Crazy Meeting with Obama, McCain, and Bush Post Housing Market Crash 🌱

Quote from Barack Obama’s “A Promised Land” book about a meeting that Joh McCain had organized with George Bush and Obama during the election to discuss. Shows how crazy things actually get in government.

On most days, light streams into the room through broad French doors that look out onto the Rose Garden. But on September 25, as I took my seat for the meeting Bush had called at McCain’s behest, the sky was overcast, Around the table sat the president, Vice President Cheney, McCain, and me, along with Hank Paulson, Nancy Pelosi, Harry Reid, the Republican leaders John Boehner and Mitch McConnell, plus the chairpersons and ranking members of the relevant committees. A horde of White House and congressional staffers lined the walls, taking notes and leafing through thick briefing books. No one looked like they wanted to be there. The president certainly hadn’t sounded enthusiastic when we’d spo- ken on the phone the previous day. I disagreed with just about every one of George W. Bush’s major policy decisions, but I’d come to like the man, finding him to be straightforward, disarming, and self-deprecating in his humor. “I can’t tell you why McCain thinks this is a good idea,” he’d said, sounding almost apologetic. He acknowledged that Hank Paulson and | were already communicating a couple of times daily and expressed ap- preciation for my behind-the-scenes help with congressional Demo- crats. “If I were you, Washington’s the last place I’d want to be,” Bush said. “But McCain asked, and I can’t say no. Hopefully we can keep it short.” Only later would I learn that Paulson and the rest of Bush’s team had been opposed to the meeting, and for good reason. Over the previous several days, congressional leaders had begun to narrow their differences on the TARP legislation. That very morning, there had been reports of a tentative agreement (although within a few hours, House Republicans pulled back from it). With negotiations at such a delicate stage, Bush’s advisors rightly felt that inserting me and McCain into the process would likely hinder more than help. Bush, though, had overruled his team, and I couldn’t blame him. Given the increasing resistance to TARP within his own party, he could hardly afford to have the Republican nominee go south on him. Still, the entire proceeding had the air of an elaborate charade. Looking at the dour faces around the room, I understood we were gathered not for a substantive negotiation but rather a presidential effort to placate one man. The president opened with a brief appeal for unity before turning the meeting over to Paulson, who updated us on current market condi- tions and explained how TARP funds would be used to buy up bad mortgages (“toxic assets,” as they were called) from the banks, thereby shoring up balance sheets and restoring market confidence. “If Hank and Ben think this plan is going to work,” Bush said after they were fin- ished, “then that’s what I’m for.” In accordance with protocol, the president next called on Speaker Pelosi. Rather than take the floor herself, though, Nancy politely in- formed the president that the Democrats would have me speak first, on their behalf, It had been Nancy and Harry’s idea that I serve as their point person, and I was grateful for it. Not only did it ensure that 1 wouldn’t be out- flanked by McCain during the deliberations, but it signaled that my fel- low Democrats saw their political fortunes as wrapped up with mine. The move seemed to catch the Republicans by surprise, and I couldn’t help noticing the president giving Nancy one of his patented smirks—as a shrewd politician, he recognized a deft maneuver when he saw one— before nodding my way. For the next several minutes, I spoke about the nature of the crisis, the details of the emerging legislation, and the remaining points on oversight, executive compensation, and homeowner relief that Demo- crats believed still needed to be addressed. Noting that both Senator McCain and I had publicly pledged not to play politics with the financial rescue effort, 1 told the president that Democrats would deliver their share of the votes needed for passage. But I warned that if there was any truth to reports that some Republican leaders were backing away and insisting on starting from scratch with a whole new plan, it would inevi- tably bog down negotiations, and “the consequences would be severe.” Bush turned to McCain and said, “John, since Barack had a chance to speak, I think it’s only fair if I let you go next.” Everyone looked at McCain, whose jaw tightened. He appeared to be on the verge of saying something, thought better of it, and briefly fidg- eted in his chair. “I think I’ll just wait for my turn,” he said finally, There are moments in an election battle, as in life, when all the pos- sible pathways save one are suddenly closed; when what felt like a wide distribution of probable outcomes narrows to the inevitable. This was one of those moments. Bush looked at McCain with a raised eyebrow, shrugged, and called on John Boehner. Boehner said he wasn’t talking about starting from scratch but just wanted some modifications— including a plan he had trouble describing, which involved the federal government insuring banks’ losses rather than purchasing their assets. I asked Paulson if he’d looked at this Republican insurance proposal and determined whether it would work. Paulson said firmly that he had and it wouldn’t. Richard Shelby, the ranking member on the Senate Banking Com- mittee, interjected to say he’d been told by a number of economists that TARP wouldn’t work. He suggested that the White House give Con- gress more time to consider all its options. Bush cut him off and said the country didn’t have more time. As the discussion wore on, it became increasingly apparent that none of the Republican leaders were familiar with the actual content of the latest version of the TARP legislation—or for that matter the nature of their own proposed changes. They were simply trying to find a way to avoid taking a tough vote. After listening to several minutes of wrangling back and forth, I jumped in again. “Mr. President,” I said, “I’d still like to hear what Senator McCain has to say.” Once again, everyone turned to McCain. This time he studied a small note card in his hand, muttered something I couldn’t make out, and then served up maybe two or three minutes of bromides—about how talks seemed to be making progress, how it was important to give Boehner room to move his caucus to yes. And that was it. No plan. No strategy. Not even a smidgen of a sug- gestion as to how the different positions might be bridged. The room fell silent as McCain set down his note card, his eyes downcast, like a batter who knows he’s just whiffed at the plate. I almost felt sorry for him; for his team to have encouraged such a high-stakes move and then sent their candidate into the meeting unprepared was political malpractice. When reporters got wind of his performance that day, the coverage would not be kind. The more immediate effect of John’s weirdness, though, was to set off a Cabinet Room free-for-all. Nancy and Spencer Bachus, the ranking Republican on the House Financial Services Committee, started arguing over who deserved credit for the stronger taxpayer protections in the most recent version of the legislation. Barney Frank, the tough and quick-witted Democrat from Massachusetts who knew his stuff and had probably worked harder than anyone to help Paulson get TARP across the finish line, started taunting the Republicans, yelling repeatedly, “What’s your plan? What’s your plan?” Faces reddened; voices rose; peo- ple talked over one another. And all the while, McCain remained silent, stewing in his chair. It got so bad that finally President Bush rose to his feet. “I’ve obviously lost control of this meeting,” he said. “We’re finished.” With that, he wheeled around and charged out the south door. The entire scene left me stunned. As McCain and the Republican leadership quickly filed out of the room, I pulled Nancy, Harry, and the rest of the Democrats into a huddle in the adjacent Roosevelt Room. They were in various states of agita- tion, and because we’d already decided I wouldn’t be giving any post- meeting comments to reporters, I wanted to make sure that none of them said anything that might make matters worse. We were discussing ways that they could constructively summarize the meeting when Paul- son entered, looking absolutely shell-shocked. Several of my colleagues started shooing him away, as if he were an unpopular kid on the play- ground. A few even jeered. “Nancy,” Paulson said, towering next to the Speaker. “Please …” And then, in an inspired and somewhat sad blend of humor and desperation, he lowered his six-foot-five, sixty-two-year-old frame onto one knee. “I’m begging you. Don’t blow this up.” The Speaker allowed a quick smile. “Hank, I didn’t know you were Catholic,” she said, Just as quickly her smile evaporated, and she added curtly, “You may not have noticed, but we’re not the ones trying to blow things up.” I had to give Paulson credit; getting back to his feet, he stood there for several more minutes and let the Democrats vent. By the time they exited for press availability, everyone had calmed down and agreed to try to put the best spin they could on the meeting. Hank and I made plans to talk later that night. After leaving the White House, I put ina call to Plouffe.