President Bush wanted to avoid a depression greater than the Great Depression

By Justin Fox | December 18, 2008 | +

Karen Tumulty points me toward some depressing comments from President Bush this morning:

I was in the Roosevelt Room and Chairman Bernanke and Secretary Paulson, after a month of every weekend where they’re calling, saying, we got to do this for AIG, or this for Fannie and Freddie, came in and said, the financial markets are completely frozen and if we don’t do something about it, it is conceivable we will see a depression greater than the Great Depression.

So I analyzed that and decided I didn’t want to be the President during a depression greater than the Great Depression, or the beginning of a depression greater than the Great Depression.

Greater than the Great Depression, huh? You mean like the depression of the 1870s? Karen wonders if these comments constitute candor or alarmism. I lean towards the former. It would have been nice if he’d decided to avert the depression back in 2005 or 2006, though.

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whs806

Living beyond your means finally caught up with the USA. The housing / mortgage crisis that Bush tried to regulate about five years ago did not happen due to Barney Franks, Chris Dodd and other liberals. Mortgage companes were required to make high-risk loans due to the CRA, Community Revitalization Act implemented by Jimmy Carter and mandated by Bill Clinton. I know of some banks that paid fines to the Federal Government because they would not make these risky loans. They are the healthy banks today. But Fannie and Freddie loaded up their truck with these high-risk loans and when housing become oversupplied, oil prices when thru the roof, and the economy started slippling, the house of cards started crumbling.

You will not get this perspective on ABC, CBS, NBC, or CNN but it happens to be reality whether it is popular or not.
plukasiak

You will not get this perspective on ABC, CBS, NBC, or CNN but it happens to be reality whether it is popular or not.
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shrooms? Acid? Peyote? Horse tranquilizers? Just what is your source of inspiration?
bryanfromhouston

as Pluk says, “Just what is your source of inspiration?”
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What about the wall-street CDO market? If they hadn’t been buying and grouping, banks would have run low on capital reserves and quit lending to excess.
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What about the Fed? Greenspan’s put had everybody believing that the good-times gravy train had no more stops.
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What about the treasury’s lack of enforcement and regulation on banks and entities with insane amounts of leverage? Or regulations to draw in credit companies?
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What about Congress who had passed the law? Or all of the Presidents from Carter on who kept executing the law…certainly anyone could have directed their treasury department, FDIC chair, etc. to take action.
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The argument about it being all the CRA’s fault is bogus and been debunked on myriad occassion. You may now go back to your regularly scheduled brainwashing.
Justin Fox

@plukasiak & bryanfromhouston: Thanks for doing my job for me. Also, this CRA-is-to-blame argument has actually been given a fair amount of play in the mainstream media for a claim for which there is no factual support (I can’t this for sure of the network newscasts because I don’t watch them, but definitely on CNN.com, in the NYT, etc.).
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That said, whs806 is right that “Living beyond your means finally caught up with the USA.” This was a decades-long phenomenon, meaning it shouldn’t all be blamed on Bush. But he certainly didn’t do anything to stop it.