On September 24, 2008, former President George Bush addressed the nation to explain the $700 billion Troubled Asset Relief Program (TARP) that was being crafted by the administration, the Treasury Department, and Congress. “Under our proposal,” Bush explained, “the federal government would put up to $700 billion taxpayer dollars on the line to purchase troubled assets that are clogging the financial system.”
But former Bush speechwriter Matt Latimer wrote in an upcoming book (excerpted by GQ) that, even hours before he gave an address promoting the TARP, Bush fundamentally misunderstood what the program was all about:
Under his proposal, he said, the federal government would buy troubled mortgages on the cheap and then resell them at a higher price when the market for them stabilized. “We’re buying low and selling high,” he kept saying. The problem was that his proposal didn’t work like that…As it turned out, the plan wasn’t to buy low and sell high. In some cases, in fact, Secretary Paulson wanted to pay more than the securities were likely worth in order to put more money into the markets as soon as possible. [...]
In the theater, the president was clearly confused about how the government would buy these securities. He repeated his belief that the government was going to “buy low and sell high,” and he still didn’t understand why we hadn’t put that into the speech like he’d asked us to. When it was explained to him that his concept of the bailout proposal wasn’t correct, the president was momentarily speechless. He threw up his hands in frustration. “Why did I sign on to this proposal if I don’t understand what it does?” he asked.
The proposal that Bush offered that night would ultimately be rejected by the House of Representatives, with a slightly modified bill passing one week later. And it should come as no surprise that Treasury Secretary Hank Paulson ultimately abandoned the idea to buy toxic assets entirely, instead opting for bank recapitalization, devoid of meaningful strings for the banks. As Latimer reported it, “the treasury secretary didn’t seem to know [which course of action he favored], changed his mind, had misled the president, or some combination of the three.”
Meanwhile, the toxic assets, which warranted such attention at the time, have not gone away. As the Congressional Oversight Panel for the TARP wrote last month, the financial system remains vulnerable “to the crisis conditions that TARP was meant to fix.”
In the book, Latimer also reported that Bush joked about Hillary Clinton’s “fat keister,” called Gov. Sarah Palin (R-AK) the “governor of Guam,” and said that he himself had “redefined the conservative movement.”