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?"

In the article from today's NYT, the reporters argue that Bush's commitment to 1) expanding home ownership and 2) deregulating markets led his administration to adopt policies that directly encouraged the real estate bubble and subsequent crash. While report acknowledges that Bush now takes the crisis very seriously and is taking aggressive action, it cites evidence that the administration ignored the warning signs for much too long.

Highlights after the jump

• As recently as February, Bush was still calling the economic deterioration "a rough patch."
• Al Hubbard, former chief economics adviser: "There is no question we did not recognize the severity of the problems. Had we, we would have attacked them."
• John W. Snow, former Treasury Secretary: "The Bush administration took a lot of pride that homeownership had reached historic highs, 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."
• Bush foresaw the danger posed by Fannie and Freddie and pressured Congress to toughen regulation of them but refused to compromise on a proposal by Rep. Michael Oxley (R-Ohio) which the former Treasury Secretary backed.
• To fulfill his vision of an "ownership society" Bush proposed affordable housing tax incentives, insisted that Fannie and Freddie meet ambitious new low-income lending goals, persuaded Congress to spend $200M per year to help first-time buyers, and pushed, unsuccessfully, to allow first-time buyers to qualify for federally insured mortgages with no money down.
• The administration fought attempts by states to crack down on predatory lending and won a Supreme Court ruling asserting that states had no authority over national banks. 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."
• Feb. 2003: Armando Falcon Jr., a Clinton appointee who ran the Office of Federal Housing Enterprise Oversight, produced a report which warned that Fannie and Freddie could default on debt, setting off "contagious illiquidity in the market," and raised red flags about the companies' use of derivatives. The White House cites that report as evidence that it foresaw the crisis and tried to avert it in a talking points memo entitled, G.S.E.'s -- We Told You So. But the day Falcon released the report, the administration tried to fire him and replace him with Mark C. Brickell, a leader in the derivatives industry that Mr. Falcon's report had flagged. The administration reconsidered that decision later in the year.
• In 2004, mortgage bankers and brokers donated $847K to Bush's re-election campaign, triple their contributions in 2000.
• Falcon left in 2005 and was eventually 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 Lockhart's watch, Freddie and Fannie took on even more risk and bought over $400 billion in subprime and other alternative mortgages.
• Spring 2007: Mr. Paulson declared that "the housing market is at or near the bottom," with the problem "largely contained."
• Fall 2007: Rahm Emanuel 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 that the credit crisis would get "deep and serious" and that the only answer was big, internationally coordinated government intervention. Instead, Mr. Bush developed Hope Now, a voluntary public-private partnership to help struggling homeowners refinance loans and worked with Congress to pass a stimulus package that sent taxpayers $150 billion in tax rebates.
• March 2008: Mr. Lockhart's office planned to lift restraints on Fannie and Freddie's huge portfolios. 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.
• July 2008: Lockhart declared that Fannie and Freddie were well managed and "worsts were not coming to worst." Jason Thomas, an economic analyst for President Bush, sent out e-mails accusing Lockhart of "pimping for the stock prices of the undercapitalized firms he regulates." Soon afterward, the companies' stocks lost half their value in a single day.

As for Bush himself, he declined to be interviewed and says that he's too focused on the present to do much looking back. "It turns out, this isn't one of the presidencies where you ride off into the sunset, you know, kind of waving goodbye."

I'm afraid not, Mr. Bush. Rather, it's one of the presidencies where you sneak off in the dark of night. But that's OK. In the words of the great Dr. Seuss:

The time has come. The time is now. Just go. Go. GO! I don't care how. You can go by foot. You can go by cow. George W. Bush, will you please go now!

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Cross posted at dagblog.com, where we cover everything from South Korean parliamentary brawls to the top 10 music albums of the year.