A few hours before I went on the air to deliver the speech, my personal aide, Jared Weinstein, told me John McCain needed to speak to me immediately. I asked John how he was feeling about the campaign, but he went directly to the reason for his call. He wanted me to convene a White House meeting on the rescue package.
“Give me some time to talk to Hank,” I said. I wanted to make sure a White House meeting wouldn’t undermine my treasury secretary’s efforts to structure a deal with Congress. John said he was going to issue a statement. Minutes later, he was on TV. He called for the meeting and announced he was suspending his campaign to work full-time on the legislation.
I knew John was in a tough position. He was trailing in the polls to Senator Barack Obama of Illinois, who had stunned Hillary Clinton in the Democratic primaries. No question the economic trouble was hurting John. Our party controlled the White House, so we were the natural target of the finger-pointing. Yet I thought the financial crisis gave John his best chance to mount a comeback. In periods of crisis, voters value experience and judgment over youth and charisma. By handling the challenge in a statesmanlike way, John could make the case that he was the better candidate for the times.
I walked over to the Oval Office, where Josh Bolten was waiting with his deputy, Joel Kaplan, and Counselor Ed Gillespie. Nobody was keen on the idea of the meeting. Josh said Hank opposed it. But how could I say no to John’s request? I could see the headlines: “Even Bush Thinks McCain’s Idea Is a Bad One.”
Conferring with Ed Gillespie (left) and Josh Bolten, two trusted aides and good friends, in the trying final months of the administration. White House/Eric Draper
We notified Speaker Nancy Pelosi and Senate Majority Leader Harry Reid that the meeting would take place the next afternoon, Thursday, September 25. I called Senator Obama and told him I appreciated his interrupting his campaign schedule. “Anytime the president calls, I will take it,” he said graciously. I extended the invitation to the meeting and made clear it was not a political trap. He agreed to attend.
At around 3:30 p.m. the next day, the participants began to arrive. Although I did not venture to the narrow parking strip between the White House and the Eisenhower Executive Office Building, I was told it looked like an SUV convention. Before the meeting started, I had a quick discussion with Senate Minority Leader Mitch McConnell and House Minority Leader John Boehner. We spent most of our time talking about how tough it would be to structure a deal that could garner Republican votes in the House. I told them it would be a disaster if Republicans killed the TARP bill and the economy collapsed.
Just before I sat down in the Cabinet Room, I had a moment with Speaker Pelosi. I told her I planned to call on her after Hank and I had made our opening remarks. She clearly suspected that my motive was to sabotage the Democrats. Like a volcano ready to erupt, she said, “Barack Obama will be our spokesman.”
I took my seat at the center of the large wooden table Richard Nixon had donated to the White House. Hank Paulson, Dick Cheney, Josh Bolten, and I represented the administration. The party leaders and key committee chairmen represented Congress. Presidential candidates McCain and Obama took their seats at opposite ends of the table. Members of our staffs were sardined into the room. Nobody wanted to miss the marquee event in Washington’s political theater.
The emergency Cabinet Room meeting about the rescue package. White House/Eric Draper
I opened the meeting by stressing the urgency of passing legislation as soon as possible. The world was watching to see if America would act, and both parties had to rise to the challenge. Hank gave an update on the volatile markets and echoed my call for speedy passage.
I turned to the speaker. True to her word, she deferred to Senator Obama. He had a calm demeanor and spoke about the broad outlines of the package. I thought it was smart when he informed the gathering that he was in constant contact with Hank. His purpose was to show that he was aware, in touch, and prepared to help get a bill passed.
When Obama finished, I turned to John McCain. He passed. I was puzzled. He had called for this meeting. I assumed he would come prepared to outline a way to get the bill passed.
What had started as a drama quickly descended into a farce. Tempers flared. Voices were raised. Some barbs were thrown. I was watching a verbal food fight, which would have been comical except that the stakes were so high.
Toward the end of the meeting, John did speak. He talked in general terms about the difficulty of the vote for Republican members and his hope that we could reach a consensus.
After everyone had their chance to vent, I decided there was nothing more we could accomplish. I asked the candidates not to use the White House as a backdrop to issue political statements. I asked the members of Congress to remember we needed to show a united front to avoid spooking the markets. Then I stood up and left.
Early in the afternoon of Monday, September 29, the House of Representatives held a vote on the financial rescue bill. The previous two days, our fifth weekend in a row spent dealing with the financial crisis, had been packed with negotiations. Hank and his Treasury staff—joined by Dan Meyer, my cool-headed legislative affairs chief, and Keith Hennessey, my tireless National Economic Council director—had shuttled back and forth to Capitol Hill, working to resolve the remaining issues on TARP. Late Saturday night, Speaker Pelosi and John Boehner told me they had the outlines of a deal. On Monday morning, I stepped onto the South Lawn to congratulate Congress and urge the agreement’s quick passage.
Back in the Oval Office, I started calling Republican House members to lock in votes.
“We really need this package,” I told one congressman after the next. They all had reasons why they couldn’t vote for it. The price tag was too high. Their constituents opposed it.
“I just can’t bail out Wall Street,” one told me. “I’m not going to be part of the destruction of the free market.”
“Do you think I like the idea of doing this?” I shot back. “Believe me, I’d be fine if these companies fail. But the whole economy is on the line. The son of a bitch is going to go down if we don’t step in.”
At 2:07 p.m., the final vote on the bill was cast. It failed, 228 to 205. Democrats had voted in favor of the legislation, 140 to 95. Republicans had rejected it, with 65 votes in favor and 133 opposed
I knew the vote would be a disaster. My party had played the leading role in killing TARP. Now Republicans would be blamed for the consequences.
Within minutes, the stock market went into free fall. The Dow dropped 777 points, the largest single-day point loss in its 112-year history. The S&P 500 dropped 8.8 percent, its biggest percentage loss since the Black Monday crash of 1987. “This is panic … and fear run amok,” one analyst told CNBC. “Right now we are in a classic moment of financial meltdown.”
Shortly after the vote, I met with Hank, Ben, and the rest of the economic team in the Roosevelt Room to figure out our next move. We really had only one option. We had to make another run at the legislation.
My hope was that the market’s severe reaction would provide a wakeup call to Congress. Many of those who voted against the bill had based their opposition on the $700 billion price tag. Then they had watched the markets hemorrhage $1.2 trillion in less than three hours. Every constituent with an IRA, a pension, or an E*Trade account would be furious.