If You Could Be a Fly On the Wall

Well, Henry Paulson grants you your wish in his new memoir, On the Brink: Inside the Race to Stop the Collapse of the Global Financial System, which is excerpted today in the Wall Street Journal in an article with a fantastic title: "When Mr. McCain Came to Washington."

Paulson takes readers inside the development of the financial crisis, as well as the almost-comical meeting at the White House, organized by McCain after he suspended his campaign (my italics):

I went into [Democratic Massachusetts Rep.] Barney Frank's office and called [White House Chief of Staff] Josh Bolten to tell him in no uncertain terms that I thought it was dangerous for McCain to return. Josh said the White House was equally frustrated. McCain wanted a meeting at the White House, and the president felt he had no choice but to accommodate him.

...

We'd devised TARP to save the financial system. Now it had become all about politics—presidential politics. I wondered what McCain could have been thinking. Calling a meeting like this when we didn't have a deal was playing with dynamite.

...

I was so concerned that McCain would do or say something rash that I resorted to a veiled threat: "I'm not a politician, but if you or anyone else does something that causes this system to collapse, it is not going to just be on me. I am going to go and say what I think to the American people."

...

By protocol, [after]the president [spoke he] turned to call on the speaker of the House. And when Nancy Pelosi spoke, it was clear the Democrats had done their homework and had planned a skillful response for McCain.

Pelosi deferred to Obama, who promised the needed votes from the Democrats, but warned that he perceived Republicans in Congress were waffling and playing politics. The Republican leadership had indeed gone on record disclaiming any idea that a deal had been reached on TARP.

Paulson writes:

Now Obama and the Democrats were skillfully setting up the story line that McCain's intervention had polarized the situation and that Republicans were walking away from an agreement. It was brilliant political theater that was about to degenerate into farce. Skipping protocol, the president turned to McCain to offer him a chance to respond: "I think it's fair that I give you the chance to speak next."

But McCain demurred. "I'll wait my turn," he said. It was an incredible moment, in every sense. This was supposed to be McCain's meeting—he'd called it, not the president, who had simply accommodated the Republican candidate's wishes. Now it looked as if McCain had no plan at all—his idea had been to suspend his campaign and summon us all to this meeting. It was not a strategy, it was a political gambit, and the Democrats had matched it with one of their own.

...

Finally, raising his voice over the din, Obama said loudly, "I'd like to hear what Senator McCain has to say, since we haven't heard from him yet."

The room went silent and all eyes shifted to McCain, who sat quietly in his chair, holding a single note card. He glanced at it quickly and proceeded to make a few general points. He said that many members had legitimate concerns and that I had begun to head in the right direction on executive pay and oversight. [Eric Potruch interjects: This is the irony of ironies! McCain now complimented Paulson for crafting aspects of the financial bailout that regulated executive pay and provided government oversight of the biggest banks, which is exactly the aspect of the plan for which Republicans are now saying Obama engineered.] He mentioned that Boehner was trying to move his caucus the best he could and that we ought to give him the space to do that. He added he had confidence the consensus could be reached quickly.

As he spoke, I could see Obama chuckling. McCain's comments were anticlimactic, to say the least. His return to Washington was impulsive and risky, and I don't think he had a plan in mind. If anything, his gambit only came back to hurt him, as he was pilloried in the press afterward, and in the end, I don't believe his maneuver significantly influenced the TARP legislative process. ... when it came right down to it, he had little to say in the forum he himself had called.

...

The room descended into chaos as the House and Senate members erupted into full-fledged shouting around the table. Barney Frank started to loudly bait McCain, who sat stony-faced.

"What's the Republican proposal?" he pressed. "What's the Republican plan?"

It got so ridiculous that Vice President Cheney started laughing. Frankly, I'd never seen anything like it before in politics or business—or in my fraternity days at Dartmouth, for that matter.

Finally, the president just stood up and said: "Well, I've clearly lost control of this meeting. It's over."

So, here we had the most perilous moment in the economy, basically the economic equivalent of 9/11, and one that would have far-reaching effects -- trillion dollar deficits, huge federal investments in the banking sector, ownership of AIG, Fannie Mae, Freddie Mac, and Citibank -- and McCain tried to play quarterback without having a playbook. And it was an epic failure. I believe his gambit was made without the benefit of his advisors, as rashly as his choice of Palin for vice president.

Now, there are those on the Republican side who believe the government bailout was a huge mistake and who are now trying to blame Obama for it. But as Paulson describes the scene, it was clearly the president's, Paulson's, and Bernanke's plan. Democrats recognized the gravity of the problem and responded by doing the right thing for the country. Republicans, who have since descended into a snake pit of political terrorists putting party before country, were absolutely powerless in a Republican-occupied Oval Office. Bush's prophetic words are going to echo for a long time: "I've clearly lost control of this meeting. It's over."