BUSH: "Someday you guys are going to need to tell me how we ended up with a system like this."

kpete

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Sun Sep-13-09 10:45 AM
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BUSH: "Someday you guys are going to need to tell me how we ended up with a system like this."

Edited on Sun Sep-13-09 10:46 AM by kpete

"Someday you guys are going to need to tell me how we ended up with a system like this."

-- President Bush, quoted in a must-read New Yorker piece to be published tomorrow, to Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson.
http://politicalwire.com/archives/2009/09/13/bonus_quote_of_the_day.html

TUESDAY, SEPT. 16: “That afternoon, President Bush, accompanied by Josh Bolten and Joel Kaplan, his chief of staff and deputy chief of staff, and by Keith Hennessey, the director of the National Economic Council, sat down with Paulson and Bernanke in the Roosevelt Room of the White House. ‘So what is going on in our financial system, and what are we going to do?’ Bush asked. Paulson regularly delivered updates to the White House, but from the outset of his tenure as Treasury Secretary he had been making policy to an extraordinary degree. Bush saw himself as a wartime President, and he was deeply involved in defense issues. The economy was secondary. One person who worked with Bush for many years said, ‘My sense is, this came up in the final months of an eight-year term. He was so ground down by Katrina, the war in Iraq. He was just out of gas.’ A government official added, ‘Hank Paulson and the Treasury were unilaterally making economic policy for the Administration. There was no influence from the White House.’ ‘A.I.G. is about to fail,’ Paulson told Bush, warning that a potential collapse was likely to be catastrophic, especially with markets still highly unstable after the Lehman failure. Bernanke explained A.I.G.’s credit-default swaps and the likely consequences that A.I.G.’s failure would have on major U.S. and European banks. He also described the limits on the Fed’s powers to deal with an institution like A.I.G. ‘How have we come to the point where we can’t let an institution fail without affecting the whole economy?’ Bush wondered aloud. Bernanke reiterated that what had begun as a subprime-mortgage problem in the U.S. was emerging as a global crisis, which made it even harder for the Fed to combat the problems on its own.

“When Bernanke and Paulson finished, Bush said, ‘Sometimes you have to make the tough decisions. If you think this has to be done, you have my blessing.’ But, as he rose to leave, he said, ‘Someday you guys are going to need to tell me how we ended up with a system like this. I know this is not the time to test them and put them through failure, but we’re not doing something right if we’re stuck with these miserable choices.’ …

way more - fascinating stuff:
http://dyn.politico.com/members/forums/thread.cfm?catid=7&subcatid=41&threadid=3008811