Archive for Wednesday, September 24, 2008

Bush warns of ‘dire financial consequences’ if bailout not approved

In this photo from television, President Bush speaks in a prime-time address from the Cross Hall of the White House in Washington, Wednesday.

In this photo from television, President Bush speaks in a prime-time address from the Cross Hall of the White House in Washington, Wednesday.

September 24, 2008, 8:16 p.m. Updated September 24, 2008, 9:00 p.m.


— President Bush on Wednesday warned Americans and lawmakers reluctant to pass a $700 billion financial rescue plan that failing to act fast risks wiping out retirement savings, rising foreclosures, lost jobs and closed businesses. "Our entire economy is in danger," he said.

His dire warning came not long after the president issued extraordinary invitations to presidential candidates Barack Obama and John McCain, one of whom will inherit the mess in four months, as well as key congressional leaders to a White House meeting on Thursday to work on a compromise.

"Without immediate action by Congress, American could slip into a financial panic and a distressing scenario would unfold," Bush said in a 12-minute prime-time address from the White House East Room that he hoped would help rescue his tough-sell bailout package.

Bush explicitly endorsed several of the changes that have been demanded in recent days from the right and left. But he warned that he would draw the line at regulations he determined would hamper economic growth.

"It should be enacted as soon as possible," the president said.

The bailout, which the Bush administration asked Congress last weekend to approve before it adjourns, is meeting with deep skepticism, especially from conservatives in Bush's own party who are revolting at the high price tag and unprecedented private-sector intervention. Though there is general agreement that something must be done to address the spiraling economic problems, the timing and even the size of the package remained in doubt and the administration has been forced to accept changes almost daily.

Seeking to explain himself to conservatives, Bush stressed he was reluctant to put taxpayer money on the line to help businesses that had made bad decisions and that the rescue is not aimed at saving individual companies. He tried to address some of the major complaints from Democrats by promising that CEOs of failed companies won't be rewarded.

"With the situation becoming more precarious by the day, I faced a choice: to step in with dramatic government action or to stand back and allow the irresponsible actions by some to undermine the financial security of all," Bush said. "These are not normal circumstances."

The president turned himself into an economics professor for much of the address, tracing the origins of the problem back a decade to a large influx of money into the U.S. system from overseas, low interest rates, the "faulty assumption" that home values would continue to skyrocket, easy lending by mortgage companies, over-borrowing by home owners and exuberant building by construction firms.

But while generally acknowledging risky and poorly thought-out financial decisions at many levels of society, Bush never assigned blame to any specific entity, such as his administration, the quasi-indepedent mortgage giants Fannie Mae and Freddie Mac, or the Wall Street firms that built rising profits on increasingly speculative mortgage-backed securities. Instead, he spoke in terms of investment banks that "found themselves saddled with" toxic assets and banks that "found themselves" with questionable balance sheets.

Intensive, personal wheeling and dealing is not usually Bush's style as president, unlike some predecessors. He does not often call or meet with individual lawmakers to push a legislative priority.

But with the nation facing the biggest financial meltdown in decades, Bush took the unusual step of calling Democrat Obama personally about the meeting, said presidential spokeswoman Dana Perino. White House aides extended the invitations to Republican McCain and to GOP and Democratic leaders from Capitol Hill.

Obama spokesman Bill Burton said the senator would attend and "will continue to work in a bipartisan spirit and do whatever is necessary to come up with a final solution." Senior McCain advisers said McCain will attend, too. The plans of the other invitees were unknown, and the exact details of the meeting, which Perino said was aimed at making fast progress to stem the biggest financial meltdown in decades, were still being set.

In another move welcome at the White House, Obama and McCain issued a joint statement urging lawmakers - in dire terms - to act.

"Now is a time to come together Democrats and Republicans in a spirit of cooperation for the sake of the American people," it said. "The plan that has been submitted to Congress by the Bush administration is flawed, but the effort to protect the American economy must not fail."

The two candidates - bitterly fighting each other for the White House but coming together over this issue - said the situation offers a chance for politicians to prove Washington's worth.

"This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe," they said.

However, the Oval Office rivals were not putting politics aside entirely. McCain asked Obama to agree to delay their first debate, scheduled for Friday, to deal with the meltdown. Obama said the debate should go ahead.

Bush last gave a prime-time address to the nation 377 days ago, on Iraq. This one, carried live by all five major television outlets, could be the last of his presidency.

White House and administration officials have warned repeatedly of a coming "financial calamity."

But that has not closed the deal, which for many recalls previous warnings of grave threats from Bush - such as before the Iraq war - that did not materialize. So Bush's goal with his speech was to frame the debate in layman's terms to show the depths of the crisis, explain how it affects the people's daily lives and inspire the public to demand action from Washington.

He said that more banks could fail, the stock market could plummet and erase retirement accounts, businesses could find it hard to get credit and be forced to close, wiping out jobs for millions of Americans.

"Ultimately, our country could experience a long and painful recession," Bush said. "Fellow citizens, we must not let this happen."

But he ended on a positive note, predicting lawmakers would "rise to the occasion" and that the nation's economy will overcome "a moment of great challenge."

Through the crisis, the White House has struggled over how to deploy Bush.

As the problem mushroomed over the weekend of Sept. 13, Bush generally stayed out of the limelight, letting Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke take the lead with reporters, lawmakers and the public. Bush remained silent for days.

Since last Thursday, however, the president has talked about the crisis almost daily, although usually briefly, and yet he still has had trouble breaking into the debate. News coverage has barely mentioned Bush's comments.

The decision to pull out perhaps a president's largest available weapon - the ability to demand a presence on evening television screens nationwide, from a setting with the ultimate bully-pulpit power - is one sign that the rescue package still faced daunting hurdles.

With so many crises hitting the United States at once, the presidential race has taken a back seat and so has Bush's involvement in politics. Bush canceled a fundraising trip to Florida on Wednesday to deal with the problem, the third time in a week that he has scrapped his attendance at out-of-town fundraisers, either because of the market turmoil or Hurricane Ike.

The economic crisis also is almost certain to overshadow the rest of Bush's four months left in office and could hugely impact his legacy. It has been assumed that the long-term view of Bush's presidency was to be shaped largely by Iraq, Hurricane Katrina and the Sept. 11, 2001, attacks. Now, the dire economic problems and the aftermath of the government's attempted solution will certainly be added to that list.


monkeywrench1969 9 years, 7 months ago

This behavior started int he late 90's with a lot of the deregulation in securities and continued in a variety of ways up to now. both dems and repubs were lining their pockets waiting for the "ultimate bubble" to burst. I would venture a guess most of those on both sides at the federal level have multiple houses and sheltered incomes know this day would come and the gravy train is over. There is no difference between the Republicans and Democrats they are both selfish, elitists who won't meet in the middle for those of us who may not own a house, have a retirement fund or even health insurance.

blakus 9 years, 7 months ago

Providing health insurance for those who can't afford it... Socialist! Bailing out your corporate buddies with tax-payers money because of greed and shortsightedness... ummm... not Socialist?!?! Ugh, how (not) far this administration has come. And sadly enough, people still defend this booger-of-a-president as a great man. Bagh! Oh, and one more thing, if we bail these dumb crooks out what makes you think it won't HAPPEN AGAIN!?

slang4d 9 years, 7 months ago

I didn't hear the speech, but I imagine it went something like this: Citizens of 'Merica: this is a monumentus event in our history and we needs to stop evil-doers from attacking this great nation under god To prevent further destruction and strike fear into the heart of our godless enemies, we must take action immediately to rescue my billionaire friends. Their very freedom has come under attack.Don't misunderestimate this dire dilemna we are now faced with. Some think we should negotiate and debate as if taking the time to really think about our actions will stop this terror and evil we call the "free market." I for one refuse to relinquish power to the wicked "free market" that's lurking out there seeking to destroy us and everything this great nation stands for.

tangential_reasoners_anonymous 9 years, 7 months ago

merrill: "What is the party afraid of?"What isn't this party afraid of?Boo!

Richard Heckler 9 years, 7 months ago

As I stated earlier he would say be very afraid and ask congress to bail out his criminal buddies and that he did.He offered little and took no questions. How can a party allow a president to NOT face some tough questions fromthe public by way of the media? What is the party afraid of?

tangential_reasoners_anonymous 9 years, 7 months ago

jayhawklawrence: "I can think of only one issue left that would keep Kansas from becoming a Blue state. It is the abortion issue. I personally have a problem with this issue. But I think it is time the Republicans not be allowed to hide behind this issue."( As I've been all-too vocal regarding... ) I, too, have a significant problem with the abortion issue, but let us not delude ourselves... the abortion issue would see as much light under a McCain ad-mini-stration as it did from beneath the shrubbery. And in the meantime, America would be further defoliated.What Republican EVER has been able to effect a meaningful difference with respect to the abortion issue? And, yet, how many votes have been secured by singing to the choir regarding this issue?Wouldn't it be GRAND if a blue shock wave emanated from mid-America, rippling beyond the continental shelf, lifting every American, as it were, in its wake-stirring those far too long asleep back to consciousness.And placing the helm of racist America into the hands of a "black" man....Independent of Kansas, America may yet evolve, overnight.Are the "people of the [south] wind" capable of as much?We have nothing to fear... but the fearful, themselves.

igby 9 years, 7 months ago

Shrade! Shrade!shrode! shrode!The government would just love to get it's hand on those high yielding bond yields the investment banks are getting now. Just miss two or more payments and your home loan will get tossed into and under this government umbrella of risk management. This is the biggest transfer of wealth Americans have ever seen. So why aren't these Dems and some Republicans not, not, not, buying this deal? Because it will kill any national health care plan forever and ever. Dead as a door nail.Secondly! It's time for the stock market gamblers to pay for their own malpractice. The best thing that can happen in American is to let this stock market crash and bring reality too the actual values of these companies stocks. They're over inflated for loan purposes to begin with. Is not this the very reason their in the trouble that they're in today? Screw these gamblers of the stock markets. That's all it is about, gambling and betting on unreal values.So what, lay off a few million? A very low price to pay rather than this 700 billion dollar bond yield grab by the U.S. Government. Bond yields are the only place left for any investor to invest their money and get a fair return, CD's and money market funds are all but nothing compared to 8% to 9% bond yields. The GOP is rallying the enemy hoping for an attack before the November elections. The Muslim's have won the Great Harlot has fallen and is falling fast so attack while the irons hot. If this is not a clear sign of defeat for our enemy. May we offer to surrender and bow down and stick our butts in the air and kiss the ground of Allah! That's just how they see it.So what, the stock market dropped some 400 points. All the big money guy's planned a little sell off which started a downward selling effect of selling just to shake up the press. It's all smoke and mirrors and the U.S. Government's holding a large net to catch all the little fishes who panic. 40 billion to sure up the over seas banks for the hush!That's right!Hush money!Yes, a payoff for this shrade and it's cost to the Euro-Banks that got clipped a little in the roller coaster tumble of only 400 DJIA dipping points. The sad truth is that even after all is said and done and congress buys this load of bull crap, the stock market will crash anyway. So, why tie up the backbone of all our nations wealth, the bond market, too this sinking ship of gamblers, the stock market?Because America, must lose it's wealth to become part of their new world order. Where will you put your money when the governments broke?Better buy gold and not the paper kind.

igby 9 years, 7 months ago

Damm!I sound like a Dem-liberal, the sky must truly be falling!

SMe 9 years, 7 months ago

Liar, Liar, Pants on fire!The only thing he want's to save is the golden parachutes of his buddies.Let what will fail then pickup the pieces.It's about time something woke up the American public.Bunch of lazy, cheap fools. Trade your children's children's future for a cheaper Japanese car or $39 Chinese dvd player.

rdkone 9 years, 7 months ago

Let's invade Switzerland. They have banks with lots of money.

cds 9 years, 7 months ago

Something I've been asking about to numerous people that still bugs me. Do you know of anyone that this will actually affect or is currently affected by homeowner's loans? Every single person that I have asked say the same thing, and they don't know of anyone it has, or will affect, and they are people who currently pay morgatges, car payment, etc. Are the only people that this affects: people who have bought homes/cars well beyond their means who stopped paying because they believed they could get a "free-ride" by either fileing for bankruptcy or hoping for government intervention? Just food for thought.

KEITHMILES05 9 years, 7 months ago

Well, Bushie has been asleep at the wheel the last eight years. It's just astounding how these politicians are crying wolf now when before they encouraged this mess.Term limits is the answer. No more than 8 years and then you go back home......or die.

igby 9 years, 7 months ago

$25 dollar jump in a barrel of oil in one day should really open your eyes to the size and scope of this world wide shrade.

lee66049 9 years, 7 months ago

All of this crap talk from the left....and yet the bill will pass by a huge margin and soon.Lawrence is so lucky to have so many economic experts gathered in one place. LOL!

nobody1793 9 years, 7 months ago

Just remember that in a severe recession, it's the poor people that suffer, not the rich.

tangential_reasoners_anonymous 9 years, 7 months ago

Py: "... and if Congress doesn't immediately rubber stamp whatever I want, no questions asked, we're all gonna die!"Clearly, this is a national emergency... "becoming more precarious bythe day." I think we should respond with all the urgency shown by the Administration following that other emergency... New Orleans... three years ago... and counting....

Flap Doodle 9 years, 7 months ago

"Obama: I Am Such a Leader That I Will Defer to Harry Reid and Nancy Pelosi As to Whether I Actually Need to Show Up To Do My Job As SenatorIf Harry Reid tells him he needs to come into work during the most serious financial crisis since 1929, he'll do so.Otherwise, he's doin' what he does best. Campaignin' for president. Talking about stuff."

Potawatomi 9 years, 7 months ago

Do you redneck bible beating republicans believe it now? Your crooked president that you voted for said it.

jayhawklawrence 9 years, 7 months ago

I can think of only one issue left that would keep Kansas from becoming a Blue state. It is the abortion issue.I personally have a problem with this issue. But I think it is time the Republicans not be allowed to hide behind this issue.It should not be a political issue. It is a moral issue.Can any logical person continue to support the "conservative" agenda which means to basically take advantage of middle and working americans?Vote Democrat.

SunevaLightfoot 9 years, 7 months ago

Supposedly all of the key players in this drama are intelligent people--the writing was on the wall seven years ago and yet it must be that these folks are members of because they refused to take the necessary action to prevent this situation.

ridinthefence 9 years, 7 months ago

Could it possibly be true Jeb, thats right Little Bro, was hired as a private equity advisor for Lehman in August of 2007? Go figure! Crooks...........

Chris Ogle 9 years, 7 months ago

Somewhere in Texas a village is STILL looking for that idiot.

Jennifer Forth 9 years, 7 months ago

shrade? seriously? wow. The Financial Patriot Act is a charade.

Godot 9 years, 7 months ago

One thing that has happened is the hedge funds have had their cojones cut off - Soros and his legions of hedge fund greed feeders will not be able to drive down the value of a solvent company into the ground in a matter of hours by short selling.

Satirical 9 years, 7 months ago

Is anyone else concerned about the amount of power that will be shifted to the Executive branch under the proposed bill?I have serious reservations about this "rescue," but most economic experts are saying it is harder and harder for businesses and individuals to get credit, which means jobs will be lost among other deleterious effects. The free market system is not perfect (markets sometimes fail) but still... I don't trust government to fold laundry let alone do this successfully. I am optimistic, but I fear this rescue will resemble FEMA coming to help after hurricane Katrina, too little, too late, too poorly planned.

BigPrune 9 years, 7 months ago

More bailouts...first it is Obama's Fannie Mae and his buddies. Vote Democrat and get corruption.

Godot 9 years, 7 months ago

If there is a god, Soros will lose at least $100 Billion with the elimination of short selling.Then, again, he will make it up with a government bail out.Crooks. They are all crooks.

lee66049 9 years, 7 months ago

Brain, so you think we are just giving $700 billion? No one is going to pay their loan off? Not one homeowner is going to pay their mortgage?

labmonkey 9 years, 7 months ago

This bailout should be considered very carefully and over time. It DOES NOT need to be passed this week. The economy works much slower than Wall Street and there is plenty of time to scour this proposal and wring out the bugs, or scrap it totally. As it stands now, there will be no court or administrative oversite over what the Treasury Secretary says. This means that Wall Street CEO's can inflate the value of the securities that they sell to the taxpayers and the Treasury Secretary will look the other way as he wants to get Wall Street rolling crooks get caught. As it stands now, the work is too much for the treasury department to handle, so it will be farmed out to Wall Street firms....the same people who caused the mess. If we do this too quickly, the government will loose all leverage it has to encourage and force reforms. The Americans who waited until they could afford what they buy (the taxpayer) should have very high demands of their money being spent that is going to bail out the lenders and borrowers who lacked fiscal responsibility.

BrianR 9 years, 7 months ago

Handing Henry Paulson $700 billion is a terrible idea.Doing nothing is a terrible idea.We are screwed.

gccs14r 9 years, 7 months ago

Congress should make sure that at-risk 401(k) plans are made whole and let the rest of this corrupt enterprise collapse under its own weight. No way should we be giving tax dollars to criminals as reward for stealing trillions of dollars.

tangential_reasoners_anonymous 9 years, 7 months ago

Newell: "... 2. A rash, impetuous person who shoots from the hip when making major decisions such as his second-in-command?"But he's a "maverick.",;-DToo bad all that shooting from the hip keeps taking out hooves.

dandelion 9 years, 7 months ago

Especially bankers who are still pulling in the big bucks. The government should take over these businesses. Despite what the righties on here say, I am for free enterprise, but if they think we should help them out with no strings attached, they're crazy. We don't allow people on food stamps to buy beer and cigarettes with their stamps, so why shouldn't we put limitations on businesses who are on welfare? Welfare is welfare. Make them live on less money.

Tom McCune 9 years, 7 months ago

Think about this. When the sitting president who is responsible for this situation calls it "dire," who would you like to have take over the top job in a few months:1. A very intelligent person who thinks things through and usually has good reasons for his decisions, even if you (or I) disagree with those decisions, or2. A rash, impetuous person who shoots from the hip when making major decisions such as his second-in-command?

Commenting has been disabled for this item.