Talking Points Memo: Bush prevented Paulson from briefing Congress

May 3, 2010 12:13 PM

September 18, 2008 - Lehman Brothers had filed for bankruptcy four days earlier and the Federal Reserve had authorized the New York Fed to lend up to $85 billion to insurance giant AIG. That afternoon, Nancy Pelosi called Henry Paulson to ask for a full briefing the next morning. "They said, 'That will be too late. That will be too late. Tomorrow morning, 9 o'clock will be too late.' ... 'We were not allowed to tell Congress, but since you called, we're going to answer your questions.'" The Bush administration prohibited its own top officials from briefing Congress on the financial crisis.
posted by East Manitoba Regional Junior Kabaddi Champion '94 (29 comments total)

The Bush administration prohibited its own top officials from briefing Congress on the financial crisis.

It wouldn't surprise me, but this entire article is speculative. Has any evidence come to light that supports Pelosi's allegation?
posted by zarq at 12:19 PM on May 3, 2010 [1 favorite]

It would have been better had Pelosi said something about this on September 18, 2008.
posted by birdherder at 12:21 PM on May 3, 2010 [26 favorites]

I was laughing today at the fate of ex-Financial Times journalist Andrew Gowers - who moved on to be first head of corportate relations for Lehman - and now has the same job for BP.
posted by rongorongo at 12:21 PM on May 3, 2010 [6 favorites]

You know, I'm not a fan of the idea that every issue has two valid sides, but given an allegation of this magnitude, I would like to hear the Bush administration's response to this.
posted by Pope Guilty at 12:22 PM on May 3, 2010 [2 favorites]

Surely this...
posted by Thorzdad at 12:25 PM on May 3, 2010 [6 favorites]

"...592 days since the Bush Administration declared 'Mission Accomplished' in its war against Congressional Oversight..."
posted by oneswellfoop at 12:31 PM on May 3, 2010

Wow, I had really begun to miss Bushfilter. Thanks for bringing it back!
posted by charred husk at 12:35 PM on May 3, 2010 [3 favorites]

You know, I'm not a fan of the idea that every issue has two valid sides, but given an allegation of this magnitude, I would like to hear the Bush administration's response to this.

It doesn't sound like the members of that administration are interested in providing such a response:

Pelosi says the admissions from Bush administration officials that they had kept Congress in the dark came in private conversations between her and those officials in person and by phone. None of the other parties to those conversations would comment for this story.

It sounds like TPM knows who these people are but that they aren't talking.
posted by enn at 12:39 PM on May 3, 2010

The linked article is pretty confusing and does not seem to support the dramatic headline.

If I am following correctly, Pelosi calls Paulson and asks for a briefing. Paulson agrees and gives Congress a briefing. Pelosi then asks something like: "why did I have to ask for the briefing, why didn't you come and tell me about these problems without me asking?" And the response from Paulson is something like "we were not allowed to go to Congress."

This does not really compute, from a separation of powers perspective. If Congress wants a briefing, generally, it has to ask for one. If the Executive wants to give Congress a briefing, the President sends over his Cabinet and other appointees to give a briefing. I am not aware of some procedure for a Secretary to decide on his/her own to march up to Congress to give a briefing on his/her own initiative. It makes sense that the President would determine whether/when/how his appointees will brief Congress, subject to Congress's own power to demand such a hearing. But, absent a demand from Congress, it just isn't up to Hank Paulson to give freelance briefings without running it past the President.
posted by Mid at 12:41 PM on May 3, 2010 [3 favorites]

Too bad someone didn't give Paulson a blow job in his office...then we'd have an independent committee to investigate and impeach.
posted by spicynuts at 12:42 PM on May 3, 2010 [8 favorites]

B.b.b.but this was all Obama's fault!
posted by Pollomacho at 12:44 PM on May 3, 2010

Wow, I had really begun to miss Bushfilter. Thanks for bringing it back!
posted by charred husk at 2:35 PM on May 3 [+] [!]

Somehow this strikes me as eponysterical.
posted by adamrice at 12:45 PM on May 3, 2010 [14 favorites]

Let's say you're Joe Average Treasury Department dude.

It's Monday. No matter what anyone does, the economy is going to go to hell on Friday. All you can do now is try to cushion the landing. Even that seems unlikely.

Are you really going to go out of your way to tell Nancy Pelosi? "Umm, hey. So, like, it's all gonna go tits up. Just thought you should know. You know, FYI."

All she's going to do is grab a bullhorn and scream into it.

What if she makes it worse? What if it goes from "worst collapse since the Great Depression" to "worst collapse evar?"
posted by Cool Papa Bell at 12:47 PM on May 3, 2010 [2 favorites]

Three of the most powerful tools in a con-man's arsenal are to promote an authoritative appearance, a sense of urgency, and a strong feeling of fear.

Check, check and check.
posted by quin at 12:48 PM on May 3, 2010 [12 favorites]

Are you really going to go out of your way to tell Nancy Pelosi? "Umm, hey. So, like, it's all gonna go tits up. Just thought you should know. You know, FYI."

All she's going to do is grab a bullhorn and scream into it.

OMGWTFBBQ! RT: @HenryPaulson Umm, hey, @NancyPelosi. So, like, it's all gonna go tits up. Just thought you should know. You know, FYI.
1:31 PM Sep 18th via the web

just barely fits under 140.
posted by juv3nal at 1:00 PM on May 3, 2010 [4 favorites]

In little-noticed statements to reporters over the last few weeks, Pelosi has alleged that the Bush administration knew well in advance of its intervention that the financial crisis would hit, and that Congress would need to authorize a historic and unpopular bailout - but that top officials, including then-Treasury Secretary Henry Paulson, told her that they had been barred from briefing Congress about true extent of the crisis.

The point is that the Bush administration failed to tell Congress that it thought a massive crisis was in the making until they showed up asking for the no-strings-attached bailout administered by the former CEO of Goldman-Sachs. At which point they said that Congress had to act now to prevent a second great depression.

But she also added this: "When [then-Senator Obama] accepted the nomination in Colorado, the [Bush] Administration had kept from the public the idea that, in a matter of weeks, the financial community would be in crisis, and we would need to pass the TARP legislation."

Do you really think the Bush administration would let a good crisis go to waste?
posted by ennui.bz at 1:01 PM on May 3, 2010 [5 favorites]

It would have been better had Pelosi said something about this on September 18, 2008.

Yes. I am really tired of people saying, "Oh hey, two and four and six and eight years ago this thing happened that was so horrifying I was absolutely horrified, which is why I only just now got around to telling you."

Maybe we could handle these situations better or avoid them altogether if everyone didn't have to wait for a mid-term election or book deal before bravely speaking truth to power.
posted by Legomancer at 1:13 PM on May 3, 2010 [13 favorites]

if everyone didn't have to wait for a mid-term election or book deal before bravely speaking truth to power.

Well, as far as I can tell, midterm elections are still more than half a year away, so I'm not sure if the timing of this news is really as suspect as you're suggesting.
posted by saulgoodman at 1:54 PM on May 3, 2010 [1 favorite]

But congrats on the GOTCHA! anyway, I suppose.
posted by saulgoodman at 1:56 PM on May 3, 2010

Maybe we could handle these situations better or avoid them altogether if everyone didn't have to wait for a mid-term election or book deal before bravely speaking truth to power.

What's odd is that the timing coincides with the release of Laura Bush's memoir and the announcement of George's.
posted by Sys Rq at 8:11 PM on May 3, 2010 [1 favorite]

Also, I advise you all to look at the denials Bush and Paulson spox put out today. They talk right past her, and disengenously focus on the week before the bailout became necessary, without mentioning the weeks before that the problem took shape within.

Its always the denials that give you the real clue as to what happened.
posted by Ironmouth at 11:11 PM on May 3, 2010

Let's say you're Joe Average Treasury Department dude.

It's Monday. No matter what anyone does, the economy is going to go to hell on Friday. All you can do now is try to cushion the landing. Even that seems unlikely.

Are you really going to go out of your way to tell Nancy Pelosi? "Umm, hey. So, like, it's all gonna go tits up. Just thought you should know. You know, FYI."

All she's going to do is grab a bullhorn and scream into it.

Assumes many, many facts not in evidence.
posted by Ironmouth at 11:12 PM on May 3, 2010

Well, as far as I can tell, midterm elections are still more than half a year away

Illinois and Texas already had primaries, the rest fall in between today (Indiana, Ohio, and North Carolina) and the end of the summer. The midterms are now.
posted by Pollomacho at 5:47 AM on May 4, 2010

As far as I understand it, the issue framed by the article is that Paulson/the administration did not go to Congress on their own initiative on the night of September 18, but rather went to Congress on September 20 on their own initiative to ask for the emergency authority that became the TARP program. I'm just not seeing the huge deal. It was not a secret to anyone by September 18 that there was a serious crisis brewing.
posted by Mid at 6:55 AM on May 4, 2010

As far as I understand it, the issue framed by the article is that Paulson/the administration did not go to Congress on their own initiative on the night of September 18, but rather went to Congress on September 20 on their own initiative to ask for the emergency authority that became the TARP program.

Paulson and Bernake did not go to Congress on their own initiative on the 14th when the crisis was just beginning because they were told not to even though they were shelling out tens of billions of dollars already by that point. In stead when Congress came knocking to ask what was up on the 18th they suddenly insisted on an immediate meeting stating that the morning would be too late! Then on the 20th they had thrown together the 3 page long TARP and took it to the Hill.
posted by Pollomacho at 7:19 AM on May 4, 2010

Sorry, I'm not seeing anything about shelling out billions on the 14th in the article. Not saying it didn't happen - just don't see it in the piece.
posted by Mid at 7:49 AM on May 4, 2010

Sorry, I'm not seeing anything about shelling out billions on the 14th in the article. Not saying it didn't happen - just don't see it in the piece.

From the piece:

She recounted to me the events of September 18, 2008 - some two weeks, she reminded me, after Barack Obama accepted the Democratic Presidential nomination in Denver. Lehman Brothers had just filed for bankruptcy four days earlier and the Federal Reserve had authorized the New York Fed to lend up to $85 billion to insurance giant AIG. That afternoon, she called Paulson to ask for a full briefing the next morning.

Here's a little timeline:

9/10 - Lehman Bros. announces a $3.9 Billion loss.

9/13 - Lehman announces an emergency liquidation, Barclays will pick up assets.

9/14 - Barclays gets vetoed by the Bank of England and the deal collapses - Lehman prepares Bankruptcy filing - Wall street, the Fed and the Treasury meet to plug the swirling vortex of financial suck that is caused by the plug being pulled out of the hot tub full of liquid gold and cocaine they've been frolicking in with underwear models for the last decade(actually turns out it was full of horse shit and crushed baby laxatives, but don't tell the underwear models!).

9/15 - It's official Lehman's is bankrupt! Fed reserve gives $87 Billion to J P Morgan Chase to cover their $138 Billion losses in Lehman.

9/16 - $51 Billion more to JP Morgan - Uh Oh! AIG starts to slide into the black hole, a quick $85 Billion hot cash injection from "Big Bernie" Berneke gives the government an 80% stake in AIG and keeps it from completely collapsing and taking consumer capitalism, everyone's first born, and most of the free world with it.

9/18 - Nancy Pelosi rings up the Treasury for a little "wha's up, yo?" is met with "OMG MUST MEET NOW OR ELSE WE ALL DIE!!1!"
posted by Pollomacho at 8:22 AM on May 4, 2010

The Duties of Government Officials
posted by homunculus at 9:38 AM on May 4, 2010

Screws v. United States
He who defies a decision interpreting the Constitution knows precisely what he is doing. If sane, he hardly may be heard to say that he knew not what he did.

Did anyone bother to ask these 'leaders' if they were sane when they were leading?
posted by rough ashlar at 11:44 AM on May 5, 2010