“IS THIS THE WORST CRISIS since the Great Depression?” President Bush somberly asked Ben Bernanke, the chairman of the Federal Reserve bank in late September 2008.
It was a reasonable question. A spiral in the American housing market had precipitated a series of calamitous events that had sent the economy, heavily steeped in mortgage-backed securities, reeling. Corporate behemoths began falling like dominoes. Mortgage giants Freddie Mac and Fannie Mae collapsed and, deemed “too big to fail,” were taken over by the government on September 7; a week later, Lehman Brothers filed for Chapter 11, becoming the largest bankruptcy in American history; the following day, AIG, the world’s largest insurance company, took an $85 million bailout from the government in exchange for an 80 percent stake. Other corporate aftershocks would follow, including the closing of Washington Mutual Bank, the largest bank failure in history, and the cratering of the domestic automobile industry, as the economy wobbled on the brink of free fall. Bush’s presidency was, in Laura’s words, bookended by two Septembers, “September 11, when the nation was devastated by forces without, and the September of 2008, when it was threatened to collapse from within.”
“Yes,” replied Bernanke as he considered Bush’s question, “In terms of the financial system we have not seen anything like this since the 1930s, and it could get a lot worse.”
In fact, it might have been worse than the Great Depression. Bernanke, a foremost scholar on the Depression, later stated that “September and October of 2008 was the worst financial crisis in global history, including the Great Depression,” adding that, of the thirteen “most important financial institutions in the United States, twelve were at risk of failure within a period of a week or two.”
On September 19, as the crisis escalated, Bush addressed the nation from the Rose Garden. “There will be ample opportunity to debate the origins of this problem,” he said. “Now is the time to solve it.” But blame was heaped inevitably on Bush. As he knew well, it was part of the territory for a president, especially for a two-termer at the end of a reign rife with crises. Even well before the market nose-dived, Bush had felt the rabid bite of capricious public opinion. The previous April, seven years after Bush garnered the highest approval rating in presidential history at 90 percent, a Gallup poll reflected that 69 percent of Americans disapproved of his performance, a low since Gallup began posing the question in 1938. “To say that Bush is unpopular only begins to capture the historic depths of his estrangement from the American public,” wrote the New York Times Magazine a little over a week before the crisis erupted. “He is arguably the most disliked president in seven decades.” If it got to Bush, he didn’t let it show. He made the decisions he thought were right, with little regard for public approbation. “I would like to be remembered as president as somebody who did not compromise principles in order to be loved or liked,” he said later.
Was Bush to blame for the economic crisis? The market had erupted due to the cumulative effects of a trend toward financial deregulation that had started in the 1970s, cresting during the Clinton administration, which helped clear the way for the trading of derivatives, complex financial instruments that would become the chief culprit of the crisis. Additionally, Clinton had pushed to repeal the 1933 Glass-Steagall Act, relaxing restrictions on commercial banks to act as investment banks. Though Bush had advocated unsuccessfully for greater regulation of Fannie Mae and Freddie Mac, the administration also, like Clinton’s, promoted greater home ownership while generally upholding the climate of deregulation that saw overheated lending institutions run amok, ultimately sinking under the weight of loan defaults as the housing market crashed.
While Bush had channeled Lincoln during the surge, it was the most iconic Democratic president he looked to as he approached the financial meltdown. “If we’re looking at another Great Depression,” he told aides after his meeting with Bernanke, “you can be damn sure I’m going to be [Franklin] Roosevelt, not Hoover.” The federal government, in other words, would step forward to manage and mitigate the crisis as much as possible. To that end, Bush pushed for the creation of the Troubled Asset Relief Program—TARP—which authorized $700 billion in federal money, the largest federal expenditure in American history, to buy up toxic assets from banks to ensure their solvency and stabilize the economy. Congress’s rejection of the proposal sent the Dow Jones Industrial Average spiraling 778 points, the largest one-day drop in its history. Four days later, Congress hurriedly passed a revised version. The Department of the Treasury, Federal Deposit Insurance Company, and Federal Reserve scrambled to reduce the strain on banks and other major corporations with guarantees, funding access, and capital. Heading up Bush’s efforts was Henry Paulson, whom Bush had lured from the top spot at Goldman Sachs to become his secretary of the treasury in 2006. Bush wrote later that Paulson’s efforts during the crisis rivaled “those of Henry Morgenthau under FDR or Alexander Hamilton at the founding of the country.”
The efforts of the administration were enough to stave off economic free fall but not a deep recession. By the end of 2008, the Dow Jones Industrial Average was down by over a third, and unemployment rose to 7.2 percent—a 2.3 percent lift over the previous December. That the ramifications could have been far worse came as little consolation to Americans who struggled with the effects of a crippled economy.
As the situation worsened, Bush kept the two presidential candidates, Republican John McCain and Democrat Barack Obama, abreast of developments. Due to the “historic” nature of the crisis, McCain decided in late September to suspend his campaign to involve himself in the negotiation of federal bailouts and further monitor the situation from Washington, suggesting that Obama was ignoring the matter’s severity by remaining on the stump. The move backfired. “It’s my belief that this is exactly the time that the American people need to hear from the person who in approximately 40 days will be responsible for dealing with this mess,” Obama said. “It’s going to be part of the president’s job to deal with more than one thing at once.” It proved a turning point in the campaign. As a GOP strategist said afterward, “We don’t need to quit the game. We need to change the game.” Even beforehand, a Washington Post–ABC News poll showed Americans believed Obama would do a better job on the economy by a margin of two to one, a gap McCain wasn’t able to overcome. Campaigning on a platform of hope and change, an implicit and often direct indictment of the Bush administration, Obama managed a decisive win over McCain on November 4, with just under 53 percent of the popular ballot, taking 365 electoral votes to McCain’s 173. The first African American had been elected to the nation’s highest office.
Taking his father’s lead with Clinton, Bush handled the presidential transition with grace. He invited his successor, fifteen years his junior, to the White House for a series of cordial meetings. On January 7, he hosted an unprecedented White House reception for the president-elect and all the former presidents—Carter, Clinton, and his father—to welcome Obama into their small club, soon to be integrated. Standing side by side in the Oval Office, which Obama would inherit in less than a fortnight, the quintet looked like an animated would-be Mount Rushmore. “One message that I have, and I think we all share,” Bush told Obama before the five men adjourned for a private lunch, “is that we all want you to succeed. Whether we’re Democrat or Republican, we care deeply about this country.”
Bush’s last days were filled with tasks big and small. The economic crisis was the main priority, but there were also last-minute details to attend to, including presidential pardons. Cheney argued persistently that his former chief of staff, Scooter Libby, should be pardoned for any wrongdoing in the investigation into compromising the identity of CIA covert operative Valerie Plame during Bush’s first term. “I felt we were leaving a good man wounded on the battlefield,” Cheney said later. “It was a major strain on our relationship, obviously a major source of friction. The president had the power to fix it and make the right decision and chose not to.” Bush had commuted Libby’s thirty-month prison sentence several months after it was handed down, but told Cheney he was unwilling to overturn the jury’s verdict.
In the wake of a heated exchange with Cheney over the matter, Bush uncharacteristically wrestled anxiously over the decision during what was to be a celebratory last weekend at Camp David with family, friends, and a few staffers in mid-January. “Don’t let this be a pall over your last days as president,” Condoleezza Rice counseled Bush. “You deserve better . . . and this shouldn’t be the way that you spend your last hours as president.” It was emblematic of the change that had taken place in Bush’s second term, as Rice supplanted Cheney as Bush’s chief adviser and distance grew between the president and vice president. Regardless, Bush would leave the White House believing that Cheney had served him well. “I understand the way the system works, somebody has to be the bad guy,” he said of his vice president, adding, “When I made decisions he didn’t agree with, he didn’t immediately trod out into the public and leak. He was always straightforward; there were no hidden agendas.”
On the morning of January 20, 2009, Bush went to the Oval Office as president for the last time. Observing the tradition that Reagan had begun by leaving a handwritten note for 41, 43 wrote out best wishes to his successor.
Dear Barack,
Congratulations on becoming our President. You have just begun a fantastic new chapter in your life.
Very few have had the honor of having the responsibility you now feel. Very few will know the excitement of the moment and the challenges you will face.
There will be trying moments. The critics will rage. Your “friends” will disappoint you. But, you will have an Almighty God to comfort you, a family who loves you, and a country that is pulling for you, including me.
No matter what comes, you will be inspired by the character and compassion of the people you now lead.
Sincerely,
After placing the letter in a manila White House envelope and sticking a Post-it Note on it, on which he wrote “44,” Bush left the Oval Office, much like he would the presidency, with little reservation and without looking back.
A little before 10:00 a.m., he arrived at the residence where he and Laura stood outside on the North Portico in 28-degree air to greet Barack and Michelle Obama as their limousine glided through the west gates. “Welcoming Barack Obama was a historic moment and I was looking forward to it,” Bush recalled. “I was looking forward to going home—eight years is a lot.” As he did almost invariably during the momentous times of his public life, Bush thought about his dad and wondered “what he must have been going through” when he went through the same ritual with Clinton under different circumstances sixteen years earlier—and it occurred to him that no one at the time thought to ask.
His father was on hand at the Capitol with Clinton and Carter to watch, along with 1.8 million others who made up the record crowd that stretched from the south side of the building well beyond the Washington Monument. Fending off the winter chill in a trapper’s hat and purple scarf that looked as though it had been snatched from a Minnesota Vikings fan, 41 walked gingerly with Barbara beside him, his legs suffering from a vascular disorder that would soon render him unable to walk. It would be the last inauguration the elder Bushes would witness as guests.
After bidding the Obamas farewell from the Capitol’s front steps, George W. and Laura boarded Marine One, the presidential helicopter, where George H. W. and Barbara awaited them. “The love of the Bush family had come full circle;” Laura wrote later, “the pride George had felt for his parents, they felt in return for their son. They too had made this journey we were about to begin, and had found unexpected joys in the years beyond.” Boos could be heard from the dispersing crowd as the helicopter thwacked over the Mall toward Andrews Air Force Base. Emotions around the Bush presidency still seethed—the wars in Iraq and Afghanistan, Hurricane Katrina, the financial crisis—even as the jubilant masses invested their hope in Barack Obama. But as he left Washington, looking down at his nation beneath him, Bush could feel due satisfaction around what hadn’t happened—no major act of terrorism had befallen America after 9/11. He had kept the nation safe just as he had vowed to do.