Bill Clinton says Bush was wrong to let Lehman fail

Former President Bill Clinton says the Bush administration made a mistake allowing Lehman Bros. to fail -- and that the calamity that resulted from Lehman’s collapse heavily tilted the presidential election in Barack Obama’s favor.

Speaking at the World Business Forum in New York on Wednesday, here’s what Clinton said about Lehman, as relayed by the Wall Street Journal:

"I feel more strongly now it was wrong. . . . They decided not to facilitate a loan to Lehman Bros. They thought Lehman Bros. was so much smaller than AIG or Bear Stearns, they could afford to let it fail. The problem is that Lehman Bros. had already paid. When they failed, all the rest of us paid. It led to a collapse of the stock market. Every bank in America that had mortgage investments it hadn’t sold off looked like it had bad loans."

Clinton has events out of sequence. The American International Group rescue came after Lehman’s bankruptcy on Sept. 15.

More important, I don’t know what evidence Clinton has that the Bush administration thought it could "afford" a Lehman collapse. It’s more probable that the White House, the Treasury and the Federal Reserve just had no idea that the credit markets would immediately go into a deep freeze. If they could have seen the future, I doubt that then-Treasury Secretary Henry M. Paulson and Federal Chairman Ben S. Bernanke would have closed the casket lid on Lehman.

Clinton also suggests that Lehman’s fall all but assured Arizona Sen. John McCain’s defeat in the November election.

"In 2008, we held our presidential election on Sept. 15," Clinton said. "When the Bush administration decided not to help Lehman Bros. . . . McCain’s chances of winning an election went from 1-in-4 to 1-in-50. The election ended Sept. 15."

For sure, the plummeting economy last fall helped to seal the deal for the Democrats. But would a rescue of Lehman Bros. have had made voters any more friendly toward Republicans at that point -- particularly if the rescues of AIG and the entire banking system (via TARP) probably would have followed regardless?

-- Tom Petruno

Photo: Former President Bill Clinton. Credit: Kevork Djansezian / Getty Images

Comments

[Pancho]

Pres. Clinton should have no opinion on anything. I guess he should just hang out up north with Jerry Brown and pass out cigars and ponder on Rwanda. Every soldier like me remembers pulling guard duty on freezing inghts in a foreign land while he just fooled around. Thanks for remembering me in the field, just like the million dead Rwandans.

[GeeWhiz]

Holy Cow,

Bill (The holier than thou virgin) is speaking about others' faults. What a typical hypocrite he continues to be.

Bill, shut up and mind your own damned business, which is keeping your wife in the kitchen and the bedroom.

Stupid typical liberal idiot.

[Robert]

Someone should pass word to Clinton that he is no longer president. He had his chance. He blew it and now all of us have to hear him - day in and day out - rambling on one topic and another. When Reagan left office, the media screamed about the 2 million he made for his retirement; Clinton rakes in 20 million in a few years and nary a word.
In South Carolina this past election cycle, we saw the real Clinton - he'll use race if he has to. Not one significant speech in 8 years in office and he left a burden for Gore. Retire. Leave us alone!

[Rupert Wehrmacht]

Geeze, why are all the right-wing wacko nutcases so quick to jump onto the LA Times comment boards? Guess they don't have anything useful to do.

[Jack]

The Clinton Presidency was one of peace and prosperity. The Bush Presidency was one of economic failures and disastrously planned wars. That notwithstanding, it amazes me that people still think Bush was a better president than Clinton. That's why I'm glad I'm an Independent. I don't have to continue following the script for a party, even when it runs the bus into the ditch like Bush did.

[nrb]

Clinton is a turd.

[alinosof]

Oh why, why do we have such a dumb press?
Clinton does not have events out of sequence but the author of this piece has problems understanding plain English. So let me help you out: when Lehman Bros went belly up on September 15 2008, the Bush administration made a conscious decision that they would not bail them out and the company sank starting a domino effect on the market. Later, when AIG followed suit and collapsed, the Bush administration changed its tune and decided to rescue AIG on the ground that it was too big to fail, so they injected money into the company. Now, you can justify the administration actions any way you want, but you cannot change the facts. Clinton only stated what happened and said it was wrong. As for the other juveniles commenting here, can you stick to the topic at hand or is it beyond your pay grade?

[whatthehell]

He's the President when US has a huge surplus in treasury. He has earned the right to comment on this. All this talk about Rwanda and his wife in the kitchen is just silly and have nothing to do with this discussion on Lehman brothers at all.

As for this issue, I think the system would have collapsed anyways. They might be able to postpone it if they "saved" Lehman, but nothing could prevent it.

[martscan]

nrb:

Your disgusting remark, not fit for any publication, save something exclusively for morons, says volumes about YOU.

[Southern]

Remember that the Bush Administration also consisted of Current Fed Chairman Ben Bernanke and Current Treasury Secretary Timothy Geithner on the Presidential Advisory Committee. This was a co- operative effort across different ideologies.
It is still not clear that it was a mistake (Though I fall in the camp that says it was).

And it sure is a lot easier to play Quarterback on Monday rather than Sunday.

As an independent, I do wish the various ex presidents would follow Bush' example and close their pie hole.
We have one president now.
Good or bad, let's play it that way.

[Harry]

It's only natural and patriotic to associate the words "Bush" and "wrong". Even his dog was a jerk.

[realwitit]

woot woot! pill clinton!

[aw]

Petruno is illiterate: "would had made", "more important". Sloppy language often leads to sloppy thought; both are very evident in his poorly developed opinion editorial.

[Tom Petruno]

@ aw: Apologies for the typo on had vs. have. But if you wanted "More important" to say "More importantly," my copy desk informs me that you would be wrong, at least according to our style.

Also, in your comment, note that the commas should be within the quote marks.

Regards,

Tom Petruno

[Luella]

Considering that the Clinton-McCain faction lost the election *twice*, you'd think Bill would be a little more grateful that they ended up with most of the power ministries in the administration anyway. Baker or Brzezinski can be brought in to fill a vacancy at State if he's so unhappy as to be publicly moping.

[blastoff]

Ben Stein, the conservative commentator, basically agrees with Clinton that letting Lehman collapse was a huge mistake.

http://www.nytimes.com/2008/10/12/business/12every.html?scp=3&sq=%22ben+stein%22+lehman&st=nyt

[Peter]

I like slick Willy and think he did a fine job as president. However, I don't understand why, when he opines on the economy, he doesn't get pummeled with questions on the bigger question of whether his repealing of the Steagle(?) Act facilitated the financial meltdown. Why'd you do it Bill and what do you have to say for yourself!!?? (and don't tell us you didn't inhale)

[aw]

More important are the points Mr. Clinton is making: that it was a mistake to let Lehman fail and that the failure of Lehman precipitated a market collapse. The latter is the only temporal condition Mr. Clinton makes.

Mr. Petruno gets it wrong repeatedly.

He states that he doesn't know about the information available at the time of the collapse.

Wow, enlightening.

Then he proceeds to beg the question on several levels by restrictively associating the bail-out, "the plummeting economy," shunned Republicans and electoral transformation.

Again, without evidence.

The point Mr. Clinton is making now, and many others made at the time, is that there might not have been a "plummeting economy" if Lehman had received timely assistance.

Many braggarts and demagogues said, "Let the banks fail!" We all should be thankful that G.W. Bush was more thoughtful than them.

Mr. Clinton, who is privileged to information and has a mind, might have time to meet with you, Mr. Petruno. He even might help you to put two words together.

[aw]

I retract, "He even might help you to put two words together."

That was rude. Please accept my apology.

Insert instead, "Mr. Clinton's experience and knowledge could add great import to this discussion."

Thanks

[sharmila]

Looks like President Clinton still feels bad about Barack Obama winning the election.

[Kieran O'Neill.]

This was alast ditch effort to scuttle Obama Boat to tie him up and distract him for four years and hope he would fail. This revelation is in sink with Bombing Iran and Warring with Georgia. Stopping the Election was another ploy. They lost the Election red became blue, he stil has no legal papers and is accused of being a member of the Muslim Brotherhood. Maybe Obama has some dignity and is young enough to help this God forsaken Country. The American People will never trust the GOP with thier Ecomomy or the National Defence ever again. O did I mention their was a buyer for Lehman Bros. I'm with Mike Moore on this 2% of the boososof Wall St control the Prolateriate now we know what that's called . Spreading the wealth a sin against a Party of NO. This is one dark statement in the history of America . We brought on our own Wall St Crash just to screw a man in his finest hour, as Sir Winston Churchhill would say.
Torture works it gave us a kinder gentler Leader.Abu Ghraib Hipp, Hipp Hurray.

[Patriot]

Ha ha!

Another of Bill's "Jesse won South Carolina too" moment.

The self-delusional Bill Clinton STILL cannot come to grips with the fact that Obama just plain outdid him and Hilarious politically. lol

This kind of self-centered thinking is the result of America's racist history, in which some race-centered minds find it difficult to accept that those who founded the Egyptian Civilization could today come to power in European-dominated America. lol

[middle of the road]

Lehman Bros. allowed to fail because competitor with Goldman Sachs? Simple greed?

[A.J. Braga]

The roots of this financial cancer begun under the watch of Bill Clinton. First, the Glass-Steagall Act was repealed under his watch, now making it possible for banks and other financial companies to merge into giant trusts. Second, the Commodity Futures Modernization Act , the deregulation of derivatives also was under his watch. Rep Senator Phil Gramm was behind the legislation, but Bill Clinton made it possible. This is also an example what happens when these politicians don't read what they are voting on. Then came Bush and the Republicans and added gasoline to the fire. America, please wake up. The entire place needs an enema. All these bums need to be voted out and put representatives in there that will stop fleecing us!!!! What has happened to the type of investigative reporters that made Nixon resign.

[JL]

WHAT IS HAPPENING TO "JOURNALISM" IN THIS COUNTRY?
It's appalling how many typos, grammatical errors, inaccurate information, -and more- we see every single day in all the major blogs and papers online.. glad you pointed it out. English is my second language, but I guarantee you, I have a better command of the it than most, and I'm able to communicate more clearly and succinctly than most... just puzzling!

Petruno is illiterate: "would had made", "more important". Sloppy language often leads to sloppy thought; both are very evident in his poorly developed opinion editorial.

Posted by: aw | October 07, 2009 at 10:53 PM

[Robert]

That a boy Bill! Hindsight is always 20-20

[martscan]

To: aw

I take great exceptions to your comments in several areas.

By way of qualification, I'll bet I was parsing complex sentence structures before you were born, and am something of a stickler for good grammar, thanks to the lights of the Sisters of St. Joseph of Nazareth. And, while I consider myself literarily articulate and proper, on occasion I prove myself human, and grammatically err. Additionally, I have been a continual subscriber to the WSJ since 1954, and read it, and their blogs assiduously. as I do with their "Market Watch." I also read the daily "Financial Times." To list my other daily newspaper readings would be a gauche display of hubris, so I shan't do it.

Yes, there are times when I am appalled at the gross grammatical errors and sophomoric premises proffered by highly paid, and regarded, economic journalists who, like the great physician and writer, Dr. Anton Chekhov, were forced into journalism strictly for economic survival.

But of all the economic journalists I read daily, none, absolutely none, work harder and present more original, topical, creative pieces on sometimes complex subjects in a style that even jerks can understand. As you so ably demonstrate.

[CC]

I think it's pretty lousy for one former president to criticize another. Come on, Bill Clinton should have more pride. I don't mean ego, God knows that he's stinking with that, I mean pride.

[S. Maxx Mahaffey]

To Robert: I think President Clinton knows that he no longer president, but I don't think that's the case with John McCain. So, maybe you should tell that to McCain.

[S. Maxx Mahaffey]

To Pancho: You got inserted the wrong president's name in your post. It should read: "Pres. Bush should have no opinion on anything." He put us in the mess that our Country is in, he and the Repugnant Party. So, I'll take what President Clinton says over G.W. any day. At least he didn't send thousands of Americans to their deaths trying to steal Iraq's oil and lying about WMDs. He didn't increase the wealth of the richest Americans on the backs of the Middle Class. He didn't commit war crimes turning a blind eye to the CIA's interrogation tactics. So, yeah, when President Clinton speaks, I listen. When G.W. or Evil Dick speaks, I puke.

[Democracy Rules]

Clinton is correct. I am glad someone prominent has finally said it out loud. The election ended on the day Bush and Paulson wiped out nearly every American's retirement account by letting Lehman fail.

[Nancy]

I wish he would just quietly retire and stop Monday night quarter-backing. It was during his watch that the floodgates of H1B VISA cheap foreign workers were opened.

[olli]

I don't think rescuing Lehman brothers would have helped McCain, because the economy was already in bad shape, and of course whichever party in in power at the time seems to get punished.........but we have to realize that the economy has to run it's course.......and there always will be a boom and a recession......that's just part of life.....

But, I do agree that if the government was going to help out AIG and other financial institutions, Lehman Bros. which has been an american institution for over 150 yrs and was a huge firm, certainly was deserving of a rescue as well.......and yes, it's demise triggered more panic and more credit freeze.......letting Lehman Bros. fail certainly didn't help the situation, it only complicated it.

It's unfortnate that america allowed themselves to get into this mess. The attitude in the 1920's was buy now, pay later.....and look where that got them......And for those of you that think that no recent government intervention at all would have been ideal, and that the banks should have been allowed to fail need to realize that right now, we would be waiting in line for food just like the 1930's.......

[JOE Westwood]

Of course.. President OBAMA 's treasury guy, NY FED President Geithner let it failed so he could be the next Treasury. This event reinforced "its the economy " argument which McCain had no clue.

[H. Craig Bradley]

GIVE CREDIT WHERE CREDIT IS DUE

Tom, you forgot one important factor in then Sec. of Treasury Henry M. Paulson's decision on Lehman Brothers. Henry Paulson was a former head of Goldman Sacks. As such, he had no love for competitors such as the President of Lehman Brothers. He may also have harbored some bad blood with them in a personal sense (grudge).

This is not out of the real of possibility given what human nature is capable of. He may have subconsciously factored his personal and professional feelings/background into his decision making process regarding the fate of Lehman Brothers. President Bush was swayed by Paulson's and Bernanke's warnings of "financial collapse". This is when President Bush probably panicked.

The international bankers won the day and we will all have to pay for it in spades FOR THE REST OF OUR LIVES! So will our children and grandchildren. This is probably why former Congressman Newt Ginrich said on Bill O'Reilly last Summer: " What a disasterous Secretary of the Treasury Henry Paulson turned out to be". This is giving credit where credit is due.