In Their Own Words: Anatomy Of A Meltdown (SLIDESHOW)

WASHINGTON -- The global financial system was teetering on the edge of collapse when President Bush and his economics team huddled in the Roosevelt Room of the White House for a briefing that, in the words of one participant, "scared the hell out of everybody."

It was Sept. 18. Lehman Brothers had just gone belly-up, overwhelmed by toxic mortgages. Bank of America had swallowed Merrill Lynch in a hastily arranged sale. Two days earlier, Mr. Bush had agreed to pump $85 billion into the failing insurance giant American International Group.

Read the full story or check out the slideshow below:

• • • • • • • Al Hubbard, economic adviser to President Bush: "There is no question we did not recognize the severity of the problem."

Comments

[ajax2]

Bloomberg, Mr. Diamond from "Free Market" Chicago School,
" Former Fed Chairman Alan Greenspan"s 1 percent interest rate in 2003 -- a 45-year low -- flooded Wall Street with so much cash that banks could increase profits with short-term borrowing to service long-term liabilities, Diamond says. The mismatch grew more dangerous as Greenspan resisted regulation of off-balance-sheet structured investment vehicles, which banks used to circumvent capital requirements.

Reagan"s $4.5 billion rescue of Continental Illinois National Bank & Trust Co. in 1984 convinced bankers that bailouts would come if things turned bad, Diamond says."

[Tom Joad]

"...Government of the people, by the people, and for the people shall not perish from the Earth..." - A. Lincoln

"Oh yes it will" - G.W.B ush and Company.

[dhinds]

When GWB took over the Federal Govt.'s Executive Branch (along with whatever else he could), there was no long a possibility of government's being of, by and for the people. Government then became the property of conservative republicans.

[Mahi Joe]

That image of Bush standing inside the doorway of the plane reminds me of the photo of Nixon in the same exact position with the newspaper heading in big bold letters saying..."I AM NOT A CROOK" Talk about history repeating itself.

[waynesmyer]

"I am not a crook,why, I don't even know what a crook looks like" Oh! There you are Dickie, can you tell me what a crook looks like? YOUR BELOVED GREAT WAR PRESINATOR, Gee Dubba "Baby" Bu$h
I APPROVE THIS MESSAGE! Dickie "F-U" Cheney, your beloved and truly "vice" Great War Profitnator

WHAT'S GOOD FOR HALLIBURTON/KBR/BECTEL/BLACKWATER/WALL ST. IS GOOD FOR AMERIKA!

[ChristyH]

None of this was an accident.... everyone wanted to economy to moving upward, always up -

after the dot.com collapse, after EnRon, after 911, after Katrina, after billions were added to the deficit spent fighting a war, Washington's goal was simple - how do we keep things up ON OUR WATCH... no one wanted to take the political hit for a downturn...

but as every economist knows, markets go up and go down, business cycles boom and cool, naturally - but the titans of Wall Street, the leaders in Washington wanted to play God and defy what needs to happen... Instead, the new mantra was always up, always up - because, heaven forbid, if the economy hit a natural lull, someone might loose an election... so they got creative, and greedy, and reckless....

Just think, if things were allowed to work out slowly after any of the "problems", if markets were allowed to work, if things weren't artificially FIXED, how much better off would all of us be?

The bubble blew up with subprime...but the problems were so much bigger.... Home ownership is a good thing - of course, its only a good thing if a person can ACTUALLY afford the home the are buying..... why didn't that simple thought dawn on anyone.... to allow buyers to buy ONLY homes that they could actually afford...

[northicus]

I'm rereading The Great Unraveling by Paul Krugman the op-ed columnist for the New York Times printed in 03, what a refresher! I think Everyone should read this amazing book especially the Power Brokers and Wall Street Circus Clowns. Who knew? That in a few short years the whole economic meltdown would swamp the Planet. Paul saw it coming and warned us but to no avail and now we face the worst man made disaster in human history! I don't know about most of us but I'm mystified how we let this Nightmare become reality. And still to this day no Pitch forks and Protests! Boy, we got to hand it to the Main stream media for keeping us distracted and clueless. Anyways, let's all hope 09 will bring some sober reflection and working solution for our civilization in peril. Best Wishes to all and may we find some sanity in our stockings and some willingness to speak up.

[JoeTheBlogger]

What a bunch of incompetent ideologue!

[schatsie]

In what way were they incompetent? Shock Doctrine clearly indicates that they are following the CryBaby Capitalist Model to the max... there is nothing there that wasn't going on for years under the Reagan Regime... the issue is the MSM (Mad Dog Media).... how many times did we have to hear about that litte Cuban boy in Miami. Jon Benet, Holloway etc... and not one word in the MSM about the bubbles.

We have been suckered by the GREATEST CON MACHINE the world has seen!!!

[Mahi Joe]

Isn't is interesting to see all these so-called experts now in a state of denial?

[ScottontheSpot]

Bush's excuses are Bull. We've run the science experiment twice now. Once in the 1920s and again in the late 19990s to present. We now know that if you allow financiers to take unlimited risk, they'll make unlimited failures. More specifically, the decisions to rescind Glass-Stegal in 1999, lift the leverage cap from 12% to 40% (or higher) in 2004, and lower capital reserve requirements led directly to this meltdown. And that's before you get to liar loans and other fraudulent activity designed just to generate fees without doing due diligence.

[unite4change]

What is the common denominator with these people? Old lying, cheating, millionaire white men.

[chillingaz]

This is true, but not let us forget that greed has no color other than green and they come in all shades and they don't give a sh*t about any of the working class or the working poor!

[Mahi Joe]

Total incompetency and denial. Those are your common denominators.

[Pdubya]

race bait much?

[ContraEgoiste]

http://www.mcclatchydc.com/251/story/53802.html

Private sector loans, not Fannie or Freddie, triggered crisis

By David Goldstein and Kevin G. Hall | McClatchy Newspapers

WASHINGTON " As the economy worsens and Election Day approaches, a conservative campaign that blames the global financial crisis on a government push to make housing more affordable to lower-class Americans has taken off on talk radio and e-mail.

Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.

Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height vrom 2004 to 2006.

Federal Reserve Board data show that:

_ More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

_ Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

[Pdubya]

oh dear. you're quoting federal reserve data? they're the king-pins of the very mafia.

[chillingaz]

No matter how you slice and dice it, the dems and repus are responsible for the economic collapse we are all witnessing! All of these mother f**kers are all about the green! Don't beleive anything they say about the other. They sold us all out for their own gain at our expense! They play us like no other game in town and you suckers fall for it over and over. How long has it been going on? When will you suckers wake up and smell your own coffee?

[Pdubya]

yep. good post. its the plutocratic new world order center that has divided us into blue and red camps so they can shake eachothers' hands in back rooms and collect the green. there are very few patriotic progressives or conservatives on the hill. however, they are getting more active - together even - with this bailout crime. some of our reps are finally speaking out. they best watch their backs.

[blowhard]

Henry Paulson has to be the biggest idiot on the planet

[ajax2]

It is an act of insanity to deny Republican culpability when so many Republicans took money to block oversight and reform at FreddyMac.

[Changeizgood]

Amazing how they keep calling the morgage and savings and loan meltdown a bubble.

It's a bubble alright, just like the ones in the tub after eating beans. The funkiest bubble to hit the USA, since Bush Beans.

[Anciano]

All this rethug exoneration of Bush re mortgages: Remember, buyer's strike against the Bush administration until Obama's sworn in.
Official White House release from the Office of the Press Secretary dated August 9, 2004. You can find it here: http://www.whitehouse.gov...
"Expanding Homeownership. The President believes that homeownership is the cornerstone of America's vibrant communities and benefits individual families by building stability and long-term financial security. In June 2002, President Bush issued America's Homeownership Challenge to the real estate and mortgage finance industries to encourage them to join the effort to close the gap that exists between the homeownership rates of minorities and non-minorities. The President also announced the goal of increasing the number of minority homeowners by at least 5.5 million families before the end of the decade. Under his leadership, the overall U.S. homeownership rate in the second quarter of 2004 was at an all time high of 69.2 percent."

[2garen]

Yes there is a response to a one in a 100 year event. It is called Treason, Grand Jury Investigations and we can start with Gilean,Cox, Paulson, Bernakie, Greenspan,

[Troubledwawa]

"Treasury Secretary Henry Paulson: "There was no playbook for responding to a once or twice in a hundred year event.""

Yeah there was Hank, it was called Glass-Steagall.

[WIpatriot]

"Leaders" need a playbook? HA! They are supposed to CREATE a playbook. Paulson's problem is he's just doing what the puppetmasters tell him to do.

[Lemmy]

CRA, Clinton, ACORN, Barney Frank, Chris Dodd, Maxene Waters, Franklin Raines . . I think I have them in order . . . .

[Troubledwawa]

I'm not too sure you do...

Senate's Vote on the repeal:

http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=106&session=1&vote=00105

House's Vote on the repeal:

http://clerk.house.gov/evs/1999/roll276.xml

Clinton you got right.

[melonman]

You're not very smart, are you?

[totaldisbelief]

Some guys with educations ,great careers, lots of money and the right connections just aren't that smart after all.

[WIpatriot]

They're smart enough to get away with it....

[Morgoth]

Sadly true.

[SeriousBlack]

No, they just don't care about anybody who doesn't already have lots of money, that's all.

Of course conservatives will say "what of it"? Being too short-sighted to see that it doesn't matter HOW rich you are, if things just continue to get worse and worse, to the point that the entire society breaks down (remember Rome?), EVERYbody goes down, including them.