Obama pointed to more job losses and foreclosures as well as "difficult and unpopular choices" when it comes to restructuring the auto industry and insurance giant American International Group (AIG, Fortune 500). The government has already sunk $182 billion into propping up AIG.
The Obama administration is under pressure to address the financial crisis on many different fronts. While job losses and foreclosures continue to mount, the credit markets remain frozen.
There's only $135 billion left in the Treasury Department's coffers for bailout measures. The administration is completing stress tests of the nation's 19 largest banks burdened with toxic assets to size up which will need more bailout dollars to survive.
In the meantime, the administration is trying to prepare the nation for the possibility that two of the largest domestic auto makers, General Motors (GM, Fortune 500) and Chrysler LLC, are likely headed for major restructuring's and possible mass layoffs.
Obama discussed all these developments, offering a fierce defense of pricey government actions to prop up tottering banks and clean their books of toxic assets.
"Of course, there are some who argue that the government should stand back and simply let these banks fail - especially since in many cases it was their bad decisions that helped create the crisis in the first place," he said. "The truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth."
Drawing on the biblical parable of two men who built their houses - one on sand and one on rock - Obama said the country need to rebuild the economy on a "new foundation."
That foundation includes many proposals that the Obama administration has unveiled but has yet to detail and will need congressional approval. Among them: stronger regulations of Wall Street and the possibility of more funding to bail out the financial sector and get the economy moving.
Obama also said he wants lawmakers to tackle health care and environmental initiatives, but experts say Congress has a full plate already and may not tackle such legislation until later this year.
Obama said he expects to have a health care bill arrive on his desk before the year is up. He was less definitive on hopes for bills that improve education standards and cap emissions.
"I know how difficult it is for members of Congress in both parties to grapple with some of the big decisions we face right now," Obama said. "It's more than most Congresses and most presidents have to deal with in a lifetime. But we have been called to govern in extraordinary times."
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