Editore"s Note
Tilting at Windmills

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December 1, 2008

THEY WERE WARNED.... It's common now to hear Bush administration officials, asked about the financial crisis, insist that they had no idea this meltdown was coming. Unfortunately, they were warned, but ignored the concerns.

The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents. [...]

Bowing to aggressive lobbying -- along with assurances from banks that the troubled mortgages were OK -- regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way. [...]

The administration's blind eye to the impending crisis is emblematic of its governing philosophy, which trusted market forces and discounted the value of government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.

Many of the banks that fought to undermine the proposals by some regulators are now either out of business or accepting billions in federal aid to recover from a mortgage crisis they insisted would never come. Many executives remain in high-paying jobs, even after their assurances were proved false.

More than three years ago, bank regulators "proposed new guidelines for banks writing risky loans," and looking over the proposals -- "banks would have been required to increase efforts to verify that buyers actually had jobs and could afford houses," and "regulators proposed a cap on risky mortgages so a string of defaults wouldn't be crippling" -- it's easy to see how regulations could have prevented the worst.

The Bush administration, in other words, was told what it had to do to prevent a disaster. Instead, it eventually issued a "Guidance on Nontraditional Mortgages," which was little more than a list of suggestions, and left the dangerous practices in place.

Yglesias' summary was spot-on: "Bush was specifically and repeatedly warned about the need to take regulatory action to avoid a financial system meltdown, and chose to ignore those warnings because he's a really bad president. Thanks to his indifference, incompetence, or perhaps malice, millions of people will wind up losing their jobs and suffering dire consequences."

Bush's record when it comes to disregarding warnings is right up there on the list of his most humiliating failures, isn't it? When warned that bin Laden is "determined to strike" inside the United States, the president humored the intelligence official and told him, "You've covered your ass, now." When warned that a hurricane was poised to destroy New Orleans, the president was satisfied that FEMA would handle the crisis. When warned about a looming financial crisis, Bush's White House paid more attention to the banks that told the president not to worry.

It's quite a track record.

Steve Benen 4:30 PM Permalink | Trackbacks | Comments (36)

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Comments

Cue up the 2004 congressional hearings where the Democrats tear the regulator a new one for suggesting that maybe Fannie Mae and Freddie Mac could use some more oversight.

There's plenty of blame on both sides of the aisles here.

Posted by: sjrsm on December 1, 2008 at 4:32 PM | PERMALINK

"Bush was specifically and repeatedly warned about the need to take regulatory action to avoid a financial system meltdown, and chose to ignore those warnings because he's a really bad president. Thanks to his indifference, incompetence, or perhaps malice, millions of people will wind up losing their jobs and suffering dire consequences."

Between not being able to travel abroad for fear of The Hague and when this news becomes more widely known and the USSS getting nervous about GWB appearing in public, I'm betting there's going to be lots of brush-clearing going on in Crawford!

Posted by: Michigoose on December 1, 2008 at 4:38 PM | PERMALINK

Another element behind this disaster is the K Street Project. Republicans decided to cut staff funding, and rely ever more on lobbyists for expert advise.

There's plenty of blame on both sides of the aisles here. - sjrsm

I'll give you that more regulation for F&F would have been a good idea, if you concede that F&F were bit players in the overall housing crisis compared to the Wall Street investment banks, rating agencies and "swaps" insurers.

Posted by: Danp on December 1, 2008 at 4:46 PM | PERMALINK

Bush was warned, but Bush didn't know how to do anything about the impending fiscal calamity. Bush was warned about Katrina, but didn't know anything about Emergency Preparedness, so he didn't do anything. Chertoff and Brownie didn't know how to do anything, either. Bush was warned about Al Qaeda, but neither he nor his advisers wanted to credit the Clinton administration with knowing anything about the world, so they couldn't heed advice from the outgoing staff.

Posted by: OwnedByTwoCats on December 1, 2008 at 4:57 PM | PERMALINK

Don't forget these gems as well:

When President Bush was warned repeatedly there were no WMDs in Iraq by not one but two weapon inspectors he deliberately set out to undermine their credibility and contradict their findings.

When NASA PhD scientists warned that the acceleration of polar ice cap melting was a sign global warming was accelerating President Bush had their studies redacted by a GOP loyalist college dropout working in NASA's media relations department.

There is no excuse for deliberate ignorance. None.

Posted by: pj in jesusland on December 1, 2008 at 4:58 PM | PERMALINK

Seems like we need to change the spelling of Failure to Failwure.

The word just doesn't seem right without a W in it.

Posted by: Former Dan on December 1, 2008 at 5:05 PM | PERMALINK

Steve
If you had said that Bush was the dunmbest son of a bitch you had ever seen,I might agree with you.
This fiscal mess lies with both parties. They are equaly at fault. Mr Bush had very little to do with this mess. He isn't that smart.

Posted by: EC Sedgwick on December 1, 2008 at 5:08 PM | PERMALINK

It seems like some of you are implying Bush would have let the Democrats implement tougher regulation. That has a Bush veto written all over it. So, ultimately, the blame lies at his feet.

Posted by: Matt on December 1, 2008 at 5:12 PM | PERMALINK

The reaction I always have to these kinds of excuses is that I knew a financial crisis was likely, and I'm nobody. Not an economist, not a government official, no real expertise in any relevant field, just some guy who happens to have read things like Michael Hudson's article in Harper's a couple years back explaining why the housing bubble was unsustainable. If I knew what was going on, there sure as hell isn't any excuse for people whose job it is to know this stuff.

Posted by: Stephen Stralka on December 1, 2008 at 5:16 PM | PERMALINK

Just to pick on FEMA for a minute, they handled Katrina exactly the way Republicans wanted it to. The casinos in Biloxi, MS were up and running in no time. The beach in Gulf Shores, AL, where all the luxury high rise condominiums are built, was beautifully restored within months.

Posted by: Aatos on December 1, 2008 at 5:20 PM | PERMALINK

Sedgwick,

The Republican party is responsible for agreeing with the idea that social promotion has any role when nominating a President of the United States.

Posted by: Ron Byers on December 1, 2008 at 5:20 PM | PERMALINK

When I ponder the price of oil, when I grasp the vast wealth that was created between 80 dollars a barrel and 150, I am amazed by the shear audacity of it all.

Yeah we trash ol' Georgie for his ways, but look at how his buddies have made out like bandits.

The housing bubble. Vaporous wealth.

The oil spike. Oil's 49 bucks a barrel? Woa.
Who got that money????

I'd say W and gang planned on robbing the till on their way out the door. The 700 billion dollar-turned 7 trillion dollar handout of dubious nature.

Don't forget perpetuawar. Guess who profits from said beast?

I just don't think Bush is as dumb as those of us whom he's very easily managed to fleece.

It ain't dumb that gets me about George, it's GREED.

Posted by: Tom Nicholson on December 1, 2008 at 5:23 PM | PERMALINK

Sedgwick,

The Republican party is responsible for agreeing with the idea that social promotion has any role when nominating a President of the United States.

Posted by: Ron Byers on December 1, 2008 at 5:23 PM | PERMALINK

I'm trying to think of a historical antecedant for the international/national calamity that is George W. Bush. Herbert Hoover? Benedict Arnold? Herbert Hoover? Algier Hiss, Aldrich Ames? the guy who was asleep at his radar station in the hours before Pearl Harbor? Timothy McVay? Osama bin Laden? The 911 plotters?

None of them, it seems to me, damaged this nation as much as one George W. Bush. In terms of squandered resources, damage to the environment, the rule of law (Constitution), military readiness, crippled economy, global respect, GWB stands alone as the great scourge of this nation.

It needs to be repeated as often and memorialized that Dubya is not just the worst President, but the worst American who has yet lived.

I challenge anyone to come up with another human being this side of Adolph Hitler who's even close.

Posted by: Winkandanod on December 1, 2008 at 5:29 PM | PERMALINK

"Steve
If you had said that Bush was the dunmbest son of a bitch you had ever seen,I might agree with you.
This fiscal mess lies with both parties. They are equaly at fault. Mr Bush had very little to do with this mess. He isn't that smart."
Posted by: EC Sedgwick
--------------------------
First, I once thought Bush was the dumbest son of a bitch until Palin arrived and I was seriously worried that I might miss George. That is longer a concern, but the woman who was gettin' back to Alaska's business, currently holds the title, minus 'son of a'.

Second, I might agree that both parties are to blame, but I strongly disagree that they are equally to blame. Bush forged through to make the lending legal, if it wasn't for that 'creative financing' would still be 'predatory lending'. Balance sheets would accurately reflect assets(loans) and wrapping garbage up and calling it grade A paper would be illegal, not bad judgment. I also doubt that the Bankruptcy Bill would have been passed, but that did have some D support (Biden).

Posted by: ScottW on December 1, 2008 at 5:36 PM | PERMALINK

Bushit and his cronies did to America what African despots did to their countries: Mined their own populations for wealth. Took every cent they could and leave the citizens and the country, in general, broke, dispirited, and in fear. Now he and his ilk will be leaving the carnage behind for some other sucker (Obama) to sort-out. Probably the worst though is yet to come. Bushit's surrogates (Read:GOP)will do their level best to destroy any honest efforts on Obama's part to right the ship. These sleazy bastards are the devil incarnate for sure. Nauseating...

Posted by: stevio on December 1, 2008 at 5:36 PM | PERMALINK

The core point that's being missed in all of these discussions is that Bush belongs to a political cadre where such behavior, leading to such outcomes, is considered a sign of strength. To be truly powerful, you simply HAVE to be able to destroy millions of lives; millions of dreams, without batting an eyelash. THAT is the "legacy" of George W. Bush.

Well --- that, and the insatiable desire to wrap him head-to-toe in barbed wire and throw him into a circle of hungry sharks with Obama logos painted on their dorsal fins....

Posted by: Steve W. on December 1, 2008 at 5:39 PM | PERMALINK

"I'm trying to think of a historical antecedant for the international/national calamity that is George W. Bush." -Winkandanod

The names that come to mind to me are Tsar Nicholas II of Russia, King Louis XVI of France and King John of England, but they might be slightly worse since they all inspired armed rebellions.

Posted by: C-Red on December 1, 2008 at 5:42 PM | PERMALINK
It's common now to hear Bush administration officials, asked about the financial crisis, insist that they had no idea this meltdown was coming.


Huh. I think they've tried that before. "No one could have imagined..."

Wasn't credible then, either.

Posted by: cmdicely on December 1, 2008 at 5:46 PM | PERMALINK

Remember the mantra "we're an ownership society".
For a while this was the line that seemed to give excuse to buying things we couldn't really afford but could somehow worry about later, including housing. Of course I haven't heard that line for quite a while now from the Bush admin.

Posted by: kswan on December 1, 2008 at 6:29 PM | PERMALINK

Bush was a stupid shit who pole-vaulted over his proper station in life to become president, with the willing help of the unscrupulous and his fellow dumbasses. A lot of CEO's still think he was a great leader, because he made them as sickeningly rich in 8 short years as they might reasonably have expected to reach in a lifetime, but everybody who voted for him - especially twice - should hang their heads in shame. The country will be years and years erasing the scar left on it by the Texas Turnip.

Posted by: Mark on December 1, 2008 at 6:46 PM | PERMALINK
Yglesias' summary was spot-on: "Bush was specifically and repeatedly warned about the need to take regulatory action to avoid a financial system meltdown, and chose to ignore those warnings because he's a really bad president. Thanks to his indifference, incompetence, or perhaps malice, millions of people will wind up losing their jobs and suffering dire consequences."

What's the quote from Ian Fleming?

"Once is happenstance"
Specifically and repeatedly warned about 9/11
"Twice is coincidence"
Specifically and repeatedly warned about Katrina
"Three times is enemy action."

After a certain point, you have to stop excusing the individual mistakes and start looking at the fact that the person keeps making the same mistake over and over again despite the consequences for everyone else.

Posted by: Mnemosyne on December 1, 2008 at 7:06 PM | PERMALINK

Cue up the 2004 congressional hearings where the Democrats tear the regulator a new one for suggesting that maybe Fannie Mae and Freddie Mac could use some more oversight.

Just out of curiosity, who held the majority in Congress in 2004?

Posted by: Mnemosyne on December 1, 2008 at 7:08 PM | PERMALINK

Yes the president was incompetent and corrupt but much of his damage could have been avoided if Pelosi had decided she wasn't too busy "policy making" to impeach the most unpopular, destructive damaging president in our nation's history.

What is worse...the man doing the damage or the one allowing him to continue doing damage....just to make sure more dems got elected...in other words for political gains. She avoided her responsibilities, putting everything off until she got a dem president. Impeachment would have changed everything for the better. Now we will be paying for 20yrs or more the consequences of her failure to stand up for the constitution.

When I think of how much I despise Bush/Cheney administration for their actions, Pelosi is always included as the one who made sure they got away with it. The dead, disabled and displaced curse her name along with Bush.

Posted by: bjobotts on December 1, 2008 at 7:34 PM | PERMALINK

I wonder if the good people of Crawford, TX, appreciate who will be living in their fair town from now on? Does one have to register as a fiscal predator after committing the crimes of monetary rape and moneyphilia? Let's hope he cannot walk down the street without children pointing at him and asking if he is still dangerous.

peace, stjohn

Posted by: st john on December 1, 2008 at 7:55 PM | PERMALINK

Is it okay to say the Republicans are NOT better at managing the economy, YET?

Posted by: toowearyforoutrage on December 1, 2008 at 8:25 PM | PERMALINK

st john, @19:55

The good people of Crawford aren't best pleased with their not-so-native son... For a spell, they became a tourist trap, with lots of gift shops selling a variety of Bush mugs (including on coffee mugs, but none of the admission-to-jail kind, that we'd love to see). The business fell off even before the economy took a swan dive...

Posted by: exlibra on December 1, 2008 at 8:30 PM | PERMALINK

"Thanks to his [Bush's] indifference, incompetence, or perhaps malice, millions of people will wind up losing their jobs and suffering dire consequences."

But none of those adjectives hits the real core, which is the ideological/donor-driven commitment to hands-off laissez-faire.

Posted by: Neil B. ♫ on December 1, 2008 at 8:37 PM | PERMALINK

Yeah, spell it "failwure" Well, since the nation has been screWed up so bad, we could say: We've been pWned! (Also, as in "pawned" ...) Yeah, we were Wrecked, maybe say "Wruined" "Wravaged" etc.
Whew!
Turnip and Turdblossom.

Posted by: Neil B on December 1, 2008 at 8:45 PM | PERMALINK

bjobotts - Agree 100%

Remember that time a couple years ago when Bush was trying to plug in an electric car for a White House Lawn photo op and almost blew himself, Cheney and other Republican cretins sky high? Wouldn't that have been awesome had he succeeded?

Posted by: garnash on December 1, 2008 at 9:09 PM | PERMALINK

"Bush was specifically and repeatedly warned about the need to take regulatory action to avoid a financial system meltdown, and chose to ignore those warnings because he's a really bad president. Thanks to his indifference, incompetence, or perhaps malice, millions of people will wind up losing their jobs and suffering dire consequences."

New regulations had no chance of passing the Congress, not when the Republicans had a slight majority, and especially not when the Democrats had a slight majority. To blame this on Bush ignores the much stronger influence of Congress, and especially the Democrats.

Posted by: marketeer on December 1, 2008 at 9:53 PM | PERMALINK

Many executives remain in high-paying jobs, even after their assurances were proved false.

That includes Robert Rubin, now on Obama's official economics team.

Posted by: marketeer on December 2, 2008 at 12:25 AM | PERMALINK

One more to add to the list when proving to some Republicans that their Free-Market ideology does NOT work when there aren't regulations to keep them in check.

Posted by: bruno on December 2, 2008 at 1:33 AM | PERMALINK

When things are going as planned he has no need to listen.
Problem has been the mess only is visible after the events.
None of this has been an accident. In fact most has been planned very well.
Don't get distracted. They are still at it.
The looting goes on and on.

Posted by: Johnsnottoodistracted on December 2, 2008 at 7:41 AM | PERMALINK

"To blame this on Bush ignores the much stronger influence of Congress, and especially the Democrats."
Posted by: marketeer on December 1, 2008

Are you shitting, me? Wow, I nominate you for the dumbass concern troll comment of the year award.

While your at it, why not blame Democrats for fooling Bush into going to war, or perhaps for the "hoax" of Global Warming, or maybe for the 6 trillion in federal deficit spending since Bush took office in 2001.

Posted by: Palinoscopy on December 2, 2008 at 10:19 AM | PERMALINK

"everybody who voted for him - especially twice - should hang their heads in shame."
Posted by: Mark on December 1, 2008 at 6:46 PM |

Amen.
But add in everyone who could have voted against him, and chose not to. And let's not forget everyone who voted for Nader in 2000. (Among whom I'm numbered myself, so I do hang my head in shame. My only excuse -- which was part of my decision process at the time, not just after the fact -- was that I voted in a safely Gore state, so did not materially contribute to the outcome. Still, it was clearly a mistake to have participated in that way. Lesson learned.)

Posted by: smartalek on December 2, 2008 at 11:04 AM | PERMALINK




 

 

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