When America breaks on the abyss • Good Assurance

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The Treasury Secretary's voice exhaled tension and urgency. "A very serious situation is developing," Henry Paulson warned over the phone, Speaker of the House of Representatives Nancy Pelosi. "Nothing we can say will calm the situation as long as we have not put in place a policy that weighs heavily on the force!" Later in the day on Thursday, Pelosi received the same distressing message when She telephoned Federal Reserve Chairman Ben Bernanke; the financial markets were recovering, the big companies on Wall Street were about to collapse, and the country's economy was dangerously on the brink of an abyss. Pelosi remembers anxiously asking, "If things are so bad, why do not you call me?

Paulson and Bernanke urged the president to summon the bicameral leaders of Congress to hear the George W. Bush's proposed response to the crisis, which was accelerating rapidly. Pelosi agreed to call a meeting the next day. It may be too late, warns Bernanke. Indeed, without quick action, there may not be an American economy by the end of the weekend.

Last September, a decade ago, financial markets imploded, threatening collapse of the entire US economy and creating an extraordinary and improbable collaboration between the deeply divided Congress, and the Bush administration. The prospects for successful cooperation were unfavorable: a very partisan atmosphere, significant divisions within each party, deep suspicion of the credibility of the administration, dissatisfaction with Bush's indifferent record of financial services sector and national elections in six weeks. And yet, remarkably, a largely dysfunctional political system has been revealed capable of passing an extremely expensive, complex and contentious bill that prevented a second Great Depression. As Pelosi's senior assistant, I had the opportunity to witness both the unfolding of the crisis and the private discussions and negotiations that saved the US economy from the worst collapse of the 1930s. Historian, I happily recorded these private discussions on legal notes as they unfolded, revealing the strategies, tensions and interactions that allowed rivals and political opponents to avoid the abyss. I handed these notes to the Library of Congress. This article marks the first time that these discussions have been revealed.

The remedy conceived in two weeks, without the usually lengthy deliberations of the committee that would have accompanied such a large piece of legislation, was the endangered property program. TARP was by no means a perfect, popular or comprehensive response to the global economic crisis. Many critics of the TARP remain bitter about the lack of criminal prosecution for reprehensible behavior by the leaders of the securities sector. Indeed, for Americans of various ideologies, the TARP was not a solution but an indisputable proof of false with American politics. Ten years later, however, it remains remarkable that a divided, mistrustful and often dysfunctional political system has been able to devise such a complex, imperfect response to the crisis. And this success raises the question of how the even more fragmented and controversial system of today could react in the event of a comparable crisis.

The financial services sector, as well as the political and regulatory systems designed to oversee it, had long ignored the storm that was coming. In the 30 years before the crisis, the amount of debt held by the financial sector skyrockets from $ 3 trillion to more than $ 36 trillion, "more than double the gross domestic product," according to the national commission charged with investigating the origins of the collapse. Wealth had become hyper concentrated in companies considered "too big to fail" without sinking the entire economy. In 2005, the country's 10 largest commercial banks held 55% of the country's assets, more than double the concentration recorded 15 years earlier. In 2006, corporate profits in the financial sector accounted for 27% of all corporate profits in the United States, nearly double the 1980 concentration.

Under the booming profits, however, was a dangerous rot. Five of the largest companies – Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley – had become dangerously over-indebted. Bear Stearns had equity of less than $ 12 billion and liabilities of more than $ 380 billion, which led to its collapse in March 2008. Fannie Mae and Freddie Mac had a debt ratio of 75 to 1. At Mid-September, Lehman Brothers and The Insurance giant, American International Group, trembling over the failure, many of the country's largest financial companies were struggling with hundreds of billions of dollars of toxic paper.

The commission appointed by the Congress in 2009 to investigate the causes of the crisis concluded that it resulted from human action and inaction, and not from Mother Nature or from distorted computer models. A combination of excessive borrowing, risky investments and lack of transparency has placed the financial system on a conflictual course in the face of the crisis. The commissioners were of the opinion that the crisis had been "avoidable".

At the leaders' meeting convened after his phone calls with Bernanke and Paulson, the chairman of the Federal Reserve described a "very serious financial crisis: hundreds of billions of losses". The administration was forced to turn to Congress, Bernanke said, because the Fed was "No longer able to use the tools we have to maintain stability." It's a matter of days, "warned the president, before" a major crisis [would occur] in the United States and around the world. Paulson agreed, "I've never seen anything like it," he said, "Once in 100 years."

Congress should allow the Treasury to buy toxic assets. "If we do not settle the issue next week, the country could collapse," warned Paulson. According to Bernanke, the alternative was a "long and deep recession". Congressional leaders, many of whom saw the two CFOs as politically naive and partially responsible for the disaster, were stunned. Senate Majority Leader Harry Reid asked how much it would cost. "Hundreds of billions," admitted Paulson. Even then, it was inevitable that widespread seizures cost their homes to millions of Americans.

Democratic leaders immediately seized the strategy of using the Wall Street crisis to help millions of Americans on "Main Street" who saw their homes, economies and jobs evaporate without generating an urgent, comparable response . Congress had negotiated a $ 168 billion stimulus bill with the Bush administration and the Bush administration in February, but the bill had a minimal impact on the worsening recession. Pelosi and New York Senator Chuck Schumer insisted that Paulson and Bernanke's bold proposal could only guarantee Democratic votes if it included billions of dollars in anti-recession spending to promote the creation of Jobs, to extend unemployment assistance and to fund other initiatives to reduce "perception, the bill is a [corporate] safety plan. Barney Frank, chair of the House's Financial Services Committee, also called for restrictions on the exorbitant remuneration programs of financial services companies to ensure the necessary votes.

The administration and congressional Republicans reacted negatively to these efforts to broaden the scope of law enforcement. "We will not get there if you take this approach," Paulson urged. Republican House leader John Boehner agreed, advising Democrats not to play politics. Other Republicans have expressed their own concerns. Dick Shelby, a senior Republican leader of the Senate Banking Committee, skeptically described the administration's proposal as "a blank check". Reid explained that Democrats would also face difficulties in collecting their votes without incitement. "This is the political reality," said Reid to defend the additional spending. Without the anti-recession provisions, Frank said, "I can not tell you that the bill will pass." After a moment of tension, Paulson responded in a sinister tone: "So, may God have us come help. "

The very short timeframe for the passage of the bill created additional tension. "If you think the US Senate will give you $ 500 billion next week," said Reid, "that does not happen!" … your calendar is unrealistic! The leader of the majority knew that, according to Senate rules, he would need a bipartisan supreme majority of 60 votes to pass such a law, a daunting challenge just a few weeks before one-third of the Senate – with the whole House – face the voters. "We can not just take your word. We need [to conduct] hearings. It takes two weeks to pass a bill to flush toilets in the Senate, Reid said. "Well, if we do not do that," replied Paulson, "we are flushing toilets over the American people."

The challenge facing the Congress was complicated by another imminent deadline. At the same time, members of the House and Senate were being asked to pass a $ 700 billion TARP bill. They would then have to adopt a permanent resolution (CR) that also cost hundreds of billions of dollars to keep the government open and operational early in fiscal 2009, on October 1. Although Paulson has no connection between them and the two, the connection was clear to the main leaders of the Congress. "Paulson needs to understand that there is nothing [on TARP] without agreement on the CR! Said Dave Obey, chair of the House of Credits.

Not content to talk only to Paulson, Pelosi called President Bush the next day, their first conversation in months. She detailed the additional provisions she needed to "sell [the bill] to the American people ", not to mention its own members. The Liberals in the House also called for independent oversight of the financial services sector and tighter rules on fraud. Even the representative Ellen Tauscher, a former securities broker, insisted on including important reforms in corporate governance. "Succeed" as soon as possible, Bush responded without fear, taking a "simple and light" approach, but Pelosi refused to back down. "We have to get as much as possible," she said.

Pelosi knew that she could not win Liberal votes if she was perceived as yielding to Bush or financial interests. In fact, the rich speaker was upset that she was, like Bush, reprimanded for promoting a bailout "for our Wall Street friends." She vigorously condemned the "cowboy capitalism" that was rife in both financial corporations and Bush society. the regulatory style "everything is fine" from the administration that she blamed for having spawned the crisis. "We are in this situation," the speaker insisted, "… because nobody has been monitoring the store." Indeed, many reputed Republicans (including Paulson and the presidential candidate, John McCain) have asserted the strength of the country's economy, although mortgage fraud related to grown 20 times in the decade that followed 1996 and again doubled from 2005 to 2009. Even in September 2008, Paulson was still professing trust that the chaos on the emerging market of subprime mortgages could be contained and that the irresponsible behavior of a few on Wall Street "undermined our otherwise healthy financial institutions".

It was obvious to all that no bill could be passed without bipartisan support, a daunting challenge in the highly polarized Congress; on the eve of the elections, none of the parties could afford to assume sole responsibility for what would undoubtedly be an unpopular bill. Pelosi told Boehner that she would have to get 100 votes from her lecture and that she would give the rest. But the chamber republicans were deeply divided by the proposal of their own administration and Boehner was skeptical about the possibility of responding to Pelosi's request, a sentiment he expressed on many occasions. "My people are looking for a reason not to support" the bill, he tells him. If the bill included the Democrats' anti-recession wish list, Boehner added in another conversation: "My people will flee". He complained of receiving little help from other Republican leaders in the House and told Pelosi and Paulson that the President was "hiding." Several members of his caucus were even skeptical about the the seriousness of the crisis, while others were content to let financial companies go bankrupt.Being suspicious of his ability to produce enough votes for a bailout bill, Boehner told Paulson to "cool your planes" The Boehner Chief of Staff and close confidante, Paula Nowakowski, said at the time that the minority leader was considering asking Bush to reset button "by creating a committee to study the crisis." before legislating.

Government negotiators were also exasperated by a plethora of TARP alternatives generated by the Conservatives, one of which came from the deputy chief whip, Eric Cantor, who would have substituted a plan for the future. 39, federal insurance in the rescue plan. Paulson called these solutions "pretty ridiculous" and focused on developing legislation with the Democrats. Meanwhile, on the side of the Senate on Capitol Hill, Paulson was "laying an egg" with the Senate Finance Committee, one of Boehner's senior aides told me. White House chief of staff Josh Bolten told Democratic leaders that their Republican counterparts were "horrible," Reid said. Obama said that Bush had said, "My problem is the Republicans in the House." According to a senior White House official, neither Senator Shelby nor ranking member Spencer Bachus of Alabama has been helpful. Bachus's obstinacy, Paulson said, was "shameful".

Reid was stunned to learn that even McCain was leaning against the bill. "We can not pass a bill unless 80% of Republicans vote it," he told Pelosi, who described McCain's "opposition" as "pathetic". When McCain called Pelosi on September 24 to complain about the slow pace of the talks, Pelosi scolded him sharply. "We are make progress, she says. "It's not right to say otherwise." McCain then proposed to suspend the presidential campaign and convene a bipartisan summit in the White House to reach a legislative agreement. Pelosi feared that a meeting at the White House would cause delays. When Bolten called to invite him to attend the meeting, the president blamed him for getting carried away by McCain's "politics". She asked Paulson: "Tell the president to lead! … I will not let Congress give the impression that he is in disarray!" Later in the meeting, she reminded him: "The President never listened to us talk about Iraq … He never addressed the disagreement." Unless Bush joined the TARP that they have fashioned together, she has told the Treasury Secretary: "We have wasted our time and it is an insult to you." In a holy way, Paulson noted, "I am beyond this point."

Schumer thought McCain's suggestion was "just weird," coming in particular from someone who had offered little "except for an occasional and unnecessary statement, somehow rejected." [in] The Democratic presidential candidate, Barack Obama, was equally skeptical about the meeting, which could force the postponement of his first debate with McCain, but he also mistrusted the kind of invitation that he might soon address to the Presidency. the leaders of the congress. "We put it in a box … we put it on the ropes," said Obama. "If we did not go, that would be a bad precedent," he told Reid and Pelosi. They decided to participate with enthusiasm and decided that Obama would serve as their leader. However, they agreed that there would be no agreement at the meeting, and the final statement to the press would insist that it is the Republicans who must "put their ducks in a row." ".

"We have a serious economic crisis," Bush told participants around the huge oval table in the Cabinet room. "This meeting is an attempt to reach an agreement quickly. I can not tell you how important it is to do something. "He warned of the risk of bailing out the bailout with controversial provisions that could jeopardize the move, but he also signaled flexibility, adding that if Paulson and Bernanke signed their agreement, for that." You probably will not want to not be the people who will see this crater. "He was keen to recall, if I remember correctly, Pelosi for his collaboration with the administration officials.

Obama's opening statement focused on the proposal being negotiated, while Boehner and Bachus again proposed alternative approaches. Their ideas, along with the insurance regime, prompted harsh reprimands from Frank and Reid, who accused Republicans of leading the negotiators "on the primrose trail," to create only obstacles. at the last minute. As the parties parted, Bush became more and more agitated. "It's easy for the clever guys to sit down," he said, but "if the money is not released, this sucker could collapse." Although he proposed the meeting, McCain remained silent for almost an hour. A CNN reporter later confidentially revealed that McCain's campaign staff feared his presence at the meeting would be "political dynamite," and a staff member at Boehner said he was "in the dark." privately expressed the deep concern over the candidate's lack of preparation, admitting that he had asked for staff. Boehner's assistance only the day before the meeting.

After almost all the other directors had spoken, Obama turned to his rival. "We have to hear John," he said, and all heads turned to the silent senator. McCain clumsily stumbled into a disjointed statement, thanking Bush for convening the meeting and declaring his support for the concerns expressed by other Republicans. Perplexed looks went through the Cabinet.

Bush leaned over to the speaker and whispered something in his ear.

Later, in the car coming back from the Capitol meeting, Pelosi told me that Bush had said, "I told I miss you when I'm gone! "

"No," said Pelosi dryly. "I will not do it."

After McCain concluded, urging emphatically, "we must address the concerns," resounded Obama, "This is not an answer!"

"I do not know what your proposals are," urged Frank.

Even Bush raised his hands saying:I I do not know what they are!

As the meeting broke up, McCain clumsily passed Obama, Reid, Pelosi and staff members clustered in the narrow hallway leading to the West Wing reception area. Fearing that their discussion would be heard, we moved into the nearby Roosevelt Hall. Obama's chief of communications, Robert Gibbs, began drawing a summary to offer the press on hold, which quickly reported that the meeting had been without consequence.

Suddenly, I remember, the door opened and a harassed Paulson entered the room. Moving quickly towards Pelosi, he dropped to one knee and nodded solemnly as he met a religious leader. He begged her not to "Explode this thing."

Stunned by the scene, Pelosi tried to lighten the atmosphere. "Why, Hank, I did not know you were a Catholic!" She exclaimed with a nervous laugh.

After that, Nowakowski told me that the Republican leader was unhappy with the result of the meeting at the White House and furious with Paulson for apparently being sided with the Democrats against the GOP proposals. She may have thought that Pelosi should "start thinking" about a bill that could only be passed with Democratic votes. Privately, one of the White House's key collaborators admitted that Boehner's lecture was full of "hardheads" and that the meeting was awful, "chaos … typical of the McCain world," allowing the audience to "get out of it." others to "take it upon himself". I remember a Republican assistant who had said to me, "The only person in the presidential-looking room was your guy," Obama said.

Democrats have continued to insist on adding provisions, such as limiting executive pay, to which Republicans and some of their own Wall Street leaders, such as former Treasury secretaries Robert Rubin and Larry Summers, have opposed. But Pelosi did not want to negotiate a large-scale caucus provision. "Nobody gets out alive without facing compensation," she said. "This is the only problem that the American people understand."

A cautious voice has been raised among Democratic leaders regarding additional spending. Obama not only hesitated to increase the cost of the TARP bill or compromised its adoption, but he also did not want to prematurely adopt a stimulus that, he hoped, could serve as a first success for his likely government in 2009.

However, on one essential point, the Democrats were united and unshakable. Companies receiving TARP funding must agree to fully refund taxpayers, with interest, a stipulation that is remarkably absent from Paulson's statement. original draft of three pages. Conservatives aware of the deficit of both parties were sensitive to this repayment target, but wondered how any potential deficit would be covered.

During a drafting session at the offices of the House's minority whip, Roy Blunt, Senator Republican Republican Senator Judd Gregg, insisted that funds not repaid by corporations be offset by cuts in domestic spending. , who had not played any role in the crisis. As a member of Pelosi's staff tasked with negotiating this article of the bill, I quickly rejected Gregg's proposal, which she found utterly unacceptable to the speaker, which provoked a heated exchange between us. Although I can not write his remarks for the moment, I remember it well. "You do not listen to me!" Gregg exploded as the other participants were speechless. "Well, senator, you do not listen to me," I replied, taking full advantage of a public dispute with an uncompromising senator.

Finally, I suggested, "Why do not you go to the president's office and see what she thinks about your idea of ​​cutting back on domestic spending?" With the Democrats 'chuckle, Gregg s' Tuttily advanced to present the idea to the president, returning a few minutes later, after what was to be a brief and very unsatisfactory conversation. "All right, it's not going to work," he said. At the end of the day, the bill provided that if there were a deficit after five years, the president would be required to submit to Congress a plan to ensure that the program "does not add to the deficit or national debt ". ProPublica, the government ended up making a $ 31 billion profit on its TARP investments.)

Paulson was inexperienced in the tedious Congress negotiations and frustrated by the pace of meetings. "People are just blurring the tracks … it's going slower than I would like," he complains. "I do not want to be Andrew Mellon!", He told Pelosi, citing the contempt of Herbert Hoover's Treasury Secretary, who presided over the stock market crash that preceded the Great Depression. Meanwhile, Boehner was struggling to sell the bill to the Republicans. Despite the addition of what Bachus described as "ornaments" to ease his lecture, Boehner admitted to Pelosi and Paulson that there could only be 30 Republican votes, less than a third. its designated quota. "I can not put enough lipstick on it to sell it," he said. He made a last push on alternative approaches, including corporate tax cuts, but Paulson and Pelosi reacted coldly. Pelosi feared that the reports of the inconclusive meeting of the White House had weakened her own vote count, which she said was stuck at less than 110. In addition, public reaction remained alarming. . Reid reported that his office had received 5,000 calls in opposition to the TARP plan and only 20 in support.

Pragmatists at the White House have come to take over the negotiations. On September 27, rep. Rahm Emanuel, Pelosi's top lieutenant and Obama, told Josh Bolten, "It's time to move to the political act."

Bolten replied: "Speaking like a political hacker, I say," Hallelujah! ""

But finalizing the details of the bill was only one of the challenges facing the leaders of both Houses. When Reid and Pelosi met to discuss the parliamentary maneuvers needed to pass the bill, Reid complained (as he often did) of the complicated trajectory – no fewer than nine tedious votes – that the rules of the Senate might require to guarantee the passage. On the other hand, he thought briskly, Pelosi could get up to 300 votes in favor of the bill in the House.

Pelosi, exasperated, knew she was lacking nothing and complained that Reid's filibuster rules left her "angry at the Senate." Do not be outdone, he said,I am angry at the Senate. He told her that he might be forced to make deals that she might find offensive to getting the 60 votes he would need. "You can not be a virgin if …" he began, but Pelosi motioned for him to leave.

"You do not have to go further," she warned.

The debate began on September 29th. Blunt told Pelosi: "Do not count on Republicans," while Nowakowski said some Republicans "would break their chest" in opposition. Bush, Vice President Dick Cheney, Paulson and Bernanke continued to call members of the House, White House Liaison Officer Dan Meyer said, but the bill may not count. than 75 votes. Il a demandé un délai supplémentaire pour convaincre les républicains récalcitrants, mais Mme Pelosi, craignant que ses propres membres ne commencent à s'éloigner, a insisté pour que le vote aille de l'avant.

Lors d’une réunion à la direction du parti, le whip démocrate Jim Clyburn a prédit de manière confidentielle que seulement la moitié des 235 membres du parti démocrate seraient favorables au projet de loi, mais beaucoup moins si les républicains n’en produisaient que 75 par eux-mêmes. Pelosi a envoyé Barney Frank rencontrer des factions démocrates sceptiques, notamment les caucus libéraux hispaniques et noirs, et le conservateur Blue Dogs. En se préparant à l'assaut des plaintes, Frank demanda: «Quand est le caucus Asshole, et dois-je y répondre?

Peu après l'ouverture de la bourse de New York ce matin-là, Citigroup a annoncé qu'elle reprenait la faillite de la banque Wachovia et plusieurs banques centrales ont annoncé leur intention de consolider les marchés du crédit. Aucune de ces actions n’a empêché le Dow de commencer un déclin précipité, un contexte inquiétant pour le débat. Dans sa déclaration en faveur du projet de loi à la Chambre, Pelosi a reconnu: «Nous sommes dans une situation où, à Wall Street, les gens volent haut. Ils gagnent des sommes déraisonnables. Ils gagnent beaucoup d'argent. Ils privatisent le gain. Dès que les choses tournent mal, ils nationalisent les risques… ils poussent leur entreprise sur le sol et le peuple américain doit en assumer la responsabilité. Quelque chose ne va vraiment pas avec cette photo.

Elle a réprimandé Bush pour avoir dilapidé l'excédent de 5 600 milliards de dollars que lui avait légué le président Bill Clinton à propos de guerres impayées, de réductions d'impôts et d'une expansion de Medicare. "Aucune réglementation" et "l'irresponsabilité fiscale, combinées à une politique économique" Tout va pour le mieux ", nous ont menés là où nous en sommes aujourd'hui", a-t-elle affirmé. Maintenant, at-elle assuré aux sceptiques de son caucus, "le parti est fini". Elle a promis que "dans peu de temps, nous aurons un nouveau Congrès, un nouveau président des États-Unis, et nous pourrons emmener notre pays dans une nouvelle direction."

Dans son discours, Jerry Lewis, un républicain très respecté du sud de la Californie, a expliqué pourquoi ses collègues conservateurs récalcitrants étaient favorables au projet de loi. "Franchement, je suis furieux", a-t-il admis. «L'idée de dépenser l'argent des contribuables pour soutenir des investissements risqués me garde éveillé la nuit. Cela va à l'encontre de tous les principes par lesquels j'ai vécu. »Mais il y avait peu de choix. "Ne rien faire va provoquer une catastrophe potentielle."

Le travail le plus difficile revenait à Boehner, qui avait décrit en privé le projet de loi aux républicains comme un "sandwich à la merde, mais je vais le manger quand même." Sa voix se fendit alors qu'il parlait dans le puits de la chambre, les joues striés. avec les larmes aux yeux, il a reconnu: «Personne ne veut voter pour cela, personne ne veut être autour de ça… Je ne suis pas venu ici pour voter pour des projets de loi comme celui-ci. Mais laissez-moi vous dire ceci, je crois que le Congrès doit agir. »Il a supplié les membres des deux côtés de l’allée:« Qu'est-ce qui est dans le meilleur intérêt de notre pays? Ce n’est pas dans l’intérêt supérieur de notre parti [or] notre propre réélection. »Sa demande a reçu un tonnerre d'applaudissements, puis le moment était venu de voter.

Alors que les secondes s'écoulaient sur les horloges de 15 minutes qui encadraient la chambre, il devint évident que les instances bipartisanes et la pression de la Maison-Blanche avaient échoué. Le projet de loi a été rejeté par un vote de 205-2228, une perte rare sur le sol pour Pelosi. Près de 60% des démocrates (140 sur 235) ont voté «oui», contre seulement 33% des républicains (65 sur 198). Bush, qui avait appelé les 19 membres républicains de sa délégation du Texas, n'avait persuadé que quatre d'entre eux d'appuyer le projet de loi. L'un des opposants texans, Jeb Hensarling, a qualifié le TARP de première étape «sur la pente glissante du socialisme».

L'inquiétude suscitée par l'élection imminente a joué un rôle important dans la défaite. De 18 membres en Les courses «à lancer», 15 ont voté contre le projet de loi, y compris les six démocrates de première année confrontés à des campagnes serrées. Certains ont exprimé leur scepticisme quant à la précision de la description de la crise faite par l’administration, rappelant les informations trompeuses fournies par le Congrès sur les armes de destruction massive utilisées pour justifier la guerre en Irak. De nombreux membres des caucus hispanique et noir se sont montrés réticents à expliquer à leurs électeurs économiquement en difficulté les dépenses considérables engagées pour Wall Street, d’autant plus que le projet de loi ne contenait que peu de choses que les démocrates avaient recherchées pour les personnes sans emploi et risquant de perdre leur maison.

Dans le vestiaire, des membres stupéfaits ont vu la moyenne de l'indice Dow Jones plonger nettement plus bas. Lorsque le vote final a été annoncé, le fond s'est effondré. En quelques minutes, le marché avait perdu près de 700 points de son ouverture, terminant 778 points inférieur pour la journée, une perte de points record d’un jour. En fin de journée, 1,2 billion de dollars dans les IRA, les fonds de pension et l'épargne avaient disparu, ce qui représente presque le double du plan de sauvetage lui-même. L’indice VIX qui faisait la chronique de la volatilité des marchés, appelé «indice de la peur», a clôturé à la plus haut niveau dans ses 28 ans d'histoire.

Certains républicains ont souligné la nature partisane du discours de Pelosi pour expliquer leur «non» vote. Le chanteur combatif a blâmé Pelosi «défaut d'écoute et défaut de diriger” for turning Republicans against the legislation. The normally calm House majority leader, Steny Hoyer, who often touted his ability to work across the aisle with Cantor, uncharacteristically exploded, “I can’t believe the audacity of that SOB!”

Other Republicans dismissed the allegation that Pelosi’s remarks were irresponsible. Blunt told Hoyer that Pelosi’s speech should not be “a big issue.” I recall that California’s Mary Bono minimized the impact of the speaker’s remarks, telling me she was disgusted with colleagues who were putting party over country. Frank denounced the Republicans’ “level of pettiness,” paraphrasing their argument as “Speaker Pelosi talked badly, so screw the country!” But Republicans also pointed their fingers at liberal opponents, such as some in the Black Caucus who had cast votes against the bill. Pelosi was infuriated at the Republicans’ scapegoating of black members. “I would kick someone in the teeth if they said that,” she said. Emanuel, serving as an Obama liaison to the House, offered to have the nominee call disgruntled minority members to turn around their votes for the next effort.

For her part, Pelosi pointed her finger at Bush and the Republicans, whom she termed “dysfunctional.” “The Republicans did not honor their commitment, [and] we all look bad,” she asserted. “The president has no shtick,” she complained to Paulson. “What is going on in the Republican caucus to let the United States suffer this blow?” She counseled the White House’s Dan Meyer, “There isn’t another vote [for the bill] in our caucus” unless something on the order of a $65 billion stimulus was added, but Meyer predicted that such additions would only further diminish Republican support. “You don’t know that!” Pelosi protested, but she agreed for the moment to back off her effort to load up the bill, and even dismissed suggestions from an influential friend, the financier George Soros. “Everyone’s got a plan!” she said. Bolten admitted, “The Republicans blew it,” but Pelosi was unappeased. “If we don’t get more votes on your side,” she told him, “we have to have a different conversation.”

The swift negative reaction—nearly 90 percent of Americans in one poll believed the defeat would damage the economy—quickly led some members to question their vote. Hoyer reported that Bolten had found “much voter remorse” among Republicans, and one Blue Dog leader reported that many in his business-friendly group were “shaking in their boots” from the reactions in their districts.

The Senate now knew there would be enormous pressure for the House to pass anything the Senate approved so as to prevent a time-consuming “ping-pong” process that sent the legislation back and forth between the two sides of the Capitol. Reid quickly exploited the House’s failure to pass TARP by adding tens of billions of dollars in unrelated expenses the House had been balking at approving. Reid confidentially informed Pelosi his bill would extend a series of controversial energy tax credits, which he knew would displease many of her members. “This conversation never happened,” he told her. Boehner predicted the extenders would influence “dozens” of Republicans to switch their votes in support of the bill, but Pelosi angrily denounced these unrelated additions as “pork barrel for senators.”

“You dole out goodies over there,” she tersely told Christopher Dodd, the Senate’s Banking chairman, singling out a “disgraceful” coal-to-liquids development program favored by Obama. “We could do it, too, if we gave away tens of millions of dollars!”

Dodd did not deny the accusation. “Reid cared more about the extenders than he did the bailout,” he acknowledged.

The familiarity of the Senate’s maneuver caused House members to flare. “Reid screwed us, destroyed our leverage,” in the words of one House leader. “We’re being told it’s ‘our way or no way,’” complained Hoyer, declaring himself “a very unhappy camper” because of the way “the Senate jams us.”

Close to midnight on October 1, the Senate approved the TARP bill—including the $150.5 billion package of tax extenders—by a bipartisan 74–25 margin. The next morning, Pelosi told Boehner she was hemorrhaging votes, while the Ohioan asserted he was “doing a lot better,” although he still could not confirm he would reach his promised 100 votes. “There’s no reason to bring it up if it can’t pass,” she responded, advising him to toughen up his whip operation. “Call me when you have the votes. I don’t finger my members.”

As annoyed as she was at the Senate for larding up the urgent TARP bill, Pelosi also blamed House opponents. “It’s awful what the Senate put in, but we enabled them,” Pelosi told Hoyer. “It is like lifting an anvil to get [our] people to vote for unpaid tax cuts,” she told Bolten.

Now, instead of adding billions of dollars to create jobs or prevent foreclosures, as she had wished, the TARP bill would provide, at the insistence of the Senate, tens of billions of dollars not only for the energy producers’ industry but also for intérêts particuliers, including racetrack facilities, wool manufacturers, and rum producers. Yet facing the inevitable, Pelosi brought up the Senate bill on October 3, and it passed 263–171. Democratic votes rose slightly, to 73 percent of caucus members, but Republicans contributed only 91 votes, still short of Boehner’s promise.

Working with the Republicans “turned out to be the biggest waste of time,” Pelosi charged. “We should have written the bill we wanted on the first night. we again didn’t get 100 Republican votes!”

The epic battle to pass the TARP legislation occurred under the most adverse of circumstances. The economy was in its most perilous state since the 1930s, a condition many Democrats blamed on the Bush administration—including the chief TARP negotiator, Henry Paulson—for having coddled Wall Street for seven years. The essence of the legislation was reviled by the public: hundreds of billions of taxpayer dollars for corporations whose reckless behavior had destabilized the economy and cost millions of Americans their homes and their jobs. Moreover, this unprecedented rescue operation occurred just weeks before a crucial election, offering candidates a grave choice: Oppose TARP and risk contributing to an economic catastrophe, or spend hundreds of billions of dollars to rescue the very corporate titans whose greed had provoked the crisis.

And yet, the Democratic-led Congress made function swiftly and on a bipartisan basis, notwithstanding a White House under Republican control. In two weeks, combative leaders with starkly different ideological outlooks, institutional interests, and electoral objectives were able to find common ground to avert a national catastrophe. Future historians may well regard passing TARP, under such hair-raising circumstances, as one of Congress’s finest hours. One can only wonder how successfully the contemporary Congress and White House might confront a comparable crisis.

There are several major explanations why the TARP rescue succeeded, and all contrast with our contemporary gridlock. TARP highlighted the value of experienced leaders. The “Big Four”—Pelosi and Reid, and Boehner and the Senate Republican leader Mitch McConnell—had to overcome serious cleavages within their own memberships while simultaneously defending their particular political and institutional roles.

The passage of the TARP bill also demonstrated the critical importance of frank communication between the executive and legislative branches. Even within the same party, as the Pelosi-Reid exchanges illustrate, there was tension and suspicion over the other’s motives and objectives. Yet as the conversations in this article reveal, deep-seated partisanship and institutional rivalry yielded to realistic collaboration. Equally frank communication existed among key staff whose long-standing relationships facilitated partnership even when their bosses appeared to be at loggerheads. My own close association with Nowakowski, of Boehner’s office, dated back seven years, to our serving as majority and minority staff directors of the Education and the Workforce Committee.

Perhaps no factor influenced the successful outcome more than the magnitude and urgency of the crisis itself, a common feature of periods of congressional achievement. The steadily worsening economy, rising unemployment, and loss of millions of homes since the February stimulus had not prompted a bipartisan response, and Republicans remained resistant to adding anti-recessionary initiatives to TARP. But the imminent collapse of key banking, investment, and insurance companies compelled joint action because the alternative was simply too dire to contemplate. As Mitch McConnell declared at the September 18 bipartisan leadership meeting, “If it means saving the country’s financial system, we can do it.”

Others, however, regard the bailout as a shameful example of how Congress acted only because of the urgent danger that jeopardized well-connected corporate interests. Indeed, promises made during the negotiations—to address the underlying causes of the crisis and its victims—proved less successful. Bush pledged investigations by the Securities and Exchange Commission, and an expanded Hope Now program to keep people in their homes, but there was little time or energy left in his administration for either. And while Obama and a Democratic Congress pushed through a stimulus bill even larger than TARP in February 2009, many in his party expressed disappointment at the administration’s slow pace in initiating foreclosure mitigation and job creation. Congress approved the Dodd-Frank Wall Street Reform and Consumer Protection Act less than two years later to establish safeguards against a recurrence of the behavior that led to the meltdown, but many critics complained that the necessary compromises needed to win passage left Wall Street insufficiently punished or regulated. By then, the crisis atmosphere that facilitated the TARP law had long since evaporated, and only three Republicans voted for the Dodd-Frank conference report in the House and the Senate.

For critics, TARP remains not an example of diligent public servants overcoming partisan and institutional interests, but indisputable evidence of what is wrong with American politics. Two and a half years after the crisis, 4 million families had lost their homes, and an additional 4.5 million were mired in foreclosure proceedings. The typical American household’s net worth remains nearly 20 percent lower than it was before the crisis, and nearly $11 trillion in household wealth has evaporated. It took nearly a decade for home-ownership rates to register an increase, and black ownership, which had reached a historic high in 2004, remains at its lowest level in nearly trois decennies. And yet, TARP supporters note, the nation averted plunging into an abyss that would have made each of those measures catastrophically worse.

More than any other factor—perhaps even more than Obama’s election or the enactment of health reform—TARP ignited a new level of partisanship and division that has debilitated American political institutions in the ensuing years. The law evoked a sense of betrayal: the political elite predictably rushing to aid the financial elite with the hard-earned tax dollars of the largely ignored working and middle classes. Indeed, what emerged from the ashes of the September 2008 meltdown was not only a revitalized Wall Street, with high salaries, stratospheric bonuses, and golden parachutes galore, but also the enraged Tea Party movement of 2009.

As the nation marked the 10th anniversary of the Paulson-Bernanke-Pelosi phone calls of September 18, 2008, efforts are under way to roll back many of the rules designed in the wake of the crisis. In May 2018, Trump’s Fed chairman, Jerome Powell, announced a weakening of the so-called Volcker Rule, which restricts bank actions that endanger investors, citing “overly complex and inefficient requirements.” Congress, with bipartisan support, has exempted many small and community banks from Dodd-Frank provisions. The effect of these retractions will likely “boost the profits of some of the industry’s biggest players,” one recent report concluded.

It is impossible to foresee whether this relaxation of regulations might allow a recurrence of the very misbehavior that brought the nation to the edge of the abyss only a decade ago. What seems beyond debate, however, is that the breakdown of comity between the White House and Congress, and the deepened levels of partisan distrust within the House and the Senate, would make it far more difficult today to replicate the actions of 2008 should a comparable crisis recur. The harsh reminder of how close the economy of the United States, and the world, came to a meltdown in 2008 should be more than sufficient reason for collaboration and pragmatism in politics rather than the perpetuation of the stultifying gridlock that has seized Washington.