There’s this weird meme among Republicans that I haven’t been able to figure out the origin of. It’s become an item of faith that the bailout of the banking and auto industries was a) a hostile takeover of private industry and b) the work of President Obama. Obviously, neither of these things are true. Both banks and automakers begged to be bailed out. The CEOs of the Big Three automakers went before Congress in December 2008:
“We’re here today because we made mistakes,” General Motors chief executive Rick Wagoner told the Senate Banking Committee. Wagoner, who drove to the hearing in a test version of the electric Chevrolet Volt, apologized for asking for the loans.
“We’re sorry to be asking for this support,” he said. “We wish the market conditions were better, but they’re not, so this is what we need to do.”
Things were worse still for banks. In the span of just eight days in September 2008, the U.S. financial system crumbled. Once Lehman Brothers was allowed to fail, the rest of the banks realized that they were screwed, for so many assets based on mortgage-backed securities. Within hours they agreed to take enormous loans from the federal government to prop themselves up, with AIG being a prime example of this:
Of the $58 billion in contracts that AIG had written, 64 percent of the insured instruments had been downgraded and six were in default.
If AIG failed, the effects would ripple through the world financial system and damage Wall Street firms.
The regulators stepped in on the evening of Tuesday, Sept. 16, with an $85 billion loan to AIG, in exchange for an 80 percent stake. The action averted bankruptcy and, with the first $30 billion loan installment from the New York Fed, enabled the company to meet its collateral calls from customers including Goldman.
The choice was between bankruptcy or bailout.
Obviously, this was President Bush’s doing, not President Obama’s, since Obama hadn’t even been elected when the automakers were bailed out, and hadn’t yet taken office when the banks were bailed out. Just reading a few headlines makes that much clear: “Bush bails out carmakers, banks need more cash,” “Bush: Treasury will take $250 billion stake in banks.”
So how in the world did it become settled fact among Republicans that Obama did this? It fits their narrative, so it’s probably easy to make people believe, but how is this message being spread? Is it word of mouth? Talk radio? E-mail forwards? An epidemic of stupid?
None of the above. At least here in Virginia, we can thank Pat Mullins and the Republican Party of Virginia. In an end-of-year fundraising e-mail, full of typographical errors and huge logical holes, this paragraph appears at the end of the second page of the four-page missive:
[T]he Obama Administration took over much of the U.S. banking system, and followed it up with a takeover of the American auto industry.
(That’s Mullins’ emphasis, not mine.) Now, there are a lot of things about this letter that are wrong, but this is an egregious lie. If Mullins is so ignorant as to believe that these things are true, he’s no better than Jeff Frederick. Worse yet is the possibility that Mullins figures it’s worth telling such a bald-faced lie in order to raise money.
I’d thought that Mullins was an improvement over Frederick, that he might get the RPV out of its rut of habitual lies and exaggerations. I guess I was wrong.