President Barack Obama said he believes systemic risks are still to be found in the financial system as he discussed an upcoming plan to be issued by his administration to take “toxic assets” off the balance sheets of financial companies in an interview.
Interviewer Steve Kroft, of the ’60 minutes’ CBS news program, asked the President believed there was still systemic risk in the financial system. He asked if the system could implode if there was a big failure at American International Group, or Citigroup.
“Yes,” the President said on the program, which aired Sunday evening.
Citibank? Kroft asked.
I think that systemic risks are still out there. And if we did nothing you could still have some big problems, Obama said.
There are certain institutions that are so big that if they fail, they bring a lot of other financial institutions down with them. And if all those financial institutions fail all at the same time, then you could see an even more destructive recession and potentially depression, he said. I'm optimistic about that not happening.
On Monday, the Obama administration is set to unveil the next phase in repairing the floundering financial system. Treasury Secretary Timothy Geithner will reveal additional details about a plan to removed so-called “toxic assets” from the balance sheets of financial institutions in a bid to get the financial system flowing again.