On Tuesday’s CBS Early Show co-host Harry Smith talked to White House Press Secretary Robert Gibbs about Monday’s stock market rally and wondered: "What was the reaction at the White House yesterday when the stock market closed?...There's been a lot of heat, though, aimed at the White House, aimed at the Treasury Secretary. Was there some degree of vindication?"
Gibbs claimed that the administration does not pay attention to daily stock numbers, but Smith replied: "You have to admit, it's a pretty good day, though, when the stock market goes up 500 points and the AIG executives, at least more than a dozen of them, say ‘we're going to give our money back.’" After Smith’s pressing, Gibbs admitted: "Well, look, Harry. I'll take 500 points and that kind of news any day of the week."
An earlier report by Bloomberg TV anchor Deirdre Bolton credited the White House banking plan for the stock surge: "...yesterday the Dow soared to 6.5%, that was the biggest gain since October. The Obama administration finally giving some -- Wall Street some details on how the bad banks' assets can be treated. Treasury Secretary Tim Geithner put together a plan that some say is the best of both worlds to deal with toxic assets."
Bolton cited chief economist of Global Insight, Nariman Behravesh, who declared Geither’s plan: "...was the missing link. And it's now in place." She also cited Mark Zandi of moody’seconomy.com, who claimed: "It's great. It feels good. And obviously reflects investors' enthusiasm with respect to the plan the administration put forward to help the banking system." Behravesh later added: "I think the proof of the pudding will be in the eating, but nevertheless, I think they came through with a credible, specific plan. So this is very good news for the administration, for Geithner."
Here is the full transcript of the segment:
JULIE CHEN: Wall Street's almost 500-point day in response to the Obama administration's plan to buy up bad assets. But as the President prepares to address the nation tonight, can the rally be sustained, and is it time to jump in? Here today, gone tomorrow. AIG execs give back nearly $50 million in bonuses as the company takes its name off its New York headquarters. So what will happen to the rest of the money?
MAGGIE RODRIGUEZ: But first this morning, it was a monster rally on Wall Street yesterday. Now the big question, will it last? Deirdre Bolton of Bloomberg TV is at the New York Stock Exchange. Deirdre, it's been going strong for a while, so hopefully.
DEIRDRE BOLTON: Hopefully, Maggie, is right. As you just alluded to, yesterday the Dow soared to 6.5%, that was the biggest gain since October. The Obama administration finally giving some -- Wall Street some details on how the bad banks' assets can be treated. Treasury Secretary Tim Geithner put together a plan that some say is the best of both worlds to deal with toxic assets.
TIM GEITHNER: Use public capital to bring in private capital with some government financing to provide a market for these assets.
BOLTON: The program will help take $1 trillion worth of sour securities off banks' balance sheets. The idea is to do so without using more taxpayer money and without nationalizing the banks.
NARIMAN BEHRAVESH: This was the missing link. And it's now in place.
BOLTON: The Dow Jones soared into the triple digits and logged its fifth largest point gain ever.
MARK ZANDI: It's great. It feels good. And obviously reflects investors' enthusiasm with respect to the plan the administration put forward to help the banking system.
BOLTON: Bank stocks rallied on the news, Citigroup up more than 19%, Bank of America, 26%, JP Morgan Chase, 24%, and Wells Fargo, 23%. The execution of this plan is a big test for the Treasury Secretary.
BEHRAVESH: I think the proof of the pudding will be in the eating, but nevertheless, I think they came through with a credible, specific plan. So this is very good news for the administration, for Geithner.
BOLTON: And the President does, Harry, continue to give his full public support to the Treasury Secretary. As you know, he has been in the hot seat. Back to you.
HARRY SMITH: Deirdre Bolton at the New York Stock Exchange, thanks. Looks like the outrage at those bailout bonuses for AIG worked. The government will be getting some of that money back. CBS News senior White House correspondent Bill Plante joins us now with more on that. Good morning, Bill.
BILL PLANTE: Good morning, Harry. The projection is that as much as half of it, about $80 billion, could be returned. But despite all of the anger that you heard here in Washington, it wasn't Congress or Washington that got the money returned.
BARACK OBAMA: People are rightly outraged about these particular bonuses.
PLANTE: President Obama led the populist charge when the public learned that executives at insurance giant AIG received $165 million in bonuses. Despite getting more than $170 billion in federal bailout funds. The anger was evident in a new CBS News poll, which shows 77% of Americans wanted the government to get the bonus money back. The House passed a bill last week that would levy a 90% tax on bonuses over $250,000 for any company receiving more than $5 million from the Fed. But now, as the bill heads to the Senate, there's been a change in tone from President Obama and a word of caution from the Senate.
MITCH MCCONNELL: And we ought to think about the ramifications of what we're doing.
PLANTE: And now that New York Attorney General Cuomo has gotten 15 of the top 20 AIG bonus earners to return the money-
CRAIG GORDON: I would not be surprised if that bill slowed down dramatically in light of both Obama's resistance to it and some of this talk that Andrew Cuomo got the money back from AIG.
PLANTE: And, in fact, the Senate is delaying the bill for maybe six weeks. It's probably dead. And what about getting the rest of that money back? What are the chances? Well, not very good. Because a lot of the remaining money went overseas. No reach, no jurisdiction. Harry.
SMITH: Bill Plante at the White House this morning, thanks. And President Obama will give a news conference tonight at 8:00PM Eastern. You can watch it right here on CBS. Joining us now, White House Press Secretary Robert Gibbs. Good morning, Mr. Gibbs.
ROBERT GIBBS: Good morning, Harry. How are you?
SMITH: What was the reaction at the White House yesterday when the stock market closed?
GIBBS: Well, look, obviously, we're pleased with what happened in the market yesterday, but Harry, we don't spend a lot of time worrying or looking at what happens each day in the market. Instead, the President wants to feel confident and give the American people confidence that what we're putting in place will bring our economy back long term, create jobs, and lay a path towards prosperity again.
SMITH: There's been a lot of heat, though, aimed at the White House, aimed at the Treasury Secretary. Was there some degree of vindication?
GIBBS: Well, look, Harry. I think we're not going to be judged by what happens yesterday or today in the market, but a year or two from now where people feel like they have a stable job, whether their income is growing, whether they can get a loan to buy a house or a car or send their child to school. I think what the American people are focused on more is this long-term recovery. We don't want to go from bust to -- to bubble to bust economic growth anymore. I think the American people want to get back to sustained, long-term economic growth that provides them a good quality of life and a stable job, and that's what the President's focused on.
SMITH: You have to admit, it's a pretty good day, though, when the stock market goes up 500 points and the AIG executives, at least more than a dozen of them, say 'we're going to give our money back.'
GIBBS: Well, look, Harry. I'll take 500 points and that kind of news any day of the week.
SMITH: Alright. Let's talk some more about the economy, though, because there are still grumblings from the private sector about this idea of controls on executive compensation. How far does the White House want to go with this?
GIBBS: Well, look, Harry. The White House outlined in February -- the President created a plan, it was the strongest plan that had ever been put forward to ensure that executive compensation and bonuses don't get out of whack and out of line. Look, everyone in this country understands rewarding success. But, obviously, excessive executive compensation has unfortunately become the norm, and it's understandable that people get upset about it. What we need to do is have some rationality in that system, understand that we're all in this together, that we all have to give a little. And with that, we can stabilize our economy.
SMITH: Robert Gibbs, we thank you so much for your time this morning. Do appreciate it, sir.
GIBBS: Thanks, Harry.