LAS VEGAS ― Having hit a low in 2009 due to the trauma of two domestic automakers nearing bankruptcy and the overall industry in turmoil, the annual National Auto Dealer Association convention this year was indicative of the vigorous rebound of the industry as a whole. Attendance was brisk and the expo hall was packed with vendors. Spirits were upbeat and optimism abounded.
As the final speaker on the closing day, former President George W. Bush had the last word. The hall was packed during his 25-minute prepared remarks and subsequent Q&A, with outgoing NADA Chairman Stephen Wade asking the questions. The ex-president showed his human side with a liberal mix of applause lines and humor. He cracked up the room on numerous occasions with spontaneous off-the-cuff remarks. He devoted some time to trying to sell his book, But every time Bush mentioned Decisions Points, he added with a wry expression and a twinkle in his eye, “We still have plenty of inventory.” The line became funnier every time he said it. “Did I mention, we still have plenty of inventory?”
Despite the fact that the room was primarily Republican, based on an informal polling, (and my interactions over the years with hundreds of dealers) there was no booing or hissing for the fact that then-President Bush authorized the advance of a bridge loan of $17.4 billion from TARP funds to GM and Chrysler in December 2008 after having been turned down for a bailout package by Congress. In current RW rhetoric, this is known as “government picking winners and losers.”
So given the audience, and after first spending some time on his personal battles with alcohol, Bush addressed the economic situation he faced at the end of his presidency. In fact, the auto industry rescue/restructuring might as well be termed the rescue of the North American industrial base, since that is what was at stake. Bush spoke glowingly of the advice and support of Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke. He cited them as perfect examples of people a leader should surround himself with to offer insights on subjects about which the leader is unfamiliar.
Speaking of the massive government support for the financial services industry by his administration during the economic collapse of late 2008, Bush says: “In a normal environment, the free market would render its judgment and they could fail. I would have been happy to let them do so. As unfair as it was to use the American people’s money to prevent a collapse for which they weren’t responsible, it would have been even more unfair to do nothing and leave them to suffer the consequences. The consequences of inaction would have been catastrophic.”
Regarding the economic crisis, “If we’re really looking at another Great Depression, you can be damn sure I’m going to be Roosevelt, not Hoover.” “Wall Street got drunk, and we got the hangover.”
In his book, Bush says he “opposed the Carter/Reagan bailout of Chrysler.” “Yet the economy was extremely fragile, and my economic advisors had warned me that the immediate bankruptcy of the Big Three would cost more than a million jobs, decrease tax revenues by $150 billion, and set back the country’s GDP by hundreds of billions of dollars.”
Stipulations attached to the billions in Bush Administration “bridge loans” ultimately cost GM Chief Executive Rick Wagoner his job, despite the fact many have “blamed” the next President.
Bush refrained from getting involved in the current politics other than to say “he understands the immense pressures of the job, and that it would be counter-productive for him to weigh in.” Despite the occasional malapropism, he conducted himself with class and grace with a large dose of Texas one-liner humor. While history may judge him harshly on some issues, it seems clear that the decisive action he authorized saved the economy, and in particular the auto industry, from a catastrophic meltdown.
Comment by Mike Smitka: Certainly Wall Street got drunk, but it was policy that supplied the hooch. Greed on Wall Street isn't new; the ability to indulge however was. Both historic checks were removed. The first was that of regulation, which limited the ability of bankers to gamble with other peoples money (bankers have long demonstrated an ability to keep winnings for themselves while sticking others with losses). The second was monetary policy, which historically kept the supply of funds roughly commensurate with normal loan demand. Here Bush also leaned on outside advisors, Greenspan in particular but also Paulson and to some extent Bernanke -- though Bernanke was in subordinate positions as a Fed governor and then chair of the Council of Economic Advisors, as he was not named Fed chairman until 2006, by which point real estate prices had largely peaked.