Video: Watch the entire address

By White House Correspondent
updated 9/25/2008 4:40:48 PM ET 2008-09-25T20:40:48

How did it happen, America's grave financial crisis? President George W. Bush offered a bunch of explanations but held Washington completely blameless, painting a picture of a government standing innocently on the sidelines as the economy went off the rails.

Somehow, under Bush's scenario, the country wound up at the precipice of "a long and painful recession" at a time when, apparently, the Congress, the White House, the regulators and the Fed were doing exactly what they were supposed to be doing. Now that the economy has tanked, Bush says the federal government is responding with "decisive action."

Shouldn't the people in charge have been doing that before everything became such a mess? "Our entire economy is in danger," Bush said in an address to the nation Wednesday night.

Nowhere in his 13-minute speech did the president suggest that the people in Washington who are supposed to keep an eye on the economy missed a step, failed to raise alarms or hesitated to intervene. The guilty parties in Bush's script were overseas lenders flush with cash, American borrowers reaching for more than they could afford, easy credit terms, a banking system eager to cooperate and too much optimism about rising home values.

Bush spoke vaguely about investment banks that "found themselves saddled with" toxic assets and banks that "found themselves" with questionable balance sheets.

The economic collapse — well, it happened. "The gears of the American financial system began grinding to a halt," Bush said, talking to the country as if he were an economics professor in a freshman course.

But now, there's plenty of action with federal takeovers and bailouts that have reshaped America's financial industry and left the concept of free enterprise in the dust. In Congress, key Republicans and Democrats reported agreement in principle Thursday on the outlines of a bailout package and prepared to show it to Bush for his endorsement of their changes to the plan.

Bush is a sharp-elbows politician, fiercely partisan and combative. The eight years of his presidency are filled with no-holds-barred, blame-game, finger-pointing attacks on Democrats. But not on Wednesday night. Not when Bush desperately needs Democratic votes to pass the $700 billion (that's with a b) plan to buy distressed assets from financial institutions to shore up the banking system and unlock the nation's severe credit crunch.

He could not risk offending Democrats because so many Republicans are balking at his proposal. Bush held his tongue and spoke instead of the spirit of bipartisan cooperation between Democrats and Republicans. He invited presidential rivals John McCain and Barack Obama to an extraordinary White House meeting with congressional leaders on Thursday to find a way forward.

Appearing before the nation Wednesday night, the president had a formidable challenge to persuade anxious Americans to swallow the bitter medicine of digging in their pockets to pay for a rescue package that could exceed the advertised costs and soar beyond $1 trillion. The painful truth is, no one knows how big the price tag will be.

Across the country, Americans are losing their homes or watching neighbors fall into mortgage foreclosure. Small businesses can't borrow money. But the answer from Washington is to bail out the titans on Wall Street, not the people on Main Street. Americans are anxious and angry and the politicians know it.

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Bush's argument is that rescuing the huge financial companies will preserve America's overall economy and help consumers and businesses get the credit they need. That is a tough sell.

Democrats demanded — and got — the administration's acceptance of limits on the pay of executives whose companies would be rescued. McCain has said he would fire the head of the Securities and Exchange Commission, which is supposed to oversee Wall Street, but the White House has shot that down.

In his address, Bush said Americans "deserve clear answers" about how the whole crisis happened. But government accountability was not among them.

Borrowers and lenders? They got the presidential spotlight.

"Easy credit, combined with the faulty assumption that home values would continue to rise, led to excesses and bad decisions," Bush said.

"Many mortgage lenders approved loans for borrowers without carefully examining their ability to pay. Many borrowers took out loans larger than they could afford, assuming that they could sell or refinance their homes at a higher price later on."

But whose job is it to regulate the questionable lending? That would be the government. And Bush is in charge of it.

Bush came into office eight years ago complaining that he had inherited a recession. It was brief and mild.

When he delivered his speech Wednesday night, Bush had 118 days left before the next president is sworn in on Jan. 20.

When Bush leaves, his successor will inherit a problem of historic proportions.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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