George W. Bush did not give a prime-time address on the U.S. economy until seven years and eight months into his presidency, when, 10 days after the collapse of Lehman, he stood in front of the TV cameras and proclaimed himself a strong believer in free enterprise. “My natural instinct,” he said, “is to oppose government intervention.” Under normal circumstances, “companies that make bad decisions should be allowed to go out of business.” In his folksy but stern best, he went on to declare that these were not normal circumstances. “I know that many Americans are wondering, ‘How did we reach this point in our economy?’ ” He had recently asked his advisers the same question.
Although Bush was a businessman president—the first since Herbert Hoover, and the first ever with an MBA—business had not been his focus while in office. Terrorism had been. And when Hank Paulson asked him for permission to bail out AIG, Bush was stunned. It wasn’t that he was oblivious to the credit crisis, but he had an ordinary American’s faith that the pillars of the financial establishment were solid; even if two were knocked out, the edifice would stand. Bailouts, as Bush said on TV, went against his ideology and that of his party. He often spoke as if he were a regular Joe from Midland, Tex., a place where there was little sympathy for the plight of the big banks.
But this was only half the story. Like most Americans, Bush was perfectly accommodating of Wall Street when it worked in his favor. In the 1990s, when his father was president, Bush was a director of Harken Energy (now HKN) and made a questionable sale of its stock—which he failed to report in the required time frame. Harken later restated its results, and its stock plunged. (The Securities and Exchange Commission investigated Bush for insider trading but did not bring charges.) Yet when fraud was uncovered at Enron and other corporate giants, Bush pushed for genuine reform: The Sarbanes-Oxley Act was enacted in 2002. So if Bush was an ordinary American, it was in the fullest sense—self-interested and covetous of a sweet deal, but also capable of outrage in the face of greed and unfairness.
When Paulson told him he was going to let Lehman fail, Bush shot back, “Will we able to explain why Lehman was different from Bear Stearns?” A few days later, cloistered with Ben Bernanke and Paulson in the White House’s Roosevelt Room, Bush asked whether the Troubled Asset Relief Program was truly necessary. “Don’t you have enough [authority]?” he demanded. Many Americans shared his skepticism. The regulators insisted that to avert a depression, they really did require more authority. Bush reluctantly agreed.
Give Bush credit for setting aside philosophical objections to make the right call. Still, he squandered his opportunity to rally the public. Bush had been convinced; now he had to make the case to Midland. Aside from that one TV speech, though, he never tried. His failure is not that he approved the interventions but that, five years later, the public still regards them as hateful.