Obama Stops by ‘Tonight Show’ During California Visit

think that we have a big mess on our hands. It’s not going to be solved immediately, but it is going to get solved. And the key thing is for everybody just to stay focused on doing the job instead of trying to figure out who you can pass blame on to.

Leno: Well, when will the money — this money was given out to the banks. I would have thought by this time it would have sort of trickled down to Main Street, to people wanting to get loans — I mean, it all went out there months and months ago. Where is it?

The President: Well, what’s happening is a lot of these banks are keeping it in the bank because their balance sheets had gotten so bad that they decided, you know what, for us to stay solvent we need to maintain certain capital ratios; we’ve got to have a certain amount of capital in the bank — and they haven’t started lending it yet. And that’s why what we’ve got to do — right now what we’re doing is essentially doing a diagnostic test — trying to use some auto language here so you — (laughter) — we’re doing a diagnostic on each of the banks, figuring out what are their capital levels? Can they sustain lending? And then I think we’re going to separate out — those banks that are in good shape, we’re going to say to them, all right, you’re on your own; go start lending again. Those banks that still have problems, we’ll do a little more intervention to try to clean some of those toxic assets off their books.

But I actually have confidence that we’ll get that done. In the meantime, we’re taking a lot of steps to, for example, opening up — open up separate credit lines outside of banks for small businesses so that they can get credit — because there are a lot of small businesses out here who are just barely hanging on. Their credit lines are starting to be cut. We’re trying to set up a securitized market for student loans and auto loans outside of the banking system. So there are other ways of getting credit flowing again.

But that’s why we’ve got to solve the banking problem and we’ve got to solve issues like health care, energy, and education that will put us on a pathway for long-term economic growth.

Leno: We’re going to take a break. When we come back I want to ask you what we can do — (applause) — all right, we’ll take a break. We’ll be right back.

* * * * *

Leno: Welcome back. Talking with President Barack Obama. So I was going to ask you before we went to the break. So you have –- obviously we have a lot of people with a few dollars — couple of hundred, couple of thousand — but there’s millions of them. Okay, obviously that’s a tremendous financial forest. What should they do? Put their money in the bank? Should they be spending money? Should they hide it under their mattress?

The

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