Americans and their government to start bringing an end to the recession and to emerge stronger from it.

'I refuse to let that happen,' Mr Obama said about the prospect of the American economy heading into a long and painful recession, calling on Congress to invest in green industries, in reforming the healthcare system and improving education as part of a long-term strategy that will ensure a sustained recovery.

Mr Obama's nationally televised speech was watched by millions of Americans, most of whom rated the condition of the US economy as 'very bad' and were concerned that someone in their household could lose his or her job in the next year, according to a recent CBS News- New York Times survey.

But according to the same poll, most Americans remained confident about President Obama's leadership, including his ambitious and costly economic agenda as he presses forward new spending plans aimed at reviving the ailing economy and fixing the troubled financial system.

Going on the offensive in selling his economic strategy to Congress and the American people, Mr Obama had to engage in several balancing acts during his Tuesday address. He needed to sound upbeat and express optimism about America's economic future, while at the same time he had to be frank with Americans about the bad state of the economy and call on them to make personal sacrifices as they take the road towards economic recovery,

'You don't need to hear another list of statistics to know that our economy is in crisis, because you live it every day,' he said. 'But while our economy may be weakened and our confidence shaken, though we are living through difficult and uncertain times, tonight I want every American to know this: we will rebuild, we will recover, and the United States of America will emerge stronger than before.'

Mr Obama also had to convince Americans who were furious about the greed and irresponsible conduct of US financial institutions and the auto industry that he shared their sentiments and that he would embrace new regulations to ensure that Wall Street will play by the rules in the future.

But at the same time, he had to explain why the American people needed to inject more taxpayer money into the shares of losing Wall Street institutions like Citigroup and Bank of America as well as help revive Detroit's failing auto companies, that the prosperity in Main Street depends very much on a vigorous Wall Street

'My job - our job - is to solve the problem,' he said, adding: 'It's not about helping banks - it's about helping people.'

While President Obama in his address called on Americans to support efforts to shore up the financial system, Federal Reserve Board chairman Ben Bernanke in an appearance before Congress on Tuesday said the administration was on the right track with its plan to revive the ailing banks. 'So I think if it is well executed and forcefully executed, it is our best hope of stabilising the system,' he stressed. Mr Bernanke and other administration officials also reiterated on Tuesday that they were not planning to nationalise America's major banks.