Mitt Romney Begs George W Bush NOT to Endorse him

"Has he endorsed you?" George H.W. Bush quietly asked Romney as reporters were beginning to the leave the room.
"Uh, no, no," Romney responded, before Barbara Bush quickly ended the conversation: "We'll talk about that," the former first lady said.

hahahahahahahahahahahahahahahahahahahahahahahahahah gasp hahahahahahahah

 Mitt Romney Gets George H.W. Bush Endorsement, But George W. Bush Remains Absent

Posted: 03/30/2012 9:12 am
By STEVE PEOPLES, THE ASSOCIATED PRESS
HOUSTON -- George W. Bush is as hard to find in his father's office, as he is in the 2012 presidential contest.
The 43rd president appears in a gold-framed picture tucked into a far corner of the room, partially hidden by a Texas flag and a cabinet door. The placement – whether intentional or not – is a reminder of the Republican presidential campaign and the lengths to which Romney and his rivals have tried to marginalize the two-term president.
The younger Bush was an afterthought Thursday as President George H.W. Bush met with current GOP front-runner Mitt Romney until a reporter raised the issue.
"I haven't met with President George W. Bush. We speak from time to time," Romney said when asked if he had sought the younger Bush's endorsement.
Reporters were forced to leave the room before they could ask more about Romney's connection to the Republican president who left office just three years ago with the nation on the brink of financial ruin. George W. Bush has been ignored for months in the Republican presidential campaign. But his absence has been more pronounced over the last seven days as Romney trumpeted the endorsements of the former president's father and younger brother, former Florida. Gov. Jeb Bush, while spending two days courting donors across Texas.
George W. Bush, who lives in Dallas, did not attend any of Romney's half dozen Texas fundraisers this week. And he's not expected to follow his family's migration to Romney's camp any time soon.


While largely unspoken, both sides acknowledge that Republicans would be best served by not reminding voters of the Bush legacy of gaping budget deficits, two wars and record low approval ratings. His eight-year presidency has merited no more than a fleeting reference from Romney and his rivals in debates, campaign stops and interviews.
"For now we're just staying out of it," George W. Bush spokesman Freddy Ford said Thursday, declining to comment on a possible endorsement. Ford said Bush was focused on promoting and developing a presidential library bearing his name at Southern Methodist University.
"That's really where he's spending his time," Ford said.
But George W. Bush's virtual invisibility from the presidential contest seemed to surprise even his 87-year-old father Thursday, as a handful of reporters visited the senior Bush's private office in Houston to watch him endorse Romney.
"Has he endorsed you?" George H.W. Bush quietly asked Romney as reporters were beginning to the leave the room.
"Uh, no, no," Romney responded, before Barbara Bush quickly ended the conversation: "We'll talk about that," the former first lady said.
The 43rd president has been noticeably absent from national politics since leaving office in 2009 with a Gallup approval rating of just 34 percent. His predecessor, Democrat Bill Clinton, had a 66 percent approval rating in early 2001 when he stepped down after two terms marred by a sex scandal and impeachment.
A plurality of Americans continue to blame Bush for the nation's economic struggles: 43 percent of voters said he deserved a lot or almost all of the blame, compared with 36 percent who point to Republicans in Congress, 33 percent who think Democrats in Congress are responsible and 30 percent who credit President Barack Obama, according to a December AP-GfK poll.
In a presidential contest dominated by concerns over the economy, government spending and federal debt, the Republican candidates have been loath to acknowledge the extent to which the George W. Bush administration's policies contributed to those problems.
There is no question that Obama's policies, including the federal stimulus program and the auto industry bailout, have swollen the deficit and deepened the debt. And three years into his presidency, Obama often falls back on complaints about the bad situation he inherited when defending his own economic performance.
But while Obama may be overly eager to blame the Bush years for the nation's problems, GOP presidential contenders seem just as eager to pretend those years never happened.
"George W. Bush is still too fresh in the minds of voters," said Republican operative Michael Dennehy, a top staffer for Sen. John McCain's presidential bid four years ago. "The Democrats' strategy is to try to pin the bad economy on him. ... It's smarter to just avoid being directly drawn into that line of attack right now."
Taking office in 2001 with a balanced federal budget and a surplus in the Treasury, Bush quickly pushed through sweeping tax cuts without nipping expenditures a corresponding amount. The Bush tax cuts were set to expire after 10 years, but Obama allowed them to remain in place temporarily in exchange for an extension of unemployment benefits and a payroll tax cut.
The wars in Iraq and Afghanistan launched after the Sept. 11, 2001, terror attacks never were budgeted and have cost taxpayers more than $1.4 trillion so far. Obama ordered the last troops out of Iraq in December, but the Afghanistan conflict is set to continue through 2014.
Bush also signed legislation in 2003 enacting a prescription drug benefit as part of Medicare, the government health care plan for seniors, a huge entitlement program projected to cost as much as $1.2 trillion over 10 years.
The Troubled Asset Relief Program, the bank bailout program widely loathed by many conservatives, was another Bush-era package. Congress authorized nearly $700 billion for the program at the recommendation of Bush's treasury secretary, former Goldman Sachs executive Henry Paulson, in response to the collapse of Lehman Brothers and the subsequent financial crisis in the fall of 2008. As a presidential candidate, Obama supported the TARP bailout, as did his GOP rival, Sen. John McCain.
Romney shared a deep sense of respect for the Bush family while glancing at the picture in the corner, which featured the faces of the former presidents, George H. W. Bush and George W. Bush.
"I love that picture over there of the two presidents. Father and son," Romney said as reporters were leaving the office. "What a legacy."
__
AP Deputy Director of Polling Jennifer Agiesta in Washington contributed to this report.

The Housing Bubble that George Built

http://www.nytimes.com/2008/12/21/business/21admin.html?_r=1&em=&pagewanted=all

This has now become Forgotten and Forbidden Knowledge: George W Bush's role in inflating the housing bubble and ignoring the warning signs of mounting debt.

The Reckoning

White House Philosophy Stoked Mortgage Bonfire

By JO BECKER, SHERYL GAY STOLBERG and STEPHEN LABATON

Published: December 20, 2008

“We can put light where there’s darkness, and hope where there’s despondency in this country. And part of it is working together as a nation to encourage folks to own their own home.” — President Bush, Oct. 15, 2002

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.

The president listened as Ben S. Bernanke, chairman of the Federal Reserve, laid out the latest terrifying news: The credit markets, gripped by panic, had frozen overnight, and banks were refusing to lend money.

Then his Treasury secretary, Henry M. Paulson Jr., told him that to stave off disaster, he would have to sign off on the biggest government bailout in history.

Mr. Bush, according to several people in the room, paused for a single, stunned moment to take it all in.

“How,” he wondered aloud, “did we get here?”

Eight years after arriving in Washington vowing to spread the dream of homeownership, Mr. Bush is leaving office, as he himself said recently, “faced with the prospect of a global meltdown” with roots in the housing sector he so ardently championed.

There are plenty of culprits, like lenders who peddled easy credit, consumers who took on mortgages they could not afford and Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk.

But the story of how we got here is partly one of Mr. Bush’s own making, according to a review of his tenure that included interviews with dozens of current and former administration officials.

From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone.

He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.

Mr. Bush did foresee the danger posed by Fannie Mae and Freddie Mac, the government-sponsored mortgage finance giants. The president spent years pushing a recalcitrant Congress to toughen regulation of the companies, but was unwilling to compromise when his former Treasury secretary wanted to cut a deal. And the regulator Mr. Bush chose to oversee them — an old prep school buddy — pronounced the companies sound even as they headed toward insolvency.

As early as 2006, top advisers to Mr. Bush dismissed warnings from people inside and outside the White House that housing prices were inflated and that a foreclosure crisis was looming. And when the economy deteriorated, Mr. Bush and his team misdiagnosed the reasons and scope of the downturn; as recently as February, for example, Mr. Bush was still calling it a “rough patch.”

The result was a series of piecemeal policy prescriptions that lagged behind the escalating crisis.

“There is no question we did not recognize the severity of the problems,” said Al Hubbard, Mr. Bush’s former chief economics adviser, who left the White House in December 2007. “Had we, we would have attacked them.”

Looking back, Keith B. Hennessey, Mr. Bush’s current chief economics adviser, says he and his colleagues did the best they could “with the information we had at the time.” But Mr. Hennessey did say he regretted that the administration did not pay more heed to the dangers of easy lending practices. And both Mr. Paulson and his predecessor, John W. Snow, say the housing push went too far.

“The Bush administration took a lot of pride that homeownership had reached historic highs,” Mr. Snow said in an interview. “But what we forgot in the process was that it has to be done in the context of people being able to afford their house. We now realize there was a high cost.”

For much of the Bush presidency, the White House was preoccupied by terrorism and war; on the economic front, its pressing concerns were cutting taxes and privatizing Social Security. The housing market was a bright spot: ever-rising home values kept the economy humming, as owners drew down on their equity to buy consumer goods and pack their children off to college.

Lawrence B. Lindsey, Mr. Bush’s first chief economics adviser, said there was little impetus to raise alarms about the proliferation of easy credit that was helping Mr. Bush meet housing goals.

“No one wanted to stop that bubble,” Mr. Lindsey said. “It would have conflicted with the president’s own policies.”

Today, millions of Americans are facing foreclosure, homeownership rates are virtually no higher than when Mr. Bush took office, Fannie and Freddie are in a government conservatorship, and the bailout cost to taxpayers could run in the trillions.

As the economy has shed jobs — 533,000 last month alone — and his party has been punished by irate voters, the weakened president has granted his Treasury secretary extraordinary leeway in managing the crisis.

Never once, Mr. Paulson said in a recent interview, has Mr. Bush overruled him. “I’ve got a boss,” he explained, who “understands that when you’re dealing with something as unprecedented and fast-moving as this we need to have a different operating style.”

Mr. Paulson and other senior advisers to Mr. Bush say the administration has responded well to the turmoil, demonstrating flexibility under difficult circumstances. “There is not any playbook,” Mr. Paulson said.

The president declined to be interviewed for this article. But in recent weeks Mr. Bush has shared his views of how the nation came to the brink of economic disaster. He cites corporate greed and market excesses fueled by a flood of foreign cash — “Wall Street got drunk,” he has said — and the policies of past administrations. He blames Congress for failing to reform Fannie and Freddie. Last week, Fox News asked Mr. Bush if he was worried about being the Herbert Hoover of the 21st century.

“No,” Mr. Bush replied. “I will be known as somebody who saw a problem and put the chips on the table to prevent the economy from collapsing.”

But in private moments, aides say, the president is looking inward. During a recent ride aboard Marine One, the presidential helicopter, Mr. Bush sounded a reflective note.

“We absolutely wanted to increase homeownership,” Tony Fratto, his deputy press secretary, recalled him saying. “But we never wanted lenders to make bad decisions.”

A Policy Gone Awry

Darrin West could not believe it. The president of the United States was standing in his living room.

It was June 17, 2002, a day Mr. West recalls as “the highlight of my life.” Mr. Bush, in Atlanta to unveil a plan to increase the number of minority homeowners by 5.5 million, was touring Park Place South, a development of starter homes in a neighborhood once marked by blight and crime.

Mr. West had patrolled there as a police officer, and now he was the proud owner of a $130,000 town house, bought with an adjustable-rate mortgage and a $20,000 government loan as his down payment — just the sort of creative public-private financing Mr. Bush was promoting.

“Part of economic security,” Mr. Bush declared that day, “is owning your own home.”

A lot has changed since then. Mr. West, beset by personal problems, left Atlanta. Unable to sell his home for what he owed, he said, he gave it back to the bank last year. Like other communities across America, Park Place South has been hit with a foreclosure crisis affecting at least 10 percent of its 232 homes, according to Masharn Wilson, a developer who led Mr. Bush’s tour.

“I just don’t think what he envisioned was actually carried out,” she said.

Park Place South is, in microcosm, the story of a well-intentioned policy gone awry. Advocating homeownership is hardly novel; the Clinton administration did it, too. For Mr. Bush, it was part of his vision of an “ownership society,” in which Americans would rely less on the government for health care, retirement and shelter. It was also good politics, a way to court black and Hispanic voters.

But for much of Mr. Bush’s tenure, government statistics show, incomes for most families remained relatively stagnant while housing prices skyrocketed. That put homeownership increasingly out of reach for first-time buyers like Mr. West.

So Mr. Bush had to, in his words, “use the mighty muscle of the federal government” to meet his goal. He proposed affordable housing tax incentives. He insisted that Fannie Mae and Freddie Mac meet ambitious new goals for low-income lending.

Concerned that down payments were a barrier, Mr. Bush persuaded Congress to spend up to $200 million a year to help first-time buyers with down payments and closing costs.

And he pushed to allow first-time buyers to qualify for federally insured mortgages with no money down. Republican Congressional leaders and some housing advocates balked, arguing that homeowners with no stake in their investments would be more prone to walk away, as Mr. West did. Many economic experts, including some in the White House, now share that view.

The president also leaned on mortgage brokers and lenders to devise their own innovations. “Corporate America,” he said, “has a responsibility to work to make America a compassionate place.”

And corporate America, eyeing a lucrative market, delivered in ways Mr. Bush might not have expected, with a proliferation of too-good-to-be-true teaser rates and interest-only loans that were sold to investors in a loosely regulated environment.

“This administration made decisions that allowed the free market to operate as a barroom brawl instead of a prize fight,” said L. William Seidman, who advised Republican presidents and led the savings and loan bailout in the 1990s. “To make the market work well, you have to have a lot of rules.”

But Mr. Bush populated the financial system’s alphabet soup of oversight agencies with people who, like him, wanted fewer rules, not more.

 Like Minds on Laissez-Faire

The president’s first chairman of the Securities and Exchange Commission promised a “kinder, gentler” agency. The second was pushed out amid industry complaints that he was too aggressive. Under its current leader, the agency failed to police the catastrophic decisions that toppled the investment bank Bear Stearns and contributed to the current crisis, according to a recent inspector general’s report.

As for Mr. Bush’s banking regulators, they once brandished a chain saw over a 9,000-page pile of regulations as they promised to ease burdens on the industry. When states tried to use consumer protection laws to crack down on predatory lending, the comptroller of the currency blocked the effort, asserting that states had no authority over national banks.

The administration won that fight at the Supreme Court. But Roy Cooper, North Carolina’s attorney general, said, “They took 50 sheriffs off the beat at a time when lending was becoming the Wild West.”

The president did push rules aimed at forcing lenders to more clearly explain loan terms. But the White House shelved them in 2004, after industry-friendly members of Congress threatened to block confirmation of his new housing secretary.

In the 2004 election cycle, mortgage bankers and brokers poured nearly $847,000 into Mr. Bush’s re-election campaign, more than triple their contributions in 2000, according to the nonpartisan Center for Responsive Politics. The administration did not finalize the new rules until last month.

Among the Republican Party’s top 10 donors in 2004 was Roland Arnall. He founded Ameriquest, then the nation’s largest lender in the subprime market, which focuses on less creditworthy borrowers. In July 2005, the company agreed to set aside $325 million to settle allegations in 30 states that it had preyed on borrowers with hidden fees and ballooning payments. It was an early signal that deceptive lending practices, which would later set off a wave of foreclosures, were widespread.

Andrew H. Card Jr., Mr. Bush’s former chief of staff, said White House aides discussed Ameriquest’s troubles, though not what they might portend for the economy. Mr. Bush had just nominated Mr. Arnall as his ambassador to the Netherlands, and the White House was primarily concerned with making sure he would be confirmed.

“Maybe I was asleep at the switch,” Mr. Card said in an interview.

Brian Montgomery, the Federal Housing Administration commissioner, understood the significance. His agency insures home loans, traditionally for the same low-income minority borrowers Mr. Bush wanted to help. When he arrived in June 2005, he was shocked to find those customers had been lured away by the “fool’s gold” of subprime loans. The Ameriquest settlement, he said, reinforced his concern that the industry was exploiting borrowers.

In December 2005, Mr. Montgomery drafted a memo and brought it to the White House. “I don’t think this is what the president had in mind here,” he recalled telling Ryan Streeter, then the president’s chief housing policy analyst.

It was an opportunity to address the risky subprime lending practices head on. But that was never seriously discussed. More senior aides, like Karl Rove, Mr. Bush’s chief political strategist, were wary of overly regulating an industry that, Mr. Rove said in an interview, provided “a valuable service to people who could not otherwise get credit.” While he had some concerns about the industry’s practices, he said, “it did provide an opportunity for people, a lot of whom are still in their houses today.”

The White House pursued a narrower plan offered by Mr. Montgomery that would have allowed the F.H.A. to loosen standards so it could lure back subprime borrowers by insuring similar, but safer, loans. It passed the House but died in the Senate, where Republican senators feared that the agency would merely be mimicking the private sector’s risky practices — a view Mr. Rove said he shared.

Looking back at the episode, Mr. Montgomery broke down in tears. While he acknowledged that the bill did not get to the root of the problem, he said he would “go to my grave believing” that at least some homeowners might have been spared foreclosure.

Today, administration officials say it is fair to ask whether Mr. Bush’s ownership push backfired. Mr. Paulson said the administration, like others before it, “over-incented housing.” Mr. Hennessey put it this way: “I would not say too much emphasis on expanding homeownership. I would say not enough early focus on easy lending practices.”

‘We Told You So’

Armando Falcon Jr. was preparing to take on a couple of giants.

A soft-spoken Texan, Mr. Falcon ran the Office of Federal Housing Enterprise Oversight, a tiny government agency that oversaw Fannie Mae and Freddie Mac, two pillars of the American housing industry. In February 2003, he was finishing a blockbuster report that warned the pillars could crumble.

Created by Congress, Fannie and Freddie — called G.S.E.’s, for government-sponsored entities — bought trillions of dollars’ worth of mortgages to hold or sell to investors as guaranteed securities. The companies were also Washington powerhouses, stuffing lawmakers’ campaign coffers and hiring bare-knuckled lobbyists.

Mr. Falcon’s report outlined a worst-case situation in which Fannie and Freddie could default on debt, setting off “contagious illiquidity in the market” — in other words, a financial meltdown. He also raised red flags about the companies’ soaring use of derivatives, the complex financial instruments that economic experts now blame for spreading the housing collapse.

Today, the White House cites that report — and its subsequent effort to better regulate Fannie and Freddie — as evidence that it foresaw the crisis and tried to avert it. Bush officials recently wrote up a talking points memo headlined “G.S.E.’s — We Told You So.”

But the back story is more complicated. To begin with, on the day Mr. Falcon issued his report, the White House tried to fire him.

At the time, Fannie and Freddie were allies in the president’s quest to drive up homeownership rates; Franklin D. Raines, then Fannie’s chief executive, has fond memories of visiting Mr. Bush in the Oval Office and flying aboard Air Force One to a housing event. “They loved us,” he said.

 So when Mr. Falcon refused to deep-six his report, Mr. Raines took his complaints to top Treasury officials and the White House. “I’m going to do what I need to do to defend my company and my position,” Mr. Raines told Mr. Falcon.

Days later, as Mr. Falcon was in New York preparing to deliver a speech about his findings, his cellphone rang. It was the White House personnel office, he said, telling him he was about to be unemployed.

His warnings were buried in the next day’s news coverage, trumped by the White House announcement that Mr. Bush would replace Mr. Falcon, a Democrat appointed by Bill Clinton, with Mark C. Brickell, a leader in the derivatives industry that Mr. Falcon’s report had flagged.

It was not until 2003, when Freddie became embroiled in an accounting scandal, that the White House took on the companies in earnest. Mr. Bush decided to quit the long-standing practice of rewarding supporters with high-paying appointments to the companies’ boards — “political plums,” in Mr. Rove’s words. He also withdrew Mr. Brickell’s nomination and threw his support behind Mr. Falcon, beginning an intense effort to give his little regulatory agency more power.

Mr. Falcon lacked explicit authority to limit the size of the companies’ mammoth investment portfolios, or tell them how much capital they needed to guard against losses. White House officials wanted that to change. They also wanted the power to put the companies into receivership, hoping that would end what Mr. Card, the former chief of staff, called “the myth of government backing,” which gave the companies a competitive edge because investors assumed the government would not let them fail.

By the spring of 2005 a deal with Congress seemed within reach, Mr. Snow, the former Treasury secretary, said in an interview.

Michael G. Oxley, an Ohio Republican and then-chairman of the House Financial Services Committee, had produced what Mr. Snow viewed as “a pretty darned good bill,” a watered-down version of what the president sought. But at the urging of Mr. Card and the White House economics team, the president decided to hold out for a tougher bill in the Senate.

Mr. Card said he feared that Mr. Snow was “more interested in the deal than the result.” When the bill passed the House, the president issued a statement opposing it, effectively killing any chance of compromise. Mr. Oxley was furious.

“The problem with those guys at the White House, they had all the answers and they didn’t think they had to listen to anyone, including the Treasury secretary,” Mr. Oxley said in a recent interview. “They were driving the ideological train. He was in the caboose, and they were in the engine room.”

Mr. Card and Mr. Hennessey said they had no regrets. They are convinced, Mr. Hennessey said, that the Oxley bill would have produced “the worst of all possible outcomes,” the illusion of reform without the substance.

Still, some former White House and Treasury officials continue to debate whether Mr. Bush’s all-or-nothing approach scuttled a measure that, while imperfect, might have given an aggressive regulator enough power to keep the companies from failing.

Mr. Snow, for one, calls Mr. Oxley “a hero,” adding, “He saw the need to move. It didn’t get done. And it’s too bad, because I think if it had, I think we could well have avoided a big contributor to the current crisis.”

Unheeded Warnings

Jason Thomas had a nagging feeling.

The New Century Financial Corporation, a huge subprime lender whose mortgages were bundled into securities sold around the world, was headed for bankruptcy in March 2007. Mr. Thomas, an economic analyst for President Bush, was responsible for determining whether it was a hint of things to come.

At 29, Mr. Thomas had followed a fast-track career path that took him from a Buffalo meatpacking plant, where he worked as a statistician, to the White House. He was seen as a whiz kid, “a brilliant guy,” his former boss, Mr. Hubbard, says.

As Mr. Thomas began digging into New Century’s failure that spring, he became fixated on a particular statistic, the rent-to-own ratio.

Typically, as home prices increase, rental costs rise proportionally. But Mr. Thomas sent charts to top White House and Treasury officials showing that the monthly cost of owning far outpaced the cost to rent. To Mr. Thomas, it was a sign that housing prices were wildly inflated and bound to plunge, a condition that could set off a foreclosure crisis as conventional and subprime borrowers with little equity found they owed more than their houses were worth.

It was not the Bush team’s first warning. The previous year, Mr. Lindsey, the former chief economics adviser, returned to the White House to tell his old colleagues that housing prices were headed for a crash. But housing values are hard to evaluate, and Mr. Lindsey had a reputation as a market pessimist, said Mr. Hubbard, adding, “I thought, ‘He’s always a bear.’ ”

In retrospect, Mr. Hubbard said, Mr. Lindsey was “absolutely right,” and Mr. Thomas’s charts “should have been a signal.”

Instead, the prevailing view at the White House was that the problems in the housing market were limited to subprime borrowers unable to make their payments as their adjustable mortgages reset to higher rates. That belief was shared by Mr. Bush’s new Treasury secretary, Mr. Paulson.

Mr. Paulson, a former chairman of the Wall Street firm Goldman Sachs, had been given unusual power; he had accepted the job only after the president guaranteed him that Treasury, not the White House, would have the dominant role in shaping economic policy. That shift merely continued an imbalance of power that stifled robust policy debate, several former Bush aides say.

Throughout the spring of 2007, Mr. Paulson declared that “the housing market is at or near the bottom,” with the problem “largely contained.” That position underscored nearly every action the Bush administration took in the ensuing months as it offered one limited response after another.

By that August, the problems had spread beyond New Century. Credit was tightening, amid questions about how heavily banks were invested in securities linked to mortgages. Still, Mr. Bush predicted that the turmoil would resolve itself with a “soft landing.”

The plan Mr. Bush announced on Aug. 31 reflected that belief. Called “F.H.A. Secure,” it aimed to help about 80,000 homeowners refinance their loans. Mr. Montgomery, the housing commissioner, said that he knew the modest program was not enough — the White House later expanded the agency’s rescue role — and that he would be “flying the plane and fixing it at the same time.”

That fall, Representative Rahm Emanuel, a leading Democrat, former investment banker and now the incoming chief of staff to President-elect Barack Obama, warned the White House it was not doing enough. He said he told Joshua B. Bolten, Mr. Bush’s chief of staff, and Mr. Paulson in a series of phone calls that the credit crisis would get “deep and serious” and that the only answer was big, internationally coordinated government intervention.

“You got to strangle this thing and suffocate it,” he recalled saying.

Instead, Mr. Bush developed Hope Now, a voluntary public-private partnership to help struggling homeowners refinance loans. And he worked with Congress to pass a stimulus package that sent taxpayers $150 billion in tax rebates.

In a speech to the Economic Club of New York in March 2008, he cautioned against Washington’s temptation “to say that anything short of a massive government intervention in the housing market amounts to inaction,” adding that government action could make it harder for the markets to recover.

Dominoes Start to Fall

Within days, Bear Sterns collapsed, prompting the Federal Reserve to engineer a hasty sale. Some economic experts, including Timothy F. Geithner, the president of the New York Federal Reserve Bank (and Mr. Obama’s choice for Treasury secretary) feared that Fannie Mae and Freddie Mac could be the next to fall.

Mr. Bush was still leaning on Congress to revamp the tiny agency that oversaw the two companies, and had acceded to Mr. Paulson’s request for the negotiating room that he had denied Mr. Snow. Still, there was no deal.

Over the previous two years, the White House had effectively set the agency adrift. Mr. Falcon left in 2005 and was replaced by a temporary director, who was in turn replaced by James B. Lockhart, a friend of Mr. Bush from their days at Andover, and a former deputy commissioner of the Social Security Administration who had once run a software company.

On Mr. Lockhart’s watch, both Freddie and Fannie had plunged into the riskiest part of the market, gobbling up more than $400 billion in subprime and other alternative mortgages. With the companies on precarious footing, Mr. Geithner had been advocating that the administration seize them or take other steps to reassure the market that the government would back their debt, according to two people with direct knowledge of his views.

In an Oval Office meeting on March 17, however, Mr. Paulson barely mentioned the idea, according to several people present. He wanted to use the troubled companies to unlock the frozen credit market by allowing Fannie and Freddie to buy more mortgage-backed securities from overburdened banks. To that end, Mr. Lockhart’s office planned to lift restraints on the companies’ huge portfolios — a decision derided by former White House and Treasury officials who had worked so hard to limit them.

But Mr. Paulson told Mr. Bush the companies would shore themselves up later by raising more capital.

“Can they?” Mr. Bush asked.

“We’re hoping so,” the Treasury secretary replied.

That turned out to be incorrect, and did not surprise Mr. Thomas, the Bush economic adviser. Throughout that spring and summer, he warned the White House and Treasury that, in the stark words of one e-mail message, “Freddie Mac is in trouble.” And Mr. Lockhart, he charged, was allowing the company to cover up its insolvency with dubious accounting maneuvers.

But Mr. Lockhart continued to offer reassurances. In a July appearance on CNBC, he declared that the companies were well managed and “worsts were not coming to worst.” An infuriated Mr. Thomas sent a fresh round of e-mail messages accusing Mr. Lockhart of “pimping for the stock prices of the undercapitalized firms he regulates.”

Mr. Lockhart defended himself, insisting in an interview that he was aware of the companies’ vulnerabilities, but did not want to rattle markets.

“A regulator,” he said, “does not air dirty laundry in public.”

Soon afterward, the companies’ stocks lost half their value in a single day, prompting Congress to quickly give Mr. Paulson the power to spend $200 billion to prop them up and to finally pass Mr. Bush’s long-sought reform bill, but it was too late. In September, the government seized control of Freddie Mac and Fannie Mae.

In an interview, Mr. Paulson said the administration had no justification to take over the companies any sooner. But Mr. Falcon disagreed: “They absolutely could have if they had thought there was a real danger.”

By Sept. 18, when Mr. Bush and his team had their fateful meeting in the Roosevelt Room after the failure of Lehman Brothers and the emergency rescue of A.I.G., Mr. Paulson was warning of an economic calamity greater than the Great Depression. Suddenly, historic government intervention seemed the only option. When Mr. Paulson spelled out what would become a $700 billion plan to rescue the nation’s banking system, the president did not hesitate.

“Is that enough?” Mr. Bush asked.

“It’s a lot,” the Treasury secretary recalled replying. “It will make a difference.” And in any event, he told Mr. Bush, “I don’t think we can get more.”

As the meeting wrapped up, a handful of aides retreated to the White House Situation Room to call Vice President Dick Cheney in Florida, where he was attending a fund-raiser. Mr. Cheney had long played a leading role in economic policy, though housing was not a primary interest, and like Mr. Bush he had a deep aversion to government intervention in the market. Nonetheless, he backed the bailout, convinced that too many Americans would suffer if Washington did nothing.

Mr. Bush typically darts out of such meetings quickly. But this time, he lingered, patting people on the back and trying to soothe his downcast staff. “During times of adversity, he bucks everybody up,” Mr. Paulson said.

It was not the end of the failures or government interventions; the administration has since stepped in to rescue Citigroup and, just last week, the Detroit automakers. With 31 days left in office, Mr. Bush says he will leave it to historians to analyze “what went right and what went wrong,” as he put it in a speech last week to the American Enterprise Institute.

Mr. Bush said he was too focused on the present to do much looking back.

“It turns out,” he said, “this isn’t one of the presidencies where you ride off into the sunset, you know, kind of waving goodbye.”

Kitty Bennett contributed reporting.

More Articles in Business » A version of this article appeared in print on December 21, 2008, on page A1 of the New York edition..



Huckabee's Southern Fried Limbaugh Challenges Bain Capital's Clear Channel Train Wreck

Friday, March 16, 2012


Will Limbaugh, with the help of Romney's Bain Capital, bring down Clear Channel?

By Myrddin on 3/16/2012 12:07:00 PM





Three weeks ago Rush Limbaugh was the undisputed king of talk radio. Not only did he have the most stations and the best broadcast slots, the audiences he attracted meant that he could actually charge stations for his show. Most talk radio shows are provided to the stations for free, bartering space on the dial for a half share of the advertising slots.



Limbaugh's show is distributed by Premiere, which is in turn owned by Clear Channel, a company with a balance sheet that has been running red ink for some time as the outdoor advertising market went sour during the recession. The Motley Fool has an interesting analysis of Clear Channel's attractiveness as a stock pick, scoring the company a mere 2 out of 10 on its investment screen. Forbes reports that the company has $19.2 billion in debt.



But wait, it gets worse (or better).



Clear Channel's stock has just jumped after the company announced that it would borrow $2.2 billion to pay a special dividend of $6 to shareholders. Regular readers of this blog will remember the special dividend as one of the tricks used by Mitt Romney to make his fortune at Bain Capital. The crew would buy a company with money borrowed against the value of the company then borrow even more money to fund a special dividend that would mean a huge profit for them and likely bankruptcy for the company. And, hey, lookee here [Matt Koppenheffer, my emphasis]:





In a press release today, Clear Channel, which is largely controlled by Bain Capital, announced that it will be raising $2.2 billion via two debt offerings. The company will then turn around and use $2.17 billion of the proceeds to pay a $6.08-per-share special cash dividend to shareholders on record as of March 12. As the big jump in the stock suggests, the move was well received by investors.

Forbes states that Bain Capital paid $17.2 billion to acquire the company. The huge debt load suggests that what Bain really did was to put in as little of their own money as possible and the rest makes up the lions share of that $19.2 billion in debt. Matt is not too impressed by this:



You'll have to excuse me if I throw up in my mouth just a little bit. Maybe I'm just a sissy when it comes to debt, but the idea of a company practically doubling its indebtedness in order to pay out a massive dividend just doesn't sit well with me.

The only reason I can see that the stock would jump $1.50 on the news of the special dividend is a short squeeze. When a company pays a dividend, a short seller has to cover it. So an investor short 1,000 shares in Clear Channel would be facing a $6,000 charge to their account.



The Limbaugh crisis leaves Clear Channel paying $38 million a year for a broadcaster who has recently lost a good deal of his paid advertisers and has driven many advertisers away from talk radio completely. And this comes when their competitor, Cumulus Media Networks, is preparing to launch Mike Huckabee's new show. Cumulus owns many of Limbaugh's highest profile stations, and even before the Fluke crisis, the launch of the Huckabee show was seen as a move intended to recapture the younger and female listeners that Limbaugh has been hemorrhaging in recent years.



As anyone who has seen the Golf Channel knows, a channel does not need to attract a large audience if it attracts the right audience. Limbaugh attracts large numbers of the elderly white low income demographic that few advertisers are interested in. Huckabee attracts younger listeners and female listeners that advertisers are most interested in.



So lets recap, Clear Channel is losing a large slice of advertising revenue for a broadcaster they are paying $38 million a year. The company has a market cap of $5.5 billion, and $19 billion in debt. Despite a junk bond rating, the company is planning to borrow another $2.2 billion to pay a $2 billion dividend to Bain Capital. That will leave the company with a market cap of $3.3 billion, and $21.2 billion in debt with $4 billion due in 2014 and another $12 billion up to 2016.



And don't forget that in the increasingly likely case that these Vampire Capital tactics put Clear Channel into bankruptcy, Chapter 11 will allow the same management team who engineered it to stay in control and later find a new clutch of investors to bilk.



So the answer to my question in the subject line turns out to be "no": Mitt Romney's Bain capital looks like it was doing a fine job of destroying Clear Channel all on its own. But Limbaugh's bigotry and the advertiser boycott he brought on himself might well turn out to be the final straw.



Update: A lawsuit brought on behalf of the minority shareholders in Clear Channel Outdoor alleges that Clear Channel Corporation (holder of the 89% controlling interest in CCC) forced CCO to make a $1 billion loan to CCC on unfavorable terms.



Update 2: And there is an investigation into whether an unexplained 11% price movement in the CCO stock ahead of the news was caused by insiders front-running the trade.





More posts about: mitt romney, Rush Limbaugh



We Recommend

•Stumbling drunk Jenna Bush spotted in skanky DC bar (AMERICAblog)

•AOL pulls advertising from Limbaugh, 8th to walk (AMERICAblog)

Login Add New Comment

Post as … Image .

Sort by popular now Sort by best rating Sort by newest first Sort by oldest first Showing 25 comments



radioless and proud 1 comment



I wonder just how many listeners a radio station loses within the first week of clear chanel taking them over? Clear Chanel is the number one reason I turned off the radio 15 or 16 years ago and have never listened to it again since. The sooner they go donw in flames, the better if you ask me.



EdA 1 comment



Clearly a massive swindle in the making, structured similarly to the Bush-Boehner-McConnell tax cuts. Borrow lots of money you can't afford and can't pay back and give it to your friends, leaving creditors and minority investors holding the bag.



Vulture capital at its most blatant. If I were a Clear Channel creditor, I'd start insisting on cash-on-delivery for everything.



Robert Rutledge 1 comment



Something I don't get here about the price of shares jumping by $1.50 today (March 16). The debt offering is 99.9% going to be turned into a dividend to shareholders of record as of March 12th. That means, none of the new buyers will benefit.



And, demonstrably, taking on $2.2B in debt just to hand that money to shareholders destroys future value.



So why did people buy this stock and drive its price up?



BeccaM Top 10



Whoa... that's some serious juju there.



Dividends are normally paid out when a company is doing well, as a way of sharing profits with shareholders. That's why they called them stock shares in the first place.



Borrowing billions to pay off shareholders is nothing more than a short-term bribe to prop up a stock price. Of course the stock price is gonna bump on news like that.



Next quarter from now, what'll it be? A radio syndication network that is another $2.2b in debt, on top of around $20b. Stock debt also works differently than the loans and mortgages with which we're familiar. In Myrddin's linked Forbes.com story, it's reported that ClearChannel has $4b coming due in 2014 and $16.5b two years after that. No wonder ClearChannel stock is fast approaching utter junk status.



Once the shareholder bribe money runs out and nobody will lend more billions to a failing media empire, CC's stock prices are gonna crash hard. From the sound of it, they have no rational business plan going forward, and no ideas for how they'll stem the tide of red ink. All they seem to be doing now is plundering the last of what can be sucked...



Kathy 2 comments



Wow - a P/E ratio of 68?



When your competition is increasing & your shooting yourself in the foot?



Isn't 15 considered average & over 30 unheard of?





jixter Top 500 6 comments



So ... we lose the likes of Limbaugh and replace him with a hot combo of Limbaugh-lite and southern-fried Jesus in the form of Huckabee? Sounds worse to me - like a Pyrrhic victory. Old boss/new boss/same, but worse boss.





BeccaM Top 10



No actually what's happening is (1) major advertisers are becoming leery about the whole notion of product identification with hate-mongers (if you want to see how anal they can be, just Google "Colbert" + "Wheat Thins" and watch the video) meaning reduced profitability.



(2) Profits are already tight, radio stations never liked the idea of having to pay for syndicated material, and more of the station owners are realizing they can still make money -- and totally avoid all controversy -- if they just switch (or switch back, in many cases) to music & entertainment formats.



This isn't just about Limbaugh. The whole "right wing hate-talk radio" model is being called into question.

Limbaugh's Perfect Record Stands - 23 Years of Bigoted Misogynistic Insults and ZERO Apologies!

Limbaugh Apologizes For Insulting Law Student



 (Bouvier) wrote:


Carbonite--a former Limbaugh sponsor.

A Statement from David Friend, CEO of Carbonite:

“No one with daughters the age of Sandra Fluke, and I have two, could possibly abide the insult and abuse heaped upon this courageous and well-intentioned young lady. Mr. Limbaugh, with his highly personal attacks on Miss Fluke, overstepped any reasonable bounds of decency. Even though Mr. Limbaugh has now issued an apology, we have nonetheless decided to withdraw our advertising from his show. "

Let other sponsors know what you think. Vote with your wallet.

Saturday, March 03, 2012 7:34:55 PM
Recommend (77)
 
 
 (muon) wrote:


Misleading headline. Limbaugh did NOT apologize for insulting the student, he said he chose the "wrong words". He didn't use the words "apologize" or "sorry".

His explanation is also disingenuous. The congressional hearing was regarding health insurance coverage and health care costs, subjects that do rise to the presidential level.

Calling someone a "slut" is a personal attack. If he truly is in favor of personal responsibility, he should accept the consequences of his words.

Responsible people use birth control. Insurance companies have a responsibility to their shareholders to make cost effective decisions - like covering birth control which is cheaper than covering unplanned pregnancies. Responsible companies will pull their advertising support from a misogynist blowhard.

And when I say "misogynist blowhard", I DO mean it personally.
Saturday, March 03, 2012 7:37:22 PM
Recommend (75)
 
 
 (WillHarper) wrote:


I've spent the last 3 days wondering what the women around Limbaugh must think. His wife, the women he works with, all the women at the parties, golf tournaments, etc. How can they associate with this foul mouthed, openly misogynist throwback and not feel like they need to scrub the hate off with a bristle brush?

Saturday, March 03, 2012 8:22:47 PM
Recommend (70)
 
 
(CaptinStone) wrote:


His "apology" sounds a bit like; 'OK, wh**e, I'm sorry I chose the wrong words when I called you a sl*t and prostitute.

It helps to show just how vile he and the GOP are and just how much respect they have for women.

Sunday, March 04, 2012 8:57:37 AM
Recommend (63)
 
 (Frangi) wrote:


Maybe, just MAYBE folks like Limbaugh will finally realize that free speech does not mean you get to say anything you want, when you want, with no consequences. I hope the remaining six sponsors he has join the other sponsors who have already pulled out and left him. Maybe if those remaining sponsors do indeed pull out soon, Rush won't have to use any aspirin between HIS knees!

Saturday, March 03, 2012 6:37:58 PM
Recommend (56)

(r4golf) wrote:


Here is a guy who according to his mother, "flunked everything" in his first year at Southeast Missouri State University - hardly the Harvard of the south - and that was the extent of his education beyond high school. Then he railed against drug dealers while addicted to drugs. Why in the world would anyone care what he has to say about anything under the sun?

Saturday, March 03, 2012 9:39:13 PM
Recommend (56)


(ThornAppleAcres) wrote:


Words CAN hurt our society, especially when coming from a highly paid media personality. Words from the radio are what started the genocide in Rwanda. In this country, they can hurt because far too many people use people like Limbaugh as their political gurus and vote accordingly, because they are too ignorant themselves to see the ignorance of statements like Limbaugh's and similar "shock" personalities. And that is exactly what happened during the 2010 elections, and that is exactly why we have so many too-far-to-the-right-for-their-own-good politicians sitting in the house and on state legislatures and governors seats right now. Words from people like Limbaugh can be VERY dangerous.

Sunday, March 04, 2012 9:15:37 AM
Recommend (44)

Limbaugh the Living Obscenity Apologizes to Sandra Fluke, But WHY???

Limbaugh the living obscenity that talks, has told us for 20 years how little he cares about being human, yet now he does his one and only apology for being his normal obscene disgusting depraved imitation of a human being,  what was it that finally got to him?  Advertisers?  I dont believe it.  His wife?  hahahahahah, what wife?  His dominican boy sex slave? hahahahahahha 


On February 16, 2012, Representative Darrell Issa, Chairman of the Committee on Oversight and Government Reform, held a hearing on infringement of religious liberty by contraceptives mandates. Fluke was submitted as a witness by Democratic members, but Issa denied her testimony, stating her name was submitted too late. The hearing was widely criticized for having no women witnesses to speak on religious liberty issues.[8] She was later[9] invited to testify on February 23rd for House Democratic members.[10]


Six days later on February 29, 2012, Rush Limbaugh caused controversy by stating on his radio show that:

What does it say about the college coed Susan Fluke [sic], who goes before a congressional committee and essentially says that she must be paid to have sex? What does that make her? It makes her a slut, right? It makes her a prostitute. She wants to be paid to have sex.[11]

On March 1, 2012, Limbaugh said that Fluke is "having so much sex, it's amazing she can still walk".[12] During the same show, he said:

So, Ms. Fluke and the rest of you feminazis, here's the deal. If we are going to pay for your contraceptives, and thus pay for you to have sex, we want something for it, and I'll tell you what it is. We want you to post the videos online so we can all watch[13]

On March 2, 2012, Limbaugh claimed that Fluke has boyfriends "lined up around the block."[14]

Limbaugh's remarks aroused a public reaction, leading to the creation of a campaign to encourage Limbaugh's radio sponsors to stop advertising for him. As a result, as of March 3, 2012, Sleep Train, Select Comfort, Quicken Loans, GoToMyPC, Citrix and Legal Zoom have pulled their advertisements from Rush Limbaugh's radio show.[15][16] Also, President Barack Obama called Fluke in support[17] and the President of Georgetown University John J. DeGioia described Limbaugh and his supporters' comments "as misogynistic, vitriolic, and a misrepresentation of the position of Sandra Fluke."[18]

On March 3, 2012 the Feminist Majority Foundation started a pledge drive in support called "Stand with Sandra."[19]

Fluke is currently considering legal action against Limbaugh.[20]

On March 3rd, 2012 Rush Limbaugh issued an apology to Fluke, stating:

For over 20 years, I have illustrated the absurd with absurdity, three hours a day, five days a week. In this instance, I chose the wrong words in my analogy of the situation. I did not mean a personal attack on Ms. Fluke....My choice of words was not the best, and in the attempt to be humorous, I created a national stir. I sincerely apologize to Ms. Fluke for the insulting word choices.

Breitbart and Drudge - to be young gay closeted conservatives on Venice Beach

The Republican Closeted Gay Mafia weeps for its loss.

Praise the Lord! Breitbart OD's on Poppers, Freeing us all from his misery!