Barack Obama sits down with Steve Kroft in a '60 Minutes' interview. Kroft to Obama: Are you punch-drunk?

President Barack Obama said he believes the global financial system remains at risk of implosion with the failure of Citigroup or AIG, which could touch off “an even more destructive recession and potentially depression.”

His remarks came in a“60 Minutes” interview in which he was pressed by Steve Kroft for laughing and chuckling several times while discussing the perilous state of the world’s economy.


“You're sitting here. And you're— you are laughing. You are laughing about some of these problems. Are people going to look at this and say, ‘I mean, he's sitting there just making jokes about money—’ How do you deal with— I mean: explain. . .” Kroft asked at one point.

“Are you punch-drunk?” Kroft said.

“No, no. There's gotta be a little gallows humor to get you through the day,” Obama said, with a laugh.

Obama tried to inject some optimistic notes into the interview, saying he sees “flickers of hope” that the economy is beginning to turn the corner.

And he seemed intent on cooling the populist anger rising in the country, particularly over AIG’s $165 million in bonuses. He signaled that he would like to see changes in a House resolution that would tax the bonuses at 90 percent, saying “we can’t govern out of anger.”

“Main Street has to understand, unless we get these banks moving again, then we can’t get this economy to recover. And we don’t want to cut off our nose to spite our face,” he said.

The interview captured the balancing act that Obama must strike on the economy. He gave a nod to public anger at Wall Street while saying it could not dictate his response.

He got in a few whacks of his own at Wall Street executives who contributed to the meltdown—referring to them ironically at one point as “the best and the brightest”—while being ever-mindful that he still needs their help to dig out of the crisis.

His talk of depression could be viewed as alarmist—but it also seemed aimed at bracing Congress and the public for the unpopular prospect of spending even more taxpayer dollars to prop up Wall Street. Treasury Secretary Timothy Geithner is set to roll out a plan Monday aimed at restoring the flow of credit that would back up private investments with government funds.

Even his awkward laughter highlighted an issue Obama has faced dating back to the campaign, a sense that he sometimes is too “cool” and detached to fully grasp the public anxiety over mounting job losses and economic worries.

Still, Obama made clear that he’s afraid the nation hasn’t seen the worst of the economic crisis. He said the recession deepened faster than he expected, particularly in terms of job losses.

“If we did nothing, you could still have some big problems. 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,” Obama said.



“I'm optimistic about that not happening,” he quickly added, “because I think we did learn lessons from the Great Depression.”

Obama also cited Wall Street’s high-risk, high-reward culture as a main cause of the economic meltdown. He took aim at traders and executives in personal terms—saying they need to leave New York for North Dakota or Iowa to appreciate how out-of-whack their pay looks to the average American.

“I mean there were a whole bunch of folks who, on paper, if you looked at quarterly reports, were wildly successful, selling derivatives that turned out to be. . .completely worthless,” Obama said, with a chuckle.

“Gosh, I don't think it's me being anti-Wall Street just to point out that the best and the brightest didn't do too well on that front, and that you know, maybe the incentive structures that have been set up have not produced the kinds of long term growth that, that I think everybody's looking for.”

He also said he doesn’t think Wall Street has gotten his message yet, and that he must do a better job conveying it to them:

“One of the things that I have to do is to communicate to Wall Street that, given the current crisis that we're in, they can't expect help from taxpayers but they enjoy all the benefits that they enjoyed before the crisis happened,” Obama said. “You get a sense that, in some institutions that has not sunk in.”

Even one of his top supporters, billionaire investor Warren Buffett, came in for some criticism from Obama when Kroft noted that Buffett has criticized his plan.

“Warren's also a big player in the financial markets who's a major owner of Wells Fargo. And so he's got a perspective from the perspective of somebody who is part owner of a bank,” Obama said.

Still, Obama would not endorse legislation moving through Congress to tax nearly all the bonuses of executives at AIG. Asked if the measure is constitutional, the former law professor said: “Well, I think that as a general proposition, you don't want to be passing laws that are just targeting a handful of individuals…And as a general proposition, I think you certainly don't want to use the tax code—is to punish people.”

“So let's see if there are ways of doing this that are both legal, that are constitutional that uphold our basic principles of fairness, but don't hamper us from getting the banking system back on track,” Obama said.

And he defended his embattled Treasury Secretary Timothy Geithner, telling Kroft that he wouldn’t accept his resignation if he tried to quit. Obama said jokingly that he’d respond: “Sorry Buddy, you've still got the job.”

The economy dominated the interview, which also ranges on topics such as his upcoming Afghanistan policy review and even his daughter’s new swing set at the White House.

On Afghanistan, Obama said he is looking for a “comprehensive strategy” that stresses diplomacy that includes engagement with neighboring Pakistan. While Obama is studying requests from the military for more troops, he warned that, “there's gotta be an exit strategy. There’s gotta be a sense that this is not perpetual drift.”

He said Afghanistan is a more complex problem than Iraq. “Iraq was actually easier than Afghanistan. It's easier terrain,” Obama told Kroft. “You've got a-- much better educated population, infrastructure to build off of. You don't have some of the same destabilizing border-- issues that you have between Afghanistan and Pakistan. And so this is going to be a tough nut to crack. But it is not acceptable for us to simply sit back and let safe havens of terrorists plan and plot.”

For all the challenges, Obama said, “the complexities of Afghanistan-- are matched, maybe even dwarfed, by the complexities of the economic situation.”

Obama also used the interview to criticize former Vice President Dick Cheney’s criticism of Obama’s decision to close Guantanamo Bay prison, where terror suspects are held. Since leaving office, Cheney has been an outspoken critic of Obama over the war on terror, saying Obama was taking steps to “raise the risk to the American people of another attack.”

“How many terrorists have actually been brought to justice under the philosophy that is being promoted by Vice President Cheney?” Obama asked. “It hasn't made us safer. What it has been is a great advertisement for anti-American sentiment.”

President Barack Obama, Part Two: