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.”

Yesterday, President Obama spoke at Federal Hall in New York — right across the street from the New York Stock Exchange — to lay out his vision for reforming the country’s financial regulations. “We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses,” he said. “Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.”

The regulatory reform effort has encountered stiff opposition in Congress from both the financial services industry and Republicans, who contend that the legislation is “an unwarranted intrusion on markets that could hamper the nascent economic recovery.” But Sen. Jim DeMint (R-SC) went a step further, claiming that instead of looking at better ways to regulate Wall Street, Obama should really be looking for ways to cut Wall Street’s taxes:

Instead of looking at more regulation, we could do a lot by fixing our tax system here in this country, to make us globally competitive. The President needs to focus on what really has caused problems and look at what has really made America so prosperous, and I’m afraid that’s not the lens he’s looking through right now.

Watch it:

So in DeMint’s world, Wall Street placed huge bets on the mortgage market and leveraged itself 40-1 because its taxes were too high? And lowering their taxes would prevent them from ever again imploding the financial system?

Actually, Wall Street banks already pay far below the statutory corporate tax rate of 35 percent by taking advantage of myriad tax credits and write-offs, as well as by sheltering income in low-tax (or no-tax) countries. For instance, Morgan Stanley had an effective tax rate of 21 percent in 2008, which was huge compared to the one percent (yes, one!) that Goldman Sachs paid. And this is by no means a phenomenon restricted to Wall Street, as many U.S. corporations lower their tax rate by ten or twenty points thanks to tax havens and other intricacies of the corporate tax code.

DeMint is espousing the same rhetoric as the CNBC crew, which believes that as long as Wall Street is making money, regulation is unnecessary, and that money-making should be abetted by all aspects of the tax code. But Goldman Sachs made a record breaking $3.44 billion profit in the second quarter of this year, so the tax code doesn’t seem to be holding it back. In fact, the profits that Wall Street is starting to rack up make a financial transactions tax (which levies a small tax on trades and, as Dean Baker pointed out, “would be too small for normal investors to even notice”) something worth exploring.

NOTE: This is the first installment of our series — Meet Your Insurance Company Executive: An Interview with Wendell Potter.

Yesterday, ThinkProgress talked with Wendell Potter, Cigna Health Care’s former Communication Director, about a common and widespread practice among insurance companies called “rescission.” As the former Cigna executive explains, rescission is the insurance industry practice of finding reasons — even reasons as flimsy as typos on your enrollment form — to cancel your coverage when you get sick. According to Potter, insurance companies are saving billions by rescinding coverage from Americans who purchase individual insurance:

POTTER: If they determine that you might have left out something that they consider pertinent on your application and might have indicated that you would have had some illness or might get an illness down the road, and you’ve been getting treatment and submitting claims to your insurance company, they will go back and look at that application and they will often rescind or cancel your policy even if you’ve been paying your premiums on-time, every month, for years. You will be left holding the bag with the responsibility of paying all of your medical care when insurance companies do this. They’ve been doing it for many years and saving billions of dollars as a result of this.

Watch it:

The Washington Post recently highlighted other examples of rescission:

Woman Lost Her Home Because Coverage Was Canceled For Condition She Didn’t Have. “For Teresa Dietrich, it was fibroids. The Northern California real estate agent was left to pay $19,000 after Blue Cross said she did not disclose a diagnosis of the benign uterine tumors. But Dietrich said the doctor who had written ‘fibroids’ on her medical record never mentioned his suspicions to her. The bills destroyed her credit and cost her her home – and, in a comically cruel twist, the surgery proved the doctor was wrong. ‘They said I had a condition I didn’t even have,’ Dietrich said. ‘And they canceled me.’”

Woman Saddled With $25,000 Debt For Not Disclosing Condition She Didn’t Know She Had. “The untimely disappearance of Sally Marrari’s medical coverage goes a long way toward explaining why insurance companies are cast as the villain in the health-care reform drama. ‘They said I never mentioned I had a back problem,’ said Marrari, 52, whose coverage with Blue Cross was abruptly canceled in 2006 after a thyroid disorder, fluid in the heart and lupus were diagnosed. That left the Los Angeles woman with $25,000 in medical bills and the stigma of the company’s claim that she had committed fraud by not listing on a health questionnaire ‘preexisting conditions’ Marrari said she did not know she had.’”

Woman Denied Coverage For Gall Bladder Surgery Because Of Husband’s High Cholesterol. Washington Post: “In a pending case, Blue Shield searched in vain for an inconsistency in the health records of the wife of a dairy farmer after she filed a claim for emergency gallbladder surgery, according to attorneys for the family. Turning to her husband’s questionnaire, the company discovered he had not mentioned his high cholesterol and dropped them both. Blue Shield officials said they would not comment on a pending case.”

Rescission is widespread – an investigation by the House Subcommittee on Oversight and Investigations found that three insurance companies alone (WellPoint, UnitedHealth and Assurant) cancelled more than 20,000 policies in the last five years.

As the wreckage of the subprime bubble has settled, details have slowly leaked out about the pernicious lending practices that some of the biggest banks employed, particularly when it came to taking advantage of minority borrowers. The highest-profile example of this was Wells Fargo’s “ghetto loans,” in which the bank allegedly pushed minority borrowers who qualified for prime loans into subprime, which can add more than $100,000 in interest payments to a mortgage.

But according to a new report by CAP’s Andrew Jakabovics and Jeff Chapman, Wells Fargo was far from the only bank with obvious racial disparities in its lending. Jakabovics and Chapman looked at the lending data for 14 systemically important banks in 2006 — a year in which these 14 originated more than one out of every three higher-priced mortgages in the country — and the results are fairly appalling:

Overall, 17.8 percent of white borrowers were given higher-priced mortgages when borrowing from large banks in 2006, yet 30.9 percent of Hispanics and a staggering 41.5 percent of African Americans got higher-priced mortgages…Among high-income borrowers in 2006, African Americans were three times as likely as whites to pay higher prices for mortgages—32.1 percent compared to 10.5 percent. Hispanics were nearly as likely as African Americans to pay higher prices for their mortgages at 29.1 percent.

So not only were the banks handing out subprime loans to minorities on a much greater scale, but they were issuing them to lots of low-risk borrowers — households earning more than twice their area’s median income, most of which reported six-figure incomes — at a dizzying rate (which was, again, significantly higher for minorities). I would be interested to hear how the banks explain away that one.

To be fair, many of the banks that have the most egregious stats actually bought their racial disparities, as some of the biggest subprime lenders collapsed and were acquired by the big banks. Bank of America, for instance, acquired LaSalle and Countrywide, both of which were far more likely to offer higher-priced loans to minorities than Bank of America itself. JP Morgan bought Washington Mutual, which was the worst of the banks analyzed, “with fully 56.9 percent of African Americans and 42.3 percent of Hispanics paying higher prices, compared to 16.9 percent of whites.”

The banks examined in the report were the recipients of 43 percent of the funds dispersed under the Troubled Asset Relief Program (TARP), and Jakabovics and Chapman advocate not allowing any of the banks that still owe TARP funds to pay them back without receiving a passing grade on fair lending practices from the TARP’s Inspector General.

These numbers also make the case for the creation of a Consumer Financial Protection Agency (CFPA) with strong enforcement abilities over fair lending practices. Discriminatory lending is illegal, but these numbers show that not very much was done about it. This was presumably a profitable form of lending for these institutions, which regulators charged with ensuring the safety and soundness of banks would have been loath to pull back.

By removing consumer protection responsibilities from the traditional bank regulators, and placing it with a new agency, consumers will have an advocate within the regulatory system, and discriminatory lending of the sort Jakabovics and Chapman found will hopefully be met with the sort of penalties that it deserves.