US President Barack Obama has warned that more US banks are likely to fail, as the full extent of their losses in the economic crisis becomes clear. Speaking to NBC News, Mr Obama said "some banks won't make it" but stressed that people's deposits would be safe. He has asked Treasury Secretary Timothy Geithner to draw up guidelines for banks receiving taxpayers' money. Meanwhile, he warned of a "difficult next few days" as the Senate begins to debate his $800bn (£567bn) rescue plan. Taking responsibility In an interview with NBC, Mr Obama said it was likely the banks had not yet fully acknowledged the extent of their losses. "The banks, because of mismanagement, because of huge risk-taking, are now in a very vulnerable position," he said. "We can expect that we're going to have to do more to shore up the financial system."
The president, who has been critical of bank executives receiving bonuses despite taking government bail-outs, also announced there would be new rules for such banks. "If a bank or a financial institution is getting relief then they've got to abide by certain conditions," he said. The president made it clear he was taking responsibility for turning round the US economy before the next presidential election in 2012, saying he could expect only one term in office if it was not fixed in the next three years. The interview was short on details, with the president declining to comment on whether he planned to create a "bad bank" to buy toxic assets from other financial institutions. He said he did not want to pre-empt an announcement planned for next week. 'Considerable unrest' The president and Vice-President Joe Biden are due to meet congressional leaders later on Monday to encourage them to move forward on the $800bn economic stimulus package. Mr Obama said he was confident that Republicans would be able to support the final version of the legislation, although it passed in the House of Representatives without a single Republican vote.
He acknowledged that the two parties were not agreed on all aspects of the plan. "But what we can't do is let very modest differences get in the way of the overall package moving forward quickly," he said. It is unlikely that it will be able to pass the Senate without Republican support because the Democrats do not have the majority that they would need to vote down any potential delaying tactics. As debating began in the Senate, leader of the Republicans in the chamber, Mitch McConnell, signalled his intention to oppose the bill - saying that even members of Mr Obama's own party were not happy with the proposals. "There is considerable Democratic senatorial unrest about this package," he said. "I think there is a bipartisan feeling that this is not the way to get the economy moving. And hopefully we'll see that exhibited on various amendments where we may have some bipartisan success in modifying the bill." The Democrat leader in the Senate, Harry Reid, said he hoped the measures would be approved by the end of the week. Gloomy figures Mr Obama's comments came as fresh official data indicated the problems facing the wider US economy show no signs of lessening. The Treasury Department announced it would need to borrow $493bn in the first three months of this year. The figure is a record amount for the January-March period, but is smaller than the $569bn the government borrowed from October to December last year - which was the all-time high for any quarter. US consumer spending fell for a sixth consecutive month in December, according to the Commerce Department. Although the decline was expected, the 1% drop was worse than the 0.9% contraction predicted by analysts. Meanwhile, construction spending fell for a third month in a row in December, dropping 1.4%. | |||||
Monday, February 2, 2009
Obama predicts more bank failures
Senate confirms Holder as first black AG
WASHINGTON – Eric Holder won Senate confirmation Monday as the nation's first African-American attorney general, after supporters from both parties touted his dream resume and easily overcame Republican concerns over his commitment to fight terrorism and his unwillingness to back the right to keep and bear arms.
The vote was 75-21, with all the opposition coming from Republicans.
Holder's chief supporter, Sen. Patrick Leahy, said the confirmation was a fulfillment of civil rights leader Martin Luther King's dream that everyone would be judged by the content of their character.
"Come on the right side of history," said Leahy, D-Vt., chairman of the Judiciary Committee.
Holder becomes the only black in the Obama administration in what has traditionally been known as the president's Cabinet. Three other African-Americans have been chosen for top administration positions that hold the same rank.
Holder was a federal prosecutor, judge and the No. 2 Justice Department official in the Clinton administration. Even his critics agreed that Holder was well-qualified, but they questioned his positions and independence
Holder was a federal prosecutor, judge and the No. 2 Justice Department official in the Clinton administration. Even his critics agreed that Holder was well-qualified, but they questioned his positions and independence.
The debate turned partisan in its first moments, when Leahy, expressed anger that a few Republicans demanded a pledge from Holder that he wouldn't prosecute intelligence agents who participated in harsh interrogations.
Leahy singled out Texas Republican John Cornyn as one who wanted to "turn a blind eye to possible lawbreaking before investigating whether it occurred."
"No one should be seeking to trade a vote for such a pledge," Leahy said.
When Cornyn rose to announce his vote against Holder, he did not make such a demand. However, he accused the nominee of changing his once-supportive position — on the need to detain terrorism suspects without all the rights of the Geneva Convention — to one of harshly criticizing Bush administration's counterterrorism policies.
"His contrasting positions from 2002 to 2008 make me wonder if this is the same person," Cornyn said. "It makes me wonder what he truly believes."
Cornyn and Sen. Tom Coburn said Holder was hostile to the right of individuals to own guns, despite a Supreme Court ruling last June affirming the right to have weapons for self-defense in the home.
Holder said at his confirmation hearings: "I understand that the Supreme Court has spoken." But he added that some restrictions on guns could still be legal.
Holder's confirmation will trigger reviews — and changes — to the most controversial Bush administration policies, from interrogation tactics to terrorism trials and warrantless surveillance.
Those are some of the known issues. Even Holder doesn't know what he'll find when he looks at secret memos in the Justice Department Office of Legal Counsel.
Holder also will have to rehabilitate a department that under President George W. Bush was criticized for injecting politics in hiring career officials and firings of U.S. attorneys. He'll have to decide whether to prosecute Justice Department officials who may have violated the law in some of those policies and tactics.
Holder also could reverse Bush's orders to former aides not to testify before Congress on their private discussions on the U.S. attorney firings.
To the satisfaction of Democrats and consternation of some Republicans, Holder told his confirmation hearing, "Waterboarding is torture." The statement about an interrogation technique that simulates drowning was an important signal of a policy change from Bush's view that the tactic was legal and not torture.
Obama issued an executive order to close the U.S. detention center at Guantanamo Bay, Cuba, within a year. He also created a special task force, co-chaired by the attorney general and the secretary of defense, to review detainee policy going forward. The group will consider policy options for apprehension, detention, trial, transfer or release of detainees and report to the president within 180 days.
One of Holder's most intriguing missions will be to review the Office of Legal Counsel, whose lawyers justified the use of controversial interrogation tactics and viewed themselves as attorneys for the White House.
The Justice Department's inspector general, in a report on the removal of nine U.S. attorneys, said the legal counsel's office — in effect — thumbed its nose at department internal investigators and refused to provide a crucial document. The office stated the White House counsel's office directed it not to provide the information.
Holder also said he would review why career prosecutors in Washington decided not to prosecute the former head of the department's Civil Rights Division.
An inspector general's report last month found that Bradley Schlozman, the former head of the division, misled lawmakers about whether he politicized hiring decisions.
The three former top aides to Bush — Karl Rove, Harriet Miers and Josh Bolten — have declined to testify about the U.S. attorney firings on orders from Bush while he still was in office. Rove and Miers at the time were former aides, raising the question of whether White House aides no longer in government could be compelled to testify.
If Obama reverses Bush's policy, it would create a new legal issue: whether a former president's order against testifying would still be valid.
Holder also will likely review civil liberties issues including warrantless surveillance, and he has said he will re-examine a ruling by former Attorney General Michael Mukasey that immigrants facing deportation do not have a right to government-provided lawyers.
Obama reaches out to Muslim world
President Obama speaking to Al-Arabiya about Iran
US President Barack Obama has used his first formal TV interview since taking office to reach out to the Muslim world - saying Americans are not its enemy.
Speaking to the Dubai-based Al-Arabiya network, Mr Obama reiterated that the US would extend the hand of friendship to Iran if it "unclenched its fist".
It comes as his Middle East envoy, George Mitchell, travels to the region, heralding a new burst of diplomacy.
He will meet Egypt's leader to discuss the Gaza ceasefire and peace efforts.
Egypt has been mediating between Israel and the Palestinians, and between rival Palestinian factions Hamas and Fatah.
Mr Obama told Al-Arabiya that the US sometimes made mistakes and stressed that his administration would adopt a more open diplomatic approach.
 |   This interview is a big deal... It will confuse some in the Middle East even further  BBC North America editor Justin Webb  |
"It is very important for us to make sure that we are using all the tools of US power, including diplomacy, in our relationship with Iran."
On Middle East peace, Mr Obama reiterated his administration's support for Israel and its security but also suggested Israelis would have to make some tough choices.
"Ultimately we cannot tell either the Israelis or the Palestinians what is best for them. They are going to have to make some decisions," he said.
"But I do believe the moment is ripe for both sides to realise that the path that they are on is one that is not going to result in prosperity and security for their people. And that instead, it's time to return to the negotiating table."
Asked about verbal attacks made on him in recent videos released by al-Qaeda, Mr Obama responded: "What that tells me is that their ideas are bankrupt."
The BBC's Justin Webb in Washington says that for most of the interview, Mr Obama appeared determined to be emollient and - as he put it repeatedly - respectful, stressing that the US would begin by listening rather than dictating.
Diplomatic moves
As well as meeting Egyptian President Hosni Mubarak, Mr Mitchell is to visit Israel, the West Bank, Jordan, Turkey and Saudi Arabia during a week-long tour, as well as making stops in Europe, said state department spokesman Robert Wood.
| CONFLICT IN FIGURES More than 1,300 Palestinians killed Thirteen Israelis killed More than 4,000 buildings destroyed in Gaza, more than 20,000 severely damaged 50,000 Gazans homeless and 400,000 without running water |
He said Mr Mitchell would meet "senior officials to discuss the peace process and the situation in Gaza".
Speaking earlier at the White House, Mr Obama said the new envoy would take an active approach.
"The charge that Senator Mitchell has is to engage vigorously and consistently in order for us to achieve genuine progress," he said.
"And when I say progress, not just photo ops but progress that is concrete."
It remained unclear whether Mr Mitchell would travel to the Gaza Strip.
Humanitarian crisis
Separately, EU foreign policy chief Javier Solana said he was heading to the Middle East to join efforts to cement a permanent ceasefire.
 Aid agencies have called for crossings to open so more aid can reach Gaza |
He called the destruction left by Israel's offensive "abominable", but said Hamas bore "overwhelming responsibility".
About 1,300 Palestinians, including 400 children, were killed in Israel's 22-day assault, while 13 Israelis died, some as a result of Palestinian militant rocket fire.
Israeli and Palestinian faction representatives have visited Cairo for talks with Egyptian officials since a non-negotiated ceasefire came into effect on 18 January.
Hamas wants an end to Israel's punishing blockade of Gaza.
Israel, which will hold a general elections on 10 February, wants a long-term ceasefire and curbs on Hamas re-arming.