Cheney: No One Could Have Predicted The Financial Crisis, Just As No One Foresaw 9/11

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"Cheney: No One Could Have Predicted The Financial Crisis, Just As No One Foresaw 9/11"

tricheney.jpg Yesterday in an interview with the Associated Press’s Deb Reichmann, Vice President Cheney repeatedly insisted that no one anticipated the looming U.S. financial crisis. “I don’t think anybody saw it coming,” he said. He then compared the financial crisis to 9/11, another crisis that supposedly no one predicted:

CHENEY: No, obviously, I wouldn’t have predicted that. On the other hand I wouldn’t have predicted 9/11, the global war on terror, the need to simultaneous run military operations in Afghanistan and Iraq or the near collapse of the financial system on a global basis, not just the U.S. [...]

CHENEY: Did you see it coming? (Laughter.)

REICHMANN: I wasn’t responsible for seeing it coming.

CHENEY: Now, what my point is that I don’t think anybody saw it coming.

Oddly enough, in today’s White House press briefing, Deputy Press Secretary Scott Stanzel insisted that the Bush administration “saw those [financial] problems on the horizon,” but it was Congress’s fault for taking “a long time…to act.” In reality, many economic experts — such as Nouriel Roubini, Dean Baker, and Paul Krugman — did predict the economic crisis; the Bush administration just wasn’t listening to them. In reality, administration officials often turned a “blind eye to the impending crisis.”

The same goes for 9/11. On August 6, 2001, the Bush administration received a President’s Daily Brief entitled “Bin Laden Determined to Strike U.S.” The memo warned:

We have not been able to corroborate some of the more sensational threat reporting, such as that from a —- service in 1998 saying that Bin Laden wanted to hijack a U.S. aircraft to gain the release of “Blind Sheikh” Omar Abdel Rahman and other U.S.-held extremists.

Nevertheless, FBI information since that time indicates patterns of suspicious activity in this country consistent with preparations for hijackings or other types of attacks, including recent surveillance of federal buildings in New York.

In 2001, the Federal Aviation Administration distributed a CD-ROM presentation to airlines and airports that cited the possibility of a suicide hijacking. In response to the threat warnings, the Bush administration did nothing.

In September, President Bush made similar comments to Cheney’s, citing the financial crisis in the same breath as “the bursting of the dot-com bubble, major corporate scandals, an unprecedented attack on our homeland, a global war on terror, a series of devastating natural disasters.”

Transcript:

REICHMANN: So let’s start with the economy. Did you ever think that you’d be — that we’d be finishing a two-term Republican presidency with a federal budget deficit so high, with bailouts and government spending sort of run away?

CHENEY: No, obviously, I wouldn’t have predicted that. On the other hand I wouldn’t have predicted 9/11, the global war on terror, the need to simultaneous run military operations in Afghanistan and Iraq or the near collapse of the financial system on a global basis, not just the U.S.

So it’s not a — it’s a difficult set of problems without question. And I wouldn’t have predicted the things that caused it. It’s not as though somebody went out and created a huge deficit because they like deficits. You’ve got the business of having to shore up the financial system, because the financial system is central to the whole, and because the government has a major responsibility for the nation’s finances, in terms of the Federal Reserve, the Securities and Exchange Commission, the Treasury, regulatory authority over the financial sector, the value of the dollar and so forth.

REICHMANN: People think that the administration didn’t see it coming, and they want to know why?

CHENEY: Well, I don’t know that anybody did.

REICHMANN: But why, why didn’t you see such a huge downfall in the economy coming?

CHENEY: I suppose because nobody anywhere was smart enough to figure that out. There may have been a few people who figured it out. But when I look back on it, I think a lot of what happened financially had to do with Fannie Mae and Freddie Mac, that those were programs that were put in place by the federal government, produced subprime mortgages and mortgage-backed securities, and were invested in on a global basis.

REICHMANN: I mean, I know you asked the Congress for reform on that and they didn’t act.

CHENEY: They did not.

REICHMANN: But I mean, we can’t really blame the whole debacle on the fact that there was no Fannie Mae and Freddie Mac reform.

CHENEY: No, but I think you can with the whole concept with mortgage-backed securities that were developed, where the old relationship between borrower and lender broke down, and all of those mortgages were packaged, some good viable instruments, others were questionable in terms of their repayment.

And things happened in the financial community, and I’m not an expert on it, but I think things happened in the financial community that created a situation in which, for example, the five-major investment banks that existed a year ago were gone, or fundamentally transformed themselves. And it’s not just a U.S. problem, this isn’t something that happened only in Washington and New York, this is in fact, a global problem.

REICHMANN: No, but it started here. And I think — CHENEY: Did you see it coming? (Laughter.)

REICHMANN: I wasn’t responsible for seeing it coming.

CHENEY: Now, what my point is that I don’t think anybody saw it coming.

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