He was saying perhaps Obama could adopt that speaking style if he chose to. Like redtail23 said, a lot of black people do switch between those two styles depending on who they are speaking to. He was saying white audiences would find Obama a more palatable candidate because he does not always speak AAVE.
It’s worth noting here that we don’t know who Halperin and Heilemann’s source was for this conversation. I believe the entire book is unsourced.
He clearly doesn’t speak the AAVE dialect at all, there’s no reason why he would. So it wouldn’t make sense for Reid to suggest he does. That’s why I’m saying I don’t find this interpretation very convincing.
All we know is that he doesn’t speak it in public. We don’t know if he’s able to speak it and Harry Reid certainly wouldn’t know if he did or not.
Well, FWIW, I haven’t been following the story closely, but that’s how I read it. I don’t see any other sensible interpretation to it. “Code-switching” is pretty common with successful communicators. I have no idea how Obama talks outside the public sphere, so I have no clue whether he switches dialects in private around certain people.