فصل 12

CHAPTER 12

Dear President Obama,

Today I was informed that effective June 30, 2009, I will join the rapidly growing number of unemployed in this country…

As I tucked my children into bed tonight, fighting the panic that is threatening to consume me, I realized that as a parent, I will not have the opportunity that my parents had. I cannot look at my children and tell them honestly that if you work hard enough and sacrifice enough, then anything is possible. I have learned today that you can make all the right choices, do all the right things, and it still might not be enough, because your government has failed you.

Although my government has been talking quite a bit about protecting and helping middle America, what I have seen has been to the contrary. I see a government that has been catering to lobbyists and special interest groups. I see billions of dollars that are being spent on bailouts for financial institutions… Thank you for allowing me to voice just a few of my thoughts on this emotional night.

Sincerely,

Nicole Brandon

Virginia

IT SEEMED LIKE I READ two or three letters like this every night. I’d slip them back into the folder they had come in, adding it to the high pile of papers on the desk. On that particular night, the face of the Treaty Room’s grandfather clock read one in the morning. I rubbed my eyes, decided I needed a better reading lamp, and glanced up at the massive oil painting hanging over the heavy leather couch. It depicted a stern, portly President McKinley standing like a bushy-eyebrowed headmaster while a group of mustached men signed the treaty ending the Spanish-American War in 1898, all of them gathered around the very table where I now sat. It was a fine piece for a museum, but less than ideal for what was now my home office; I made a note to myself to have it replaced with something more contemporary.

Other than the five minutes I’d spent walking across the hall to tuck in the girls and kiss Michelle good night, I’d been planted in my chair since dinnertime, the same way I was just about every night of the week. For me, these were often the quietest and most productive hours of the day, a time when I could catch up on work and prepare myself for whatever was coming next, poring over the stacks of material my staff secretary sent up to the residence for my review. The latest economic data. Decision memos. Informational memos. Intelligence briefings. Legislative proposals. Drafts of speeches. Press conference talking points.

I felt the seriousness of my job most acutely when reading letters from constituents. I received a nightly batch of ten—some written in longhand, others printed-out emails—arranged neatly in a purple folder. They were often the last thing I looked at before going to bed.

It had been my idea, the letters, one that came to me on my second day in office. I figured that taking in a steady dose of constituent mail would be an efficient way for me to reach outside the presidential bubble and hear directly from those I served. The letters were like an IV drip from the real world, an everyday reminder of the covenant I now had with the American people, the trust I carried, and the human impact of each decision I made. I insisted on seeing a representative cross section. (“I don’t just want a bunch of happy-talk stuff from supporters,” I told Pete Rouse, who was now a senior advisor and the West Wing’s resident Yoda.) Other than that, we left it up to our Correspondence Office to choose which of the ten thousand or so letters and emails that flowed into the White House daily went into the folder.

For the first week, what I read was mostly feel-good stuff: notes of congratulations, people telling me how inspired they’d been on Inauguration Day, kids with suggestions for legislation (“You should pass a law to cut down on the amount of homework”).

But as weeks went by, the letters became more somber. A man who had worked at the same job for twenty years described the shame he felt when he had to tell his wife and kids he’d been laid off. A woman wrote after the bank foreclosed on her home; she was worried that if she didn’t get immediate help, she’d end up on the streets. A student had dropped out of college; his financial aid had run out, and he was moving back into his parents’ house. Some letters offered detailed policy recommendations. Others were written in anger (“Why hasn’t your Justice Department thrown any of these Wall Street crooks in jail?”) or with quiet resignation (“I doubt you’ll ever read this, but I thought you should know we are hurting out here”).

Most often they were urgent appeals for help, and I would write back on a note card embossed with the presidential seal, explaining the steps we were taking to get the economy moving again, offering whatever encouragement I could. I would then mark the original letter with instructions for my staff. “See if Treasury can check with the bank about a refinancing option,” I’d write. Or “Does the VA have a loan program for vets in this situation?” Or simply, “Can we help?” This would usually be enough to focus the attention of the relevant agency. The letter writer would be contacted. Days or weeks later, I’d receive a follow-up memo explaining the actions taken on their behalf. Sometimes people would get the relief they had sought—their home temporarily saved, a spot in an apprenticeship program.

Still, it was hard to take any satisfaction from individual cases. I knew that each letter represented the desperation of millions across the country, people counting on me to save their jobs or their homes, to restore whatever sense of security they had once felt. No matter how hard my team and I worked, no matter how many initiatives we put into place or how many speeches I gave, there was no getting around the damning, indisputable facts.

Three months into my presidency, more people were suffering than when I began, and no one—including me—could be sure relief was in sight.

—

ON FEBRUARY 18, the day after I signed the Recovery Act, I flew to Mesa, Arizona, to announce our plan to deal with the collapsing housing market. Other than job loss, no aspect of the economic crisis had a more direct impact on ordinary people. With more than three million homes having gone into some stage of foreclosure in 2008, another eight million were now at risk. Over the final three months of the year, home prices fell almost 20 percent, meaning that even families who could manage their payments suddenly found themselves “underwater”—their house worth less than they owed, their primary investment and nest egg now a millstone of debt around their necks.

The problem was at its worst in states like Nevada and Arizona, two of the epicenters of the subprime-driven housing bubble. There, you could drive through entire subdivisions that looked like ghost towns, with block after block of cookie-cutter houses, many of them newly built but lifeless, properties developed but never sold, or sold and promptly foreclosed upon. Either way, they were empty, some with their windows boarded up. The few homes still occupied stood out like small oases, their postage-stamp lawns green and tended, cars parked in the driveways, lonely outposts against a backdrop of ravaged stillness. I remember talking with a homeowner in one of these developments during a campaign visit to Nevada. He was a sturdy, fortyish man in a white T-shirt who had turned off his lawn mower to shake my hand while a towheaded little boy zipped around behind him on a red tricycle. He was luckier than many of his neighbors, he told me: He’d had enough seniority at the factory where he worked to avoid the first wave of layoffs, and his wife’s nursing job seemed relatively secure. Still, the house they’d paid $400,000 to purchase at the height of the bubble was now worth half that amount. They had quietly debated whether their best move was to default on their mortgage and walk away. Toward the end of our conversation, the man looked back at his son.

“I remember my dad talking about the American Dream when I was a kid,” he said. “How the most important thing was to work hard. Buy a house. Raise a family. Do things right. What happened to that? When did that become just a load of…?” He trailed off, looking pained before wiping the sweat from his face and restarting his mower.

The question was what my administration could do to help a man like that. He hadn’t lost his home, but he’d lost faith in the shared enterprise of our country, its larger ideal.

Affordable-housing advocates and some progressives in Congress were pushing a large-scale government program to not only reduce monthly mortgage payments for people at risk of losing their homes but actually forgive a portion of their outstanding balance. At first blush the idea had obvious appeal: a “bailout for Main Street, not Wall Street,” as proponents suggested. But the sheer scale of lost home equity across the country made such a principal-reduction program cost-prohibitive; our team calculated that even something the size of a second TARP—a political impossibility—would have a limited effect when spread out across the $20 trillion U.S. real estate market.

We settled on launching two more modest programs, both of which I detailed that day in Mesa: the Home Affordable Modification Program (HAMP), designed to reduce the monthly mortgage payments of eligible homeowners to no more than 31 percent of their income, and the Home Affordable Refinance Program (HARP), which would help borrowers refinance their mortgage at lower rates even if their homes were underwater. By design, not everyone would be assisted under these programs. They wouldn’t help those who, through subprime loans, had bought way more home than their income could support. Nor would they be open to those who had bought real estate as a debt-financed investment, thinking they could flip the property for a profit. Instead, the goal was to target several million families teetering on the edge: those who lived in their homes and had made what had seemed at the time like a responsible purchase, but now needed relief to get them through.

Implementing even these limited programs posed all kinds of logistical hurdles. For example, while it was in the interest of mortgage lenders to keep families in their homes (in an already depressed market, foreclosed homes sold at fire-sale prices, resulting in big losses for the lender), mortgages were no longer held by a discrete set of banks that we could pressure into participating. Instead, they’d been securitized, sold in bits and pieces to various investors around the world. The homeowner never dealt directly with these anonymous lenders, instead sending mortgage payments to a servicing company that operated as little more than a glorified bill collector. Without the legal authority to force these servicing companies to do anything, the best we could do was offer incentives for them to offer homeowners a break. We also had to convince the servicing companies to process millions of applications to determine who was or wasn’t eligible for a mortgage modification or refinancing, something they were ill-equipped to do.

And just who, exactly, was deserving of government assistance? This question would insinuate itself into just about every policy debate we had throughout the economic crisis. After all, as bad as things were in 2009, the vast majority of American homeowners were still figuring out a way, by hook or by crook, to stay current on their mortgages. To do so, many had cut back on eating out, canceled their cable TV, or spent down savings intended for their retirement or for their children’s college expenses.

Was it fair to devote the hard-earned tax dollars of those Americans to reducing the mortgage payments of a neighbor who’d fallen behind? What if the neighbor had bought a bigger house than they could really afford? What if they had opted for a cheaper but riskier type of mortgage? Did it matter if the neighbor had been duped by a mortgage broker into thinking they were doing the right thing? What if the neighbor had taken their kids to Disneyland the year before rather than putting that money into a rainy-day fund—did that make them less worthy of help? Or what if they had fallen behind on their payments not because they’d put in a new swimming pool or taken a vacation but because they’d lost their job, or because a family member had gotten sick and their employer didn’t offer health insurance, or because they just happened to live in the wrong state—how did that change the moral calculus?

For policy makers trying to halt a crisis, none of these questions mattered—at least not in the short term. If your next-door neighbor’s house is on fire, you don’t want the fire department dispatcher asking whether it was caused by lightning or by someone smoking in bed before agreeing to send a fire truck; you just want the fire put out before it reaches your house. Mass foreclosures were the equivalent of a five-alarm fire that was destroying everyone’s home values and taking the economy down with it. And from our perspective, at least, we were the fire department.

Still, questions of fairness were very much on the minds of the public. I wasn’t surprised when experts reacted critically to our housing package, suggesting that the $75 billion price tag was too small to address the scale of the problem, or when housing advocates blasted us in the press for not including a means to reduce the overall principal. What my team and I didn’t anticipate was the critique that ended up getting the most attention that day in Mesa, maybe because it came from such an unlikely source. The day after the rally, Gibbs mentioned that a CNBC business commentator named Rick Santelli had launched a lengthy on-air rant about our housing plan. Gibbs, whose radar on these things was rarely off, seemed concerned.

“It’s getting a lot of play,” he said. “And the press pool’s asking me about it. You might want to check it out.”

That night I watched the video clip on my laptop. I was familiar with Santelli; he seemed no different from most of the talking heads populating the cable business shows, delivering a mix of market gossip and yesterday’s news with the glib conviction of a late-night infomercial host. In this instance, he’d been broadcasting live from the floor of the Chicago Mercantile Exchange, charged up with theatrical outrage and surrounded by traders who were smugly cheering from their desks as he regurgitated a bunch of standard Republican talking points, including the (incorrect) claim that we’d be paying off the mortgages of irresponsible spendthrifts and deadbeats—“losers,” Santelli called them—who had gotten in over their heads. “The government is promoting bad behavior!” he shouted. “How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills?” Santelli went on to declare that “our Founding Fathers, people like Benjamin Franklin and Jefferson, what we’re doing in this country now is making them roll over in their graves.” Somewhere in mid-monologue, he suggested “a Chicago tea party in July” to put a stop to big-government giveaways.

It was hard for me not to dismiss the whole thing for what it was: a mildly entertaining shtick intended not to inform but to fill airtime, sell ads, and make the viewers of Squawk Box feel like they were real insiders—not one of the “losers.” Who, after all, was going to take such half-baked populism seriously? How many Americans considered the traders at the Chicago Merc representative of the country—traders who still had jobs precisely because the government had stepped in to keep the financial system afloat?

In other words, it was bullshit. Santelli knew it. The CNBC anchors bantering with him knew it. And yet it was clear that the traders, at least, fully embraced what Santelli was peddling. They didn’t appear chastened by the fact that the game they played had been rigged up and down the line, if not by them then by their employers, the real high rollers in wood-paneled boardrooms. They didn’t seem concerned by the fact that for every “loser” who had bought more house than he could afford, there were twenty folks who had lived within their means but were now suffering the fallout from Wall Street’s bad bets.

No, these traders were genuinely aggrieved, convinced that they were about to get screwed at the hands of the government. They thought they were the victims. One had even leaned into Santelli’s mic and declared our housing program a “moral hazard”—deploying an economic term that had entered the popular lexicon, used to explain how policies that shielded banks from their mounting losses might end up encouraging even more financial recklessness in the future. Only now the same term was being wielded to argue against help for families who, through no fault of their own, were about to lose their homes.

I clicked the video feed off, feeling irritated. It was a familiar trick, I thought to myself, the kind of rhetorical sleight of hand that had become a staple of conservative pundits everywhere, whatever the issue: taking language once used by the disadvantaged to highlight a societal ill and turning it on its ear. The problem is no longer discrimination against people of color, the argument goes; it’s “reverse racism,” with minorities “playing the race card” to get an unfair advantage. The problem isn’t sexual harassment in the workplace; it’s humorless “feminazis” beating men over the head with their political correctness. The problem is not bankers using the market as their personal casino, or corporations suppressing wages by busting unions and offshoring jobs. It’s the lazy and shiftless, along with their liberal Washington allies, intent on mooching off the economy’s real “makers and the doers.” Such arguments had nothing to do with facts. They were impervious to analysis. They went deeper, into the realm of myth, redefining what was fair, reassigning victimhood, conferring on people like those traders in Chicago that most precious of gifts: the conviction of innocence, as well as the righteous indignation that comes with it.

—

I WOULD OFTEN think back to that Santelli clip, which foreshadowed so many of the political battles I’d face during my presidency. For there was at least one sideways truth in what he’d said: Our demands on the government had changed over the past two centuries, since the time the Founders had chartered it. Beyond the fundamentals of repelling enemies and conquering territory, enforcing property rights and policing issues that property-holding white men deemed necessary to maintain order, our early democracy had largely left each of us to our own devices. Then a bloody war was fought to decide whether property rights extended to treating Blacks as chattel. Movements were launched by workers, farmers, and women who had experienced firsthand how one man’s liberty too often involved their own subjugation. A depression came, and people learned that being left to your own devices could mean penury and shame.

Which is how the United States and other advanced democracies came to create the modern social contract. As our society grew more complex, more and more of the government’s function took the form of social insurance, with each of us chipping in through our tax dollars to protect ourselves collectively—for disaster relief if our house was destroyed in a hurricane; unemployment insurance if we lost a job; Social Security and Medicare to lessen the indignities of old age; reliable electricity and phone service for those who lived in rural areas where utility companies wouldn’t otherwise make a profit; public schools and universities to make education more egalitarian.

It worked, more or less. In the span of a generation and for a majority of Americans, life got better, safer, more prosperous, and more just. A broad middle class flourished. The rich remained rich, if maybe not quite as rich as they would have liked, and the poor were fewer in number, and not as poor as they’d otherwise have been. And if we sometimes debated whether taxes were too high or certain regulations were discouraging innovation, whether the “nanny state” was sapping individual initiative or this or that program was wasteful, we generally understood the advantages of a society that at least tried to offer a fair shake to everyone and built a floor beneath which nobody could sink.

Maintaining this social compact, though, required trust. It required that we see ourselves as bound together, if not as a family then at least as a community, each member worthy of concern and able to make claims on the whole. It required us to believe that whatever actions the government might take to help those in need were available to you and people like you; that nobody was gaming the system and that the misfortunes or stumbles or circumstances that caused others to suffer were ones to which you at some point in your life might fall prey.

Over the years, that trust proved difficult to sustain. In particular, the fault line of race strained it mightily. Accepting that African Americans and other minority groups might need extra help from the government—that their specific hardships could be traced to a brutal history of discrimination rather than immutable characteristics or individual choices—required a level of empathy, of fellow feeling, that many white voters found difficult to muster. Historically, programs designed to help racial minorities, from “forty acres and a mule” to affirmative action, were met with open hostility. Even universal programs that enjoyed broad support—like public education or public sector employment—had a funny way of becoming controversial once Black and brown people were included as beneficiaries.

And harder economic times strained civic trust. As the U.S. growth rate started to slow in the 1970s—as incomes then stagnated and good jobs declined for those without a college degree, as parents started worrying about their kids doing at least as well as they had done—the scope of people’s concerns narrowed. We became more sensitive to the possibility that someone else was getting something we weren’t and more receptive to the notion that the government couldn’t be trusted to be fair.

Promoting that story—a story that fed not trust but resentment—had come to define the modern Republican Party. With varying degrees of subtlety and varying degrees of success, GOP candidates adopted it as their central theme, whether they were running for president or trying to get elected to the local school board. It became the template for Fox News and conservative radio, the foundational text for every think tank and PAC the Koch Brothers financed: The government was taking money, jobs, college slots, and status away from hardworking, deserving people like us and handing it all to people like them—those who didn’t share our values, who didn’t work as hard as we did, the kind of people whose problems were of their own making.

The intensity of these convictions put Democrats on the defensive, making leaders less bold about proposing new initiatives, limiting the boundaries of political debate. A deep and suffocating cynicism took hold. Indeed, it became axiomatic among political consultants of both parties that restoring trust in the government or in any of our major institutions was a lost cause, and that the battle between Democrats and Republicans each election cycle now came down to whether America’s squeezed middle class was more likely to identify the wealthy and powerful or the poor and minorities as the reason they weren’t doing better.

I didn’t want to believe that this was all our politics had to offer. I hadn’t run simply to fan anger and allocate blame. I had run to rebuild the American people’s trust—not just in the government but in one another. If we trusted one another, democracy worked. If we trusted one another, the social compact held, and we could solve big problems like wage stagnation and declining retirement security. But how could we even begin?

The economic crisis had tipped recent elections in the Democrats’ favor. But far from restoring any sense of common purpose or faith in the government’s capacity to do good, the crisis had also made people more angry, more fearful, more convinced that the fix was in. What Santelli understood, what McConnell and Boehner understood, was how easily that anger could be channeled, how useful fear could be in advancing their cause.

The forces they represented might have lost the recent battle at the polls—but the larger war, that clash of worldviews, values, and narratives, was the one they would still try to win.

—

IF ALL THIS seems obvious to me now, it wasn’t at the time. My team and I were too busy. Passing the Recovery Act and rolling out our housing plan may have been necessary elements in ending the crisis. They weren’t close to being sufficient. In particular, the global financial system was still broken—and the man I was relying on to fix it was not off to a promising start.

Tim Geithner’s problems had begun weeks earlier, during the process to get him confirmed as Treasury secretary. Historically, Senate confirmation of cabinet appointments was a relatively routine affair, with senators from both parties operating on the presumption that presidents were entitled to choose their own teams—even if they considered the men and women the president selected to be scoundrels and fools. But in recent years, the Senate’s constitutional mandate to “advise and consent” had become one more weapon in the endless cycle of partisan trench warfare. Senate staffers of the opposing party now scoured the records of nominees, looking for any youthful indiscretion or damaging quote that could then be raised in a hearing or used to make news. The nominees’ personal lives became the subject of endless and intrusive public questioning. The point of the exercise was not necessarily to torpedo the appointment—eventually most nominees got confirmed—but to distract and politically embarrass the administration. The hazing quality of the proceedings had another consequence: With increasing frequency, highly qualified candidates for top federal jobs would cite the confirmation ordeal—what it might do to their reputations, how it might affect their families—as a reason to decline a high-profile post.

Tim’s particular problem had to do with taxes: During the three years he’d spent working for the International Monetary Fund, it turned out, neither he nor his accountants had noticed that the organization did not withhold its U.S. employees’ payroll taxes. It was an innocent and apparently common mistake, and when an audit surfaced the problem in 2006, a full two years before he was even considered for the Treasury job, Tim amended his returns and paid what the audit said he owed. Yet given the political climate—and the fact that as Treasury secretary, Tim would be overseeing the IRS—the reaction to his error was unforgiving. Republicans suggested that he had purposely committed tax fraud. Late-night comics made jokes at his expense. Tim grew despondent, telling Axe and Rahm that perhaps I should nominate someone else, which led me to call him late one night to buck him up and insist that he was “my guy.” Although he was confirmed a few days later, Tim was aware that it was by the smallest margin of any Treasury nominee in U.S. history, and that his credibility both at home and internationally had been damaged. I wasn’t as worried about all that; nobody remembered confirmation votes, and I was certain his credibility would quickly rebound. But the confirmation drama reminded me that Tim was still a civilian, a lifelong technocrat who had always operated behind the scenes. It would take him some time—just as it had taken me—to get accustomed to the glare of the spotlight.

The day after Tim’s confirmation, he and Larry came to the Oval Office to brief me on the grim state of the financial system. Credit remained frozen. The markets were precarious. Five massive institutions—“five big bombs,” Tim called them—were in particular peril: Fannie Mae and Freddie Mac, which had become virtually the only sources of housing finance and were burning through the $200 billion in taxpayer funds Treasury had injected into them the previous year; the insurance giant AIG, which had massive exposure as a result of insuring mortgage-based derivatives and had required $150 billion in TARP over the previous four months just to stay afloat; and two banks, Citigroup and Bank of America, which together constituted about 14 percent of America’s bank deposits and had seen their stock drop 82 percent over the previous four months.

A renewed run on any one of these five financial institutions could tip it into insolvency, which in turn could trigger a global financial earthquake even bigger than the one we’d just weathered. And despite the hundreds of billions the government had already devoted to their rescue, there was no way that the remaining $300 billion in TARP funds could cover the current pace of losses. A Federal Reserve analysis predicted that, unless the entire system stabilized soon, the banks might need an additional $300 to $700 billion in government cash infusion—and those numbers didn’t include AIG, which would later announce a $62 billion quarterly loss.

Rather than pouring more taxpayer dollars into a leaky bucket, we had to find a way to patch its holes. First and foremost, we needed to restore some semblance of market confidence so that investors who’d fled to safety, pulling trillions of dollars in private capital out of the financial sector, would return from the sidelines and reinvest. When it came to Fannie and Freddie, Tim explained, we had the authority to put more money into them without congressional approval, in part because they’d already been placed in government conservatorship. Right away, we agreed to a new $200 billion capital commitment. This wasn’t a comfortable choice, but the alternative was to let the entire U.S. mortgage market effectively vanish.

As for the rest of the financial system, the choices were dicier. A few days later, in another Oval Office meeting, Tim and Larry outlined three basic options. The first, most prominently advocated by FDIC chair and Bush holdover Sheila Bair, involved a reprise of Hank Paulson’s original idea for TARP, which was to have the government set up a single “bad bank” that would buy up all the privately held toxic assets, thereby cleansing the banking sector. This would allow investors to feel some form of trust and banks to start lending again.

Not surprisingly, the markets liked this approach, since it effectively dumped future losses in the lap of taxpayers. The problem with the “bad bank” idea, though, as both Tim and Larry pointed out, was that no one knew how to fairly price all the toxic assets currently on the banks’ books. If the government paid too much, it would amount to yet another massive taxpayer bailout with few strings attached. If, on the other hand, the government paid too little—and with an estimated $1 trillion in toxic assets still out there, fire-sale prices would be all the government could afford—the banks would have to swallow massive losses right away and would almost certainly go belly-up anyway. In fact, it was precisely because of these pricing complications that Hank Paulson had abandoned the idea back at the start of the crisis.

We had a second possibility, one that on the surface seemed cleaner: to temporarily nationalize those systemically significant financial institutions that—based on the current market price of their assets and liabilities—were insolvent and then force them to go through a restructuring similar to a bankruptcy proceeding, including making shareholders and bondholders take “haircuts” on their holdings and potentially replacing both management and boards. This option fulfilled my desire to “tear the Band-Aid off” and fix the system once and for all, rather than letting the banks limp along in what was sometimes referred to as a “zombie” state—technically still in existence but without enough capital or credibility to function. It also had the benefit of satisfying what Tim liked to refer to as “Old Testament justice”—the public’s understandable desire to see those who’d done wrong punished and shamed.

As usual, though, what looked like the simplest solution wasn’t so simple. Once the government nationalized one bank, stakeholders at every other bank would almost certainly dump their holdings as fast as they could, fearing that their institution would be next. Such runs would likely trigger the need to nationalize the next-weakest bank, and the one after that, and the one after that, in what would become a cascading government takeover of America’s financial sector.

Not only would that cost a whole lot of money; it also would require the U.S. government to manage these institutions for as long as it took to eventually sell them off. And while we were busy contending with a million inevitable lawsuits (filed not just by Wall Street types but also by pension funds and small investors angry over the forced “haircut”), the question would be who would we put in charge of these banks—especially given that almost everyone with the requisite experience was likely to be tainted by some involvement with subprime lending? Who would set their salaries and bonuses? How would the public feel if these nationalized banks just kept bleeding money? And to whom could the government ultimately sell these banks, other than to other banks that might have been similarly complicit in creating the mess in the first place?

In part because there were no good answers to these questions, Tim had cooked up a third option. His theory was this: Although nobody doubted that banks were in bad shape and had a whole bunch of bad assets on their books, the market panic had so deeply depressed all asset prices that their condition might look worse than it really was. After all, the overwhelming majority of mortgages wouldn’t end up in default. Not every mortgage-backed security was worthless, and not every bank was awash in bad bets. And yet as long as the market had trouble discerning genuine insolvency from temporary illiquidity, most investors would simply avoid anything related to the financial sector.

Tim’s proposed solution would come to be known as a “stress test.” The Federal Reserve would set a benchmark for how much capital each of the nineteen systemically significant banks needed to survive a worst-case scenario. The Fed would then dispatch regulators to pore over each bank’s books, rigorously assessing whether or not it had enough of a financial cushion to make it through a depression; if not, the bank would be given six months to raise that amount of capital from private sources. If it still fell short, the government would then step in to provide enough capital to meet the benchmark, with nationalization coming into play only if the government’s infusion exceeded 50 percent. Either way, the markets would finally have a clear picture of each bank’s condition. Shareholders would see their shares in a bank diluted, but only in proportion to the amount of capital needed for the bank to get well. And taxpayers would be on the hook only as a last resort.

Tim presented this third option more as a framework than a detailed plan, and Larry voiced some skepticism, believing that the banks were irredeemable, that the markets would never believe in the rigors of a government-managed audit, and that the exercise would do little more than delay the inevitable. Tim acknowledged those risks. He added that any stress test would require about three months to complete, during which time the public pressure for us to take more decisive action would only build; in the meantime any number of events could send the markets into an even sharper tailspin.

Larry and Tim stopped talking and waited for my reaction. I sat back in my chair.

“Anything else on the menu?” I asked.

“Not right now, Mr. President.”

“Not very appetizing.”

“No, Mr. President.”

I nodded, pondered the probabilities, and after a few more questions decided that Tim’s stress-test approach was our best way forward. Not because it was great—not even because it was good—but because the other approaches were worse. Larry compared it to having a doctor administer a less invasive treatment before opting for radical surgery. If the stress test worked, we could fix the system faster and with less taxpayer money. If it didn’t, we’d probably be no worse off and would at least have a better sense of what more radical surgery would entail.

Assuming, of course, that the patient didn’t die in the meantime.

—

A COUPLE OF weeks later, on February 10, Tim addressed the public for the first time as Treasury secretary, speaking in a grand hall inside the Treasury Building called the Cash Room, which for more than a century following the Civil War had operated as a bank, dispensing currency directly from government vaults. The idea was that Tim would unveil the framework for the stress test and outline other measures we were taking to stabilize the floundering banks, sending a signal that despite the uncertainty of the times, we were calm and had a credible plan.

Confidence, of course, is hard to convey if you don’t fully feel it. Still bruised by the confirmation hearings, having spent his first few weeks on the job working with only a skeleton staff, and still sorting out the details of how the stress test would work, Tim stepped before a bank of TV cameras and financial journalists that day and promptly tanked.

By every estimation, including his own, the speech was a disaster. He looked nervous, was awkwardly using a teleprompter for the first time, and spoke in only vague terms about the overall plan. The White House communications team had been pressing him to emphasize our intent to get tough on the banks, even as our economic team emphasized the need to reassure the financial markets that there was no need for panic. Meanwhile, the alphabet soup of independent agencies responsible for regulating the financial system had not coalesced around Tim’s proposal, and several agency heads, like Sheila Bair, kept pushing their own pet ideas. The result was a classic speech by committee, full of hedged bets and mixed messages, reflecting all the contradictory pressures. And in the rush to get it finished, Tim—who was running on fumes at this point—had devoted almost no time to practicing his delivery.

As he was speaking, the stock market dropped by more than 3 percent. By day’s end, it was down almost 5 percent, with financial stocks falling a full 11 percent. Tim’s speech was all over the news, being parsed every which way. As Larry had predicted, many analysts viewed the stress test as nothing more than an elaborate whitewash, a new string of bailouts. Commentators across the political spectrum were now openly wondering whether Tim’s tenure, my presidency, and the global financial system were headed for the dumpster.

As much as Tim blamed himself during the next morning’s postmortem, I recognized it as a systems failure—and a failure on my part to put those who worked under me in a position to succeed. A day earlier, speaking at a press conference of my own, I’d unthinkingly and unfairly put a good deal of advance hype on Tim’s speech, telling reporters that he’d be announcing “clear and specific plans” and was set to have “his moment in the sun.” The lessons all around were painful but useful. In the months that followed, I’d drive our team to run a tighter process, with better communications between relevant parts of the administration; to anticipate problems and resolve disputes before we took any plans public, allowing our ideas appropriate time and space to germinate regardless of external pressure; to pay careful attention to how big projects were staffed; and to sweat the details not just of substance but of stagecraft as well.

And one more thing: I told myself not to ever open my big mouth again to set up expectations that, given the circumstances, could not possibly be met.

Still, the damage was done. The world’s first impression of my hardworking, all-star economic team was that of a gang that couldn’t shoot straight. Republicans crowed. Rahm fielded calls from nervous Democrats. About the only positive thing I could draw from the fiasco was Tim’s reaction to it. His spirit could have been crushed, but it wasn’t. Instead, he had the resigned air of someone who would take his punishment for the poor speech performance but at the same time was confident that on the bigger stuff, he was right.

I liked that in him. He was still my guy. The best we could do now was hunker down, execute, and hope that our damn plan actually worked.

—

“MADAM SPEAKER…the President of the United States!”

For reasons that still aren’t entirely clear to me, a newly elected president’s first speech before a joint session of Congress isn’t technically considered a State of the Union address. But for all intents and purposes, that’s exactly what it is—the first of that annual ritual in which a president has the chance to speak directly to tens of millions of fellow Americans.

My own first address was scheduled for February 24, which meant that even as we were scrambling to get our economic rescue plan in place, I had to steal whatever scraps of time I could to review the drafts Favs worked up. It wasn’t an easy assignment for either of us. Other speeches could traffic in broad themes or focus narrowly on a single issue. In the SOTU, as West Wing staffers called it, the president was expected to outline both domestic and foreign policy priorities for the coming year. And no matter how much you dressed up your plans and proposals with anecdotes or catchy phrases, detailed explanations of Medicare expansion or tax credit refundability rarely stirred the heartstrings.

Having been a senator, I was well versed in the politics of standing ovations at the SOTU: the ritualized spectacle in which members of the president’s party leapt to their feet and cheered to the rafters at practically every third line, while the opposition party refused to applaud even the most heartwarming story for fear that the cameras might catch them consorting with the enemy. (The sole exception to this rule was any mention of troops overseas.) Not only did this absurd bit of theater highlight the country’s divisions at a time when we needed unity; the constant interruptions added at least fifteen minutes to an already long speech. I had considered beginning my address by asking all those in attendance to hold their applause, but unsurprisingly, Gibbs and the comms team had nixed the idea, insisting that a silent chamber would not play well on TV.

But if the process ahead of the SOTU left us feeling harried and uninspired—if at various points I told Favs that after an election night speech, an inauguration speech, and nearly two years of nonstop talking I had absolutely nothing new to say and would be doing the country a favor by emulating Thomas Jefferson and just dropping off my remarks to Congress for the people to read at their leisure—it all vanished the instant I arrived at the threshold of the ornate House chamber and heard the sergeant at arms announce my entrance onto the floor.

“Madam Speaker…” Perhaps more than any others, those words and the scene that followed made me conscious of the grandeur of the office I now occupied. There was the thundering applause as I stepped into the chamber; the slow walk down the center aisle through outstretched hands; the members of my cabinet arrayed along the first and second rows; the Joint Chiefs in their crisp uniforms and the Supreme Court justices in their black robes, like members of an ancient guild; the greetings from Speaker Pelosi and Vice President Biden, positioned on either side of me; and my wife beaming down from the upper gallery in her sleeveless dress (that was when the cult of Michelle’s arms truly took off), waving and blowing a kiss as the Speaker lowered her gavel and the proceedings commenced.

Although I spoke about my plans to end the war in Iraq, fortify U.S. efforts in Afghanistan, and prosecute the fight against terrorist organizations, the bulk of my address was devoted to the economic crisis. I went over the Recovery Act, our housing plan, the rationale behind the stress test. But there was also a bigger point I wanted to make: that we needed to keep reaching for more. I didn’t just want to solve the emergencies of the day; I felt we needed to make a bid for lasting change. Once we’d restored growth to the economy, we couldn’t be satisfied with simply returning to business as usual. I made clear that night that I intended to move forward with structural reforms—in education, energy, and climate policy, in healthcare and financial regulation—that would lay the foundation for long-term and broad-based prosperity in America.

The days had long passed since I got nervous on a big stage, and considering how much ground we had to cover, the speech went about as well as I could have hoped. According to Axe and Gibbs, the reviews were fine, the talking heads deeming me suitably “presidential.” But apparently they’d been surprised by the boldness of my agenda, my willingness to forge ahead with reforms beyond those that addressed the central business of saving the economy.

It was as if nobody had been listening to the campaign promises I’d made—or as if they assumed that I hadn’t actually meant what I’d said. The response to my speech gave me an early preview of what would become a running criticism during my first two years in office: that I was trying to do too much, that to aspire to anything more than a return to the pre-crisis status quo, to treat change as more than a slogan, was naïve and irresponsible at best, and at worst a threat to America.

—

AS ALL-CONSUMING AS the economic crisis was, my fledgling administration didn’t have the luxury of putting everything else on hold, for the machinery of the federal government stretched across the globe, churning every minute of every day, indifferent to overstuffed in-boxes and human sleep cycles. Many of its functions (generating Social Security checks, keeping weather satellites aloft, processing agricultural loans, issuing passports) required no specific instructions from the White House, operating much like a human body breathes or sweats, outside the brain’s conscious control. But this still left countless agencies and buildings full of people in need of our daily attention: looking for policy guidance or help with staffing, seeking advice because some internal breakdown or external event had thrown the system for a loop. After our first weekly Oval Office meeting, I asked Bob Gates, who’d served under seven previous presidents, for any advice he might have in managing the executive branch. He gave me one of his wry, crinkly smiles.

“There’s only one thing you can count on, Mr. President,” he said. “On any given moment in any given day, somebody somewhere is screwing up.”

We went to work trying to minimize screw-ups.

In addition to my regular meetings with the Treasury, state, and defense secretaries and the daily briefings I got from my national security and economic teams, I made a point of sitting down with each member of my cabinet to go over strategic plans for their departments, pushing them to identify roadblocks and set priorities. I visited their respective agencies, often using the occasion to announce a new policy or government practice, and spoke to large gatherings of career government staffers, thanking them for their service and reminding them of the importance of their missions.

There was an endless flow of meetings with various constituency groups—the Business Roundtable, the AFL-CIO, the U.S. Conference of Mayors, veterans’ services organizations—to address their concerns and solicit their support. There were big set pieces that absorbed enormous amounts of time (like the presentation of our first federal budget proposal) and innovative public events designed to increase government transparency (like our first-ever live-streamed town hall). Each week I delivered a video address. I sat down for interviews with various print reporters and TV anchors, both national and local. I gave remarks at the National Prayer Breakfast and threw a Super Bowl party for members of Congress. By the first week of March, I’d also held two summits with foreign leaders—one in D.C. with British prime minister Gordon Brown, the other in Ottawa with Canadian prime minister Stephen Harper—each involving its own policy objectives and diplomatic protocols.

For every event, meeting, and policy rollout, a hundred people or more might be frantically working behind the scenes. Every document issued was fact-checked, every person who showed up for a meeting was vetted, every event was planned to the minute, and every policy announcement was carefully scrubbed to make sure it was achievable, affordable, and didn’t carry the risk of unforeseen consequences.

This kind of focused industriousness extended to the East Wing, where the First Lady had a small suite of offices and a busy schedule of her own. From the moment we’d arrived at the White House, Michelle had thrown herself into her new job while also making a home for our family. Thanks to her, Malia and Sasha seemed to be taking the transition to our strange new life completely in stride. They tossed balls in the long hallway that ran the length of the residence and made cookies with the White House chefs. Their weekends were filled with playdates and birthday parties with new friends, rec basketball, soccer leagues, tennis lessons for Malia, dance classes and tae kwon do for Sasha. (Much like her mother, Sasha was not to be messed with.) Out in public, Michelle sparkled with charm, her fashion choices attracting favorable notice. Tasked with hosting the annual Governors Ball, Michelle had shaken up tradition by arranging to have Earth, Wind & Fire provide the entertainment, their horn-blasting R&B funk generating moves on the dance floor that I’d never thought I’d see out of a bipartisan gathering of middle-aged public officials.

Look beautiful. Care for your family. Be gracious. Support your man. For most of American history, the First Lady’s job had been defined by these tenets, and Michelle was hitting all the marks. What she hid from the outside world, though, was the way her new role initially chafed, how fraught with uncertainty it felt.

Not all her frustrations were new. For as long as we’d been together, I’d watched my wife struggle the way many women did, trying to reconcile her identity as an independent, ambitious professional with a desire to mother our girls with the same level of care and attentiveness that Marian had given her. I had always tried to encourage Michelle in her career, never presuming that household duties were her province alone; and we’d been lucky that our joint income and a strong network of close-by relatives and friends had given us advantages that many families didn’t have. Still, this wasn’t enough to insulate Michelle from the wildly unrealistic and often contradictory social pressures that women with children absorbed from the media, their peers, their employers, and, of course, the men in their lives.

My career in politics, with its prolonged absences, had made it even tougher. More than once Michelle had decided not to pursue an opportunity that excited her but would have demanded too much time away from the girls. Even in her last job at the University of Chicago Medical Center, with a supportive boss and the ability to make her own schedule, she’d never fully shaken the sense that she was shortchanging the girls, her work, or both. In Chicago, she had at least been able to avoid being in the public eye and manage the everyday push and pull on her own terms. Now all that had changed. With my election, she’d been forced to give up a job with real impact for a role that—in its original design, at least—was far too small for her gifts. Meanwhile, mothering our kids involved a whole new set of complications—like having to call a parent to explain why Secret Service agents needed to survey their house before Sasha came for a playdate or working with staffers to press a tabloid not to print a picture of Malia hanging out with her friends at the mall.

On top of these things, Michelle suddenly found herself drafted as a symbol in America’s ongoing gender wars. Each choice she made, each word she uttered, was feverishly interpreted and judged. When she lightheartedly referred to herself as a “mom in chief,” some commentators expressed disappointment that she wasn’t using her platform to break down stereotypes about a woman’s proper place. At the same time, efforts to stretch the boundaries of what a First Lady should or should not do carried their own peril: Michelle still smarted from the viciousness of some of the attacks leveled at her during the campaign, and one had only to look at Hillary Clinton’s experience to know how quickly people could turn on a First Lady who engaged in anything resembling policy making.

Which is why, in those early months, Michelle took her time deciding how she’d use her new office, figuring out how and where she might exert an influence while carefully and strategically setting the tone for her work as First Lady. She consulted with Hillary and with Laura Bush. She recruited a strong team, filling her staff with seasoned professionals whose judgment she trusted. Eventually she decided to take on two causes that were personally meaningful: the alarming jump in America’s childhood obesity rates and the embarrassing lack of support for America’s military families.

It wasn’t lost on me that both issues tapped into frustrations and anxieties that Michelle herself sometimes felt. The obesity epidemic had come to her attention a few years earlier when our pediatrician, noticing that Malia’s body mass index had increased somewhat, identified too many highly processed “kid-friendly” foods as the culprit. The news had confirmed Michelle’s worries that our harried, overscheduled lives might be adversely impacting the girls. Similarly, her interest in military families had been sparked by emotional roundtable discussions she’d had during the campaign with the spouses of deployed service members. As they’d described feeling a mixture of loneliness and pride, as they’d admitted to occasional resentment at being treated as an afterthought in the larger cause of defending the nation, as they expressed reluctance to ask for help for fear of seeming selfish, Michelle had heard echoes of her own circumstances.

Precisely because of these personal connections, I was sure her impact on both issues would be substantial. Michelle was someone who started from the heart and not the head, from experience rather than abstractions. I also knew this: My wife didn’t like to fail. Whatever ambivalence she felt about her new role, she was nonetheless determined to carry it out well.

As a family, we were adapting week by week, each of us finding means to adjust to, cope with, and enjoy our circumstances. Michelle turned to her unflappable mother for counsel anytime she felt anxious, the two of them huddling together on the couch in the solarium on the third floor of the White House. Malia threw herself into her fifth-grade homework and was lobbying us to deliver on our personal campaign promise to get a family dog. Sasha, just seven, still fell asleep at night clutching the frayed chenille blankie she’d had since she was a baby, her body growing so fast you could almost see the difference each day.

Our new housing arrangement brought one especially happy surprise: Now that I lived above the store, so to speak, I was home basically all the time. On most days, the work came to me, not the other way around. Unless I was traveling, I made a point of being at the dinner table by six-thirty each night, even if it meant that later I needed to go back downstairs to the Oval Office.

What a joy that was, listening to Malia and Sasha talk about their days, narrating a world of friend drama, quirky teachers, jerky boys, silly jokes, dawning insights, and endless questions. After the meal was over and they bounded off to do homework and get ready for bed, Michelle and I would sit and catch up for a time, less often about politics and more about news of old friends, movies we wanted to see, and most of all the wondrous process of watching our daughters grow up. Then we’d read the girls bedtime stories, hug them tightly, and tuck them in—Malia and Sasha in their cotton pajamas smelling of warmth and life. In that hour and a half or so each evening, I found myself replenished—my mind cleansed and my heart cured of whatever damage a day spent pondering the world and its intractable problems may have done.

If the girls and my mother-in-law were our anchors in the White House, there were others who helped me and Michelle manage the stress of those early months. Sam Kass, the young man we’d hired to cook for us part-time back in Chicago as the campaign got busy and our worries about the kids’ eating habits peaked, had come with us to Washington, joining the White House not just as a chef but also as Michelle’s point person on the childhood obesity issue. The son of a math teacher at the girls’ old school and a former college baseball player, Sam had an easygoing charm and compact good looks that were enhanced by a shiny, clean-shaven head. He was also a genuine food policy expert, conversant in everything from the effects of monoculture farming on climate change to the links between eating habits and chronic disease. Sam’s work with Michelle would prove invaluable; it was brainstorming with him, for example, that gave Michelle the idea to plant a vegetable garden in the South Lawn. But what we got in the bargain was a fun-loving uncle to the girls, a favorite younger brother to Michelle and me, and—along with Reggie Love—someone I could shoot hoops or play a game of pool with anytime I needed to blow off a little steam.

We found similar support from our longtime athletic trainer, Cornell McClellan, a former social worker and martial arts expert who owned his own gym in Chicago. Despite his imposing frame, Cornell was kind and good-humored when he wasn’t torturing us with squats, deadlifts, burpees, and lunge walks, and he’d decided that it was his duty to start splitting his time between D.C. and Chicago to make sure the First Family stayed in shape.

Each morning, Monday through Thursday, Michelle and I began our days with both Cornell and Sam, the four of us gathering in the small gym on the third floor of the residence, its wall-mounted television reliably set to ESPN’s SportsCenter. There was no disputing that Michelle was Cornell’s star pupil, powering through her workouts with unerring focus, while Sam and I were decidedly slower and given to taking longer breaks between sets, distracting Cornell with heated debates—Jordan versus Kobe, Tom Hanks versus Denzel Washington—anytime the regimen got too intense for our liking. For both Michelle and me, that daily hour in the gym became one more zone of normalcy, shared with friends who still called us by our first names and loved us like family, who reminded us of the world we’d once known—and the version of ourselves that we hoped always to inhabit.

—

THERE WAS A final stress reliever that I didn’t like to talk about, one that had been a chronic source of tension throughout my marriage: I was still smoking five (or six, or seven) cigarettes a day.

It was the lone vice that had carried over from the rebel days of my youth. At Michelle’s insistence, I had quit several times over the years, and I never smoked in the house or in front of the kids. Once elected to the U.S. Senate, I had stopped smoking in public. But a stubborn piece of me resisted the tyranny of reason, and the strains of campaign life—the interminable car rides through cornfields, the solitude of motel rooms—had conspired to keep me reaching for the pack I kept handy in a suitcase or drawer. After the election, I’d told myself it was as good a time as any to stop—by definition, I was in public just about anytime I was outside the White House residence. But then things got so busy that I found myself delaying my day of reckoning, wandering out to the pool house behind the Oval Office after lunch or up to the third-floor terrace after Michelle and the girls had gone to sleep, taking a deep drag and watching the smoke curl toward the stars, telling myself I’d stop for good as soon as things settled down.

Except things didn’t settle down. So much so that by March my daily cigarette intake had crept up to eight (or nine, or ten).

That month, another estimated 663,000 Americans would lose their jobs, with the unemployment rate shooting up to 8.5 percent. Foreclosures showed no signs of abating, and credit remained frozen. The stock market hit what would be its lowest point of the recession, down 57 percent from its peak, with shares of Citigroup and Bank of America approaching penny-stock status. AIG, meanwhile, was like a bottomless maw, its only apparent function being to gobble up as much TARP money as possible.

All this would have been more than enough to keep my blood pressure rising. What made it worse was the clueless attitude of the Wall Street executives whose collective asses we were pulling out of the fire. Just before I took office, for example, the leaders of most of the major banks had gone ahead and authorized more than a billion dollars in year-end bonuses for themselves and their lieutenants, despite having already received TARP funds to prop up their stock prices. Not long after, Citigroup execs somehow decided it was a good idea to order a new corporate jet. (Because this happened on our watch, someone on Tim’s team was able to call the company’s CEO and browbeat him into canceling the order.) Meanwhile, bank executives bristled—sometimes privately, but often in the press—at any suggestion that they had in any way screwed up, or should be subject to any constraints when it came to running their business. This last bit of chutzpah was most pronounced in the two savviest operators on Wall Street, Lloyd Blankfein of Goldman Sachs and Jamie Dimon of JPMorgan Chase, both of whom insisted that their institutions had avoided the poor management decisions that plagued other banks and neither needed nor wanted government assistance. These claims were true only if you ignored the fact that the solvency of both outfits depended entirely on the ability of the Treasury and the Fed to keep the rest of the financial system afloat, as well as the fact that Goldman in particular had been one of the biggest peddlers of subprime-based derivatives—and had dumped them onto less sophisticated customers right before the bottom fell out.

Their obliviousness drove me nuts. It wasn’t just that Wall Street’s attitude toward the crisis confirmed every stereotype of the über-wealthy being completely out of touch with the lives of ordinary people. Each tone-deaf statement or self-serving action also made our job of saving the economy that much harder.

Already, some Democratic constituencies were asking why we weren’t being tougher on the banks—why the government wasn’t simply taking them over and selling off their assets, for example, or why none of the individuals who had caused such havoc had gone to jail. Republicans in Congress, unburdened by any sense of responsibility for the mess they’d help create, were more than happy to join in on the grilling. In testimony before various congressional committees, Tim (who was now routinely labeled as a “former Goldman Sachs banker” despite having never worked for Goldman and having spent nearly his entire career in public service) would explain the need to wait for the stress-test results. My attorney general, Eric Holder, would later point out that as egregious as the behavior of the banks may have been leading up to the crisis, there were few indications that their executives had committed prosecutable offenses under existing statutes—and we were not in the business of charging people with crimes just to garner good headlines.

But to a nervous and angry public, such answers—no matter how rational—weren’t very satisfying. Concerned that we were losing the political high ground, Axe and Gibbs urged us to sharpen our condemnations of Wall Street. Tim, on the other hand, warned that such populist gestures would be counterproductive, scaring off the investors we needed to recapitalize the banks. Trying to straddle the line between the public’s desire for Old Testament justice and the financial markets’ need for reassurance, we ended up satisfying no one.

“It’s like we’ve got a hostage situation,” Gibbs said to me one morning. “We know the banks have explosives strapped to their chests, but to the public it just looks like we’re letting them get away with a robbery.”

With tensions growing inside the White House and me wanting to make sure everyone remained on the same page, in mid-March I called together my economic team for a marathon Sunday session in the Roosevelt Room. For several hours that day, we pressed Tim and his deputies for their thoughts on the ongoing stress test—whether it would work, and whether Tim had a Plan B if it didn’t. Larry and Christy argued that in light of mounting losses at Citigroup and Bank of America, it was time for us to consider preemptive nationalization—the kind of strategy that Sweden had ultimately pursued when it went through its own financial crisis in the 1990s. This was in contrast, they said, to the “forbearance” strategy that had left Japan in a lost decade of economic stagnation. In response, Tim pointed out that Sweden—with a much smaller financial sector, and at a time when the rest of the world was stable—had nationalized only two of its major banks as a last resort, while providing effective guarantees for its remaining four. An equivalent strategy on our part, he said, might cause the already fragile global financial system to unravel, and would cost a minimum of $200 to $400 billion. (“The chances of getting an additional dime of TARP money from this Congress are somewhere between zero and zero!” Rahm shouted, practically jumping out of his chair.) Some on the team suggested that we at least take a more aggressive posture toward Citigroup and Bank of America—forcing out their CEOs and current boards, for example, before granting more TARP money. But Tim said such steps would be wholly symbolic—and, further, would make us responsible for finding immediate replacements capable of navigating unfamiliar institutions in the midst of the crisis.

It was an exhausting exercise, and as the session ran into the evening hours, I told the team that I was going up to the residence to have dinner and get a haircut and would expect them to have arrived at a consensus by the time I got back. In truth, I’d already gotten what I wanted out of the meeting: confirmation in my own mind that, despite the legitimate issues Larry, Christy, and others had raised about the stress test, it continued to be our best shot under the circumstances. (Or as Tim liked to put it, “Plan beats no plan.”) Just as important, I felt assured that we’d run a good process: that our team had looked at the problem from every conceivable angle; that no potential solution had been discarded out of hand; and that everyone involved—from the highest-ranking cabinet member to the most junior staffer in the room—had been given the chance to weigh in. (For these same reasons, I would later invite two groups of outside economists—one left-leaning, the other conservative—who’d publicly questioned our handling of the crisis to meet me in the Oval, just to see if they had any ideas that we hadn’t already considered. They didn’t.) My emphasis on process was born of necessity. What I was quickly discovering about the presidency was that no problem that landed on my desk, foreign or domestic, had a clean, 100 percent solution. If it had, someone else down the chain of command would have solved it already. Instead, I was constantly dealing with probabilities: a 70 percent chance, say, that a decision to do nothing would end in disaster; a 55 percent chance that this approach versus that one might solve the problem (with a 0 percent chance that it would work out exactly as intended); a 30 percent chance that whatever we chose wouldn’t work at all, along with a 15 percent chance that it would make the problem worse.

In such circumstances, chasing after the perfect solution led to paralysis. On the other hand, going with your gut too often meant letting preconceived notions or the path of least political resistance guide a decision—with cherry-picked facts used to justify it. But with a sound process—one in which I was able to empty out my ego and really listen, following the facts and logic as best I could and considering them alongside my goals and my principles—I realized I could make tough decisions and still sleep easy at night, knowing at a minimum that no one in my position, given the same information, could have made the decision any better. A good process also meant I could allow each member of the team to feel ownership over the decision—which meant better execution and less relitigation of White House decisions through leaks to The New York Times or The Washington Post.

Returning from my haircut and dinner that night, I sensed that things had played out the way I had hoped. Larry and Christy agreed that it made sense for us to wait and see how the stress test went before taking more drastic action. Tim accepted some useful suggestions about how to better prepare for possibly bad results. Axe and Gibbs offered ideas about improving our communications strategy. All in all, I was feeling pretty good about the day’s work.

Until, that is, someone brought up the issue of the AIG bonuses.

It seemed that AIG—which had thus far taken more than $170 billion in TARP funds and still needed more—was paying its employees $165 million in contractually obligated bonuses. Worse yet, a big chunk of the bonuses would go to the division directly responsible for leaving the insurance giant wildly overexposed in the subprime derivative business. AIG’s CEO, Edward Liddy (who himself was blameless, having only recently agreed to take the helm at the company as a public service and was paying himself just a dollar a year), recognized that the bonuses were unseemly. But according to Tim, Liddy had been advised by his lawyers that any attempt to withhold the payments would likely result in successful lawsuits by the AIG employees and damage payments potentially coming in at three times the original amount. To cap it off, we didn’t appear to have any governmental authority to stop the bonus payments—in part because the Bush administration had lobbied Congress against the inclusion of “claw-back” provisions in the original TARP legislation, fearing that it would discourage financial institutions from participating.

I looked around the room. “This is a joke, right? You guys are just messing with me.”

Nobody laughed. Axe started arguing that we had to try to stop the payments, even if our efforts were unsuccessful. Tim and Larry began arguing back, acknowledging the whole thing was terrible but saying that if the government forced a violation of contracts between private parties, we’d do irreparable damage to our market-based system. Gibbs chimed in to suggest that morality and common sense trumped contract law. After a few minutes, I cut everyone off. I instructed Tim to keep looking at ways we might keep AIG from dispensing the bonuses (knowing full well he’d probably come up empty). Then I told Axe to prepare a statement condemning the bonuses that I could deliver the next day (knowing full well that nothing I said would help lessen the damage).

Then I told myself that it was still the weekend and I needed a martini. That was another lesson the presidency was teaching me: Sometimes it didn’t matter how good your process was. Sometimes you were just screwed, and the best you could do was have a stiff drink—and light up a cigarette.

—

THE NEWS OF the AIG bonuses brought the pent-up anger of several months to an uncontrolled boil. Newspaper editorials were scathing. The House quickly passed a bill to tax Wall Street bonuses at 90 percent for people making over $250,000, only to watch it die in the Senate. In the White House briefing room, it seemed like Gibbs fielded questions on no other topic. Code Pink, a quirky antiwar group whose members (mostly women) dressed in pink T-shirts, pink hats, and the occasional pink boa, ramped up protests outside various government buildings and surfaced at hearings where Tim was appearing, hoisting signs with slogans like GIVE US OUR \(\)$ BACK, clearly unimpressed by any argument about the sanctity of contracts.

The following week, I decided to convene a White House meeting with the CEOs of the top banks and financial institutions, hoping to avoid any further surprises. Fifteen of them showed up, all men, all looking dapper and polished, and they all listened with placid expressions as I explained that the public had run out of patience, and that given the pain the financial crisis was causing across the country—not to mention the extraordinary measures the government had taken to support their institutions—the least they could do was show some restraint, maybe even sacrifice.

When it was the executives’ turn to respond, each one offered some version of the following: (a) the problems with the financial system really weren’t of their making; (b) they had made significant sacrifices, including slashing their workforces and reducing their own compensation packages; and (c) they hoped that I would stop fanning the flames of populist anger, which they said was hurting their stock prices and damaging industry morale. As proof of this last point, several mentioned a recent interview in which I’d said that my administration was shoring up the financial system only to prevent a depression, not to help a bunch of “fat cat bankers.” When they spoke, it sounded like their feelings were hurt.

“What the American people are looking for in this time of crisis,” one banker said, “is for you to remind them that we’re all in this together.”

I was stunned. “You think it’s my rhetoric that’s made the public angry?” Taking a deep breath, I searched the faces of the men around the table and realized they were being sincere. Much like the traders in the Santelli video, these Wall Street executives genuinely felt picked on. It wasn’t just a ploy. I tried then to put myself in their shoes, reminding myself that these were people who had no doubt worked hard to get where they were, who had played the game no differently than their peers and were long accustomed to adulation and deference for having come out on top. They gave large sums to various charities. They loved their families. They couldn’t understand why (as one would later tell me) their children were now asking them whether they were “fat cats,” or why no one was impressed that they had reduced their annual compensation from $50 or $60 million to $2 million, or why the president of the United States wasn’t treating them as true partners and accepting, just to take one example, Jamie Dimon’s offer to send over some of JPMorgan’s top people to help the administration design our proposed regulatory reforms.

I tried to understand their perspective, but I couldn’t. Instead, I found myself thinking about my grandmother, how in my mind her Kansas prairie character represented what a banker was supposed to be: Honest. Prudent. Exacting. Risk-averse. Someone who refused to cut corners, hated waste and extravagance, lived by the code of delayed gratification, and was perfectly content to be a little bit boring in how she did business. I wondered what Toot would make of the bankers who now sat with me in this room, the same kind of men who’d so often been promoted ahead of her—who in a month made more than she’d made in her entire career, at least in part because they were okay with placing billion-dollar bets with other people’s money on what they knew, or should have known, was a pile of bad loans.

Finally I let out something between a laugh and a snort. “Let me explain something, gentlemen,” I said, careful not to raise my voice. “People don’t need my prompting to be angry. They’ve got that covered all on their own. The fact is, we’re the only ones standing between you and the pitchforks.” —

I CAN’T SAY my words that day had much impact—other than reinforcing the view on Wall Street that I was anti-business. Ironically, the same meeting would later be cited by critics on the left as an example of how, in my general fecklessness and alleged chumminess with Wall Street, I had failed to hold the banks accountable during the crisis. Both takes were wrong, but this much was true: By committing to the stress test and the roughly two-month wait for its preliminary results, I’d placed on hold whatever leverage I had over the banks. What was also true was that I felt constrained from making any rash moves while I still had so many fronts of the economic crisis to deal with—including the need to keep the U.S. auto industry from driving over a cliff.

Just as the Wall Street implosion was a culmination of long-standing structural problems in the global financial system, what ailed the Big Three automakers—bad management, bad cars, foreign competition, underfunded pensions, soaring healthcare costs, an overreliance on the sale of high-margin, gas-guzzling SUVs—had been decades in the making. The financial crisis and the deepening recession had only hastened the reckoning. By the autumn of 2008, auto sales had plunged 30 percent to their lowest level in more than a decade, and GM and Chrysler were running out of cash. While Ford was in slightly better shape (mainly due to a fortuitous restructuring of its debt just before the crisis hit), analysts questioned whether it could survive the collapse of the other two, given the reliance of all three automakers on a common pool of parts suppliers across North America. Just before Christmas, Hank Paulson had used a creative reading of the TARP authorization to provide GM and Chrysler with more than $17 billion in bridge loans. But without the political capital to force a more permanent solution, the Bush administration had managed only to kick the can down the road until I took office. Now that the cash was about to run out, it was up to me to decide whether to put billions more into the automakers in order to keep them afloat.

Even during the transition, it had been clear to everyone on my team that GM and Chrysler would have to go through some sort of court-structured bankruptcy. Without it, there was simply no way that they could cover the cash they were burning through each month, no matter how optimistic their sales projections. Moreover, bankruptcy alone wouldn’t be enough. To justify further government support, the automakers would also have to undergo a painstaking, top-to-bottom business reorganization and find a way to make cars that people wanted to buy. (“I don’t understand why Detroit can’t make a damn Corolla,” I muttered more than once to my staff.) Both tasks were easier said than done. For one thing, GM’s and Chrysler’s top management made the Wall Street crowd look positively visionary. In an early discussion with our transition economic team, GM CEO Rick Wagoner’s presentation was so slapdash and filled with happy talk—including projections for a 2 percent increase in sales every year, despite having seen declining sales for much of the decade preceding the crisis—that it rendered even Larry temporarily speechless. As for bankruptcy, the process for both GM and Chrysler would likely be similar to open-heart surgery: complicated, bloody, fraught with risk. Just about every stakeholder (management, workers, suppliers, shareholders, pensioners, distributors, creditors, and the communities in which the manufacturing plants were located) stood to lose something in the short term, which would be cause for prolonged, bare-knuckle negotiations when it became unclear whether the two companies would even survive another month.

We did have a few things going for us. Unlike the situation with the banks, forcing GM and Chrysler to reorganize wasn’t likely to trigger widespread panic, which gave us more room to demand concessions in exchange for continued government support. It also helped that I had a strong personal relationship with the United Auto Workers, whose leaders recognized that major changes needed to be made in order for its members to hold on to their jobs.

Most important, our White House Auto Task Force—led by Steve Rattner and Ron Bloom and staffed by a brilliant thirty-one-year-old policy specialist named Brian Deese—was turning out to be terrific, combining analytical rigor with an appreciation for the human dimensions of the million-plus jobs at stake in getting this right. They had begun negotiations with the carmakers well before I was even sworn in, giving GM and Chrysler sixty days to come up with formal reorganization plans to demonstrate their viability. To make sure the companies didn’t collapse during this period, they’d designed a series of incremental but critical interventions—such as quietly guaranteeing both companies’ receivables with suppliers so that they didn’t run out of parts.

In mid-March, the Auto Task Force came to the Oval Office to give me their assessment. Neither of the plans that GM and Chrysler had submitted, they said, passed muster; both companies were still living in a fantasy world of unrealistic sales projections and vague strategies for getting costs under control. The team felt that with an aggressive structured bankruptcy, though, GM could get back on track, and recommended that we give the company sixty days to revise its reorganization plan—provided it agreed to replace both Rick Wagoner and the existing board of directors.

When it came to Chrysler, though, our team was split. The smallest of the Big Three, Chrysler was also in the worst financial shape and—outside of its Jeep brand—had what looked to be an unsalvageable product line. Given our limited resources and the perilous state of auto sales more generally, some on the team argued that we’d have a better chance of saving GM if we let Chrysler go. Others insisted that we shouldn’t underestimate the potential economic shock of allowing an iconic American company to collapse. Either way, the task force let me know, the situation at Chrysler was deteriorating fast enough that I needed to make my decision right away.

At this point, my assistant Katie poked her head into the Oval Office, telling me I needed to get to the Situation Room for a meeting with my national security team. Figuring I should probably take more than a half hour to decide the fate of the American auto industry, I asked Rahm to reconvene the task force along with my three senior advisors—Valerie, Pete, and Axe—in the Roosevelt Room later that afternoon so I could hear from both sides (more process!). At that meeting, I listened to Gene Sperling make a pitch for saving Chrysler and Christy Romer and Austan Goolsbee explain why continued support of the company likely amounted to throwing good money after bad. Rahm and Axe, ever sensitive to the politics of the situation, pointed out that the country opposed—by a stunning two-to-one margin—any further auto bailouts. Even in Michigan, support barely reached a majority.

Rattner noted that Fiat had recently expressed an interest in buying a significant stake in Chrysler and that its CEO, Sergio Marchionne, had taken over that faltering company in 2004 and, impressively, made it profitable within a year and a half. The discussions with Fiat, however, were still tentative, and nobody could guarantee that any intervention would be enough to get Chrysler back on track. A 51–49 decision, Rattner called it—with a strong likelihood that the odds of success would seem bleaker once the company went into bankruptcy and we had a better look under the hood.

I was thumbing through the charts, scrutinizing numbers, occasionally glancing up at the portraits of Teddy and FDR hanging on the wall, when it came time for Gibbs to speak. He had previously worked on U.S. senator Debbie Stabenow’s campaign, in Michigan, and he now pointed to a map in the slide deck that showed every Chrysler plant across the Midwest.

“Mr. President,” he said, “I’m not an economist, and I don’t know how to run a car company. But I do know we’ve spent the last three months trying to prevent a second Great Depression. And the thing is, in a lot of these towns that depression has already arrived. We cut Chrysler off now and we might as well be signing a death warrant for every spot you see on the map. Each one has thousands of workers counting on us. The kind of people you met on the campaign trail…losing their healthcare, their pensions, too old to start over. I don’t know how you walk away from them. I don’t think that’s why you ran for president.” I stared at the points on the map, more than twenty in all, spread across Michigan, Indiana, and Ohio, my mind wandering back to my earliest days as an organizer in Chicago, when I’d meet with laid-off steelworkers in cold union halls or church basements to discuss their community concerns. I could remember their bodies heavy under winter coats, their hands chapped and callused, their faces—white, Black, brown—betraying the quiet desperation of men who’d lost their purpose. I hadn’t been able to help them much then; their plants had already closed by the time I’d arrived, and people like me had no leverage over the distant executives who’d made those decisions. I’d entered politics with the notion that I might someday be able to offer something more meaningful to those workers and their families.

And now here I was. I turned to Rattner and Bloom and told them to get Chrysler on the phone. If, with our help, the company could negotiate a deal with Fiat, I said, and deliver a realistic, hardheaded business plan to emerge from a structured bankruptcy within a reasonable time frame, we owed those workers and their communities that chance.

It was getting close to dinnertime and I still had several calls to make in the Oval. I was about to adjourn the meeting when I noticed Brian Deese tentatively raising his hand. The youngest member of the task force, he’d barely spoken during the discussion, but unbeknownst to me, he’d actually been the one to prepare the map and brief Gibbs on the human costs involved in letting Chrysler go under. (Years later, he’d tell me that he felt the arguments would carry more weight coming from a senior staff member.) Having seen his side prevail and feeling swept up in the moment, though, Deese started pointing out all the potential upsides of the decision I’d just made—including that a Chrysler-Fiat tandem could end up being the first U.S.-based operation to produce cars capable of getting forty miles to the gallon. Except in his nervousness, he said “the first U.S.-produced cars that can go forty miles an hour.” The room was quiet for a moment, then broke into laughter. Realizing his mistake, Deese’s face, cherubic beneath his mustache and beard, turned bright red. I smiled and rose from my chair.

“You know, it just so happens my first car was a ‘76 Fiat,” I said, gathering up the papers in front of me. “Bought it used, my freshman year of college. Red, five-speed stick. As I remember, it went over forty miles an hour…when it wasn’t in the shop. Worst car I ever owned.” I walked around the table, patted Deese on the arm, and turned back as I was heading out the door. “The people at Chrysler thank you,” I said, “for not making that particular argument until after I made my decision.” —

IT’S OFTEN SAID that a president gets too much credit when the economy is doing well, and too much blame when it slumps. In normal times, that’s true. All kinds of factors—from a decision by the Fed (over which a president by law has no authority) to raise or lower interest rates, to the vicissitudes of the business cycle, to bad weather delaying construction projects or a sudden spike in commodity prices brought on by some conflict on the other side of the world—are likely to have a bigger impact on the day-to-day economy than anything the president does. Even major White House initiatives, like a big tax cut or a regulatory overhaul, don’t tend to produce any sort of measurable influence on GDP growth or unemployment rates for months or even years.

As a result, most presidents labor without knowing the economic impact of their actions. Voters can’t gauge it either. There’s an inherent unfairness to this, I suppose: Depending on accidents of timing, a president can be punished or rewarded at the polls for things entirely beyond his or her control. At the same time, this also offers an administration a certain margin for error, allowing leaders to set policy while feeling secure in the knowledge that not everything depends on them getting things right.

In 2009, however, the situation was different. In the first hundred days of my administration, no margin for error existed. Every move we made counted. Every American was paying attention. Had we restarted the financial system? Had we ended the recession? Put people back to work? Kept people in their homes? Our scorecard was posted daily for everyone to see, with each new fragment of economic data, each news report or anecdote becoming an opportunity for judgment. My team and I carried that knowledge with us the minute we woke up, and it stayed with us until we went to bed.

Sometimes I think it was only the sheer busyness of those months that kept us from succumbing to the overall stress. After the GM and Chrysler decisions, the main pillars of our strategy were basically in place, which meant we could turn our focus to implementation. The Auto Task Force negotiated a change in GM management, brokered Fiat’s stake in Chrysler, and helped put together a plausible plan for the structured bankruptcies and reorganization of both car companies. The housing team, meanwhile, hammered together the framework for the HAMP and HARP programs. The Recovery Act’s tax cuts and grants to states began to flow, with Joe Biden, together with his able chief of staff Ron Klain, in charge of overseeing the billions of dollars in infrastructure projects with an eye toward minimizing waste or fraud. And Tim and his still-skeletal staff at Treasury, along with the Fed, continued to put out fires across the financial system.

The pace was relentless. When I met with my economic team for our regular morning briefing, the faces of those arrayed in a horseshoe of chairs and couches around the Oval told a tale of exhaustion. Later, I would hear secondhand accounts of how folks had sometimes yelled at one another during staff meetings, the result of legitimate policy disputes, bureaucratic turf battles, anonymous leaks to the press, the absence of weekends, or too many late-night meals of pizza or chili from the Navy Mess on the ground floor of the West Wing. None of this tension spilled into real rancor or kept the work from getting done. Whether due to professionalism, or respect for the presidency, or awareness of what failure might mean for the country, or a solidarity forged from being a collective target for the escalating attacks from all quarters, everyone more or less held it together as we waited for some sign, any sign, that our plans for ending the crisis were in fact going to work.

And finally, in late April, it came. Tim dropped by the Oval one day to tell me that the Federal Reserve, which had remained tight-lipped throughout its review of the banks, had at long last given Treasury a preliminary look at the stress-test results.

“So?” I said, trying to read Tim’s expression. “How does it look?”

“Well, the numbers are still subject to some revisions…”

I threw up my hands in mock exasperation.

“Better than expected, Mr. President,” Tim said.

“Meaning?”

“Meaning we may have turned the corner.”

Of the nineteen systemically significant institutions subjected to the stress test, the Fed had given nine a clean bill of health, determining that they wouldn’t need to raise more capital. Five other banks required more capital to meet the Fed’s benchmark but nonetheless appeared sturdy enough to raise it from private sources. This left five institutions (including Bank of America, Citigroup, and GMAC, the financing arm of General Motors) that were likely to need additional government support. According to the Fed, the collective shortfall looked to be no more than $75 billion—an amount that our remaining TARP funds could comfortably cover if required.

“Never a doubt,” I said, deadpan, when Tim was finished briefing me.

It was the first smile I’d seen on his face in weeks.

If Tim felt vindicated by the results of the stress test, he didn’t let it show. (He did admit several years later that hearing Larry Summers utter the words “You were right” was pretty satisfying.) As it was, we kept the early information within our tight circle; the last thing we needed was premature celebration. But when the Fed released its final report two weeks later, its conclusions hadn’t changed, and despite some continued skepticism from political commentators, the audience that mattered—the financial markets—found the audit rigorous and credible, inspiring a new rush of confidence. Investors began pumping cash back into financial institutions almost as fast as they’d pulled it out. Corporations found they could borrow again to finance their day-to-day operations. Just as fear had compounded the very real losses the banks had suffered from the subprime lending binge, the stress test—along with massive assurances from the U.S. government—had jolted markets back into rational territory. By June, the ten troubled financial institutions had raised over $66 billion in private capital, leaving only a $9 billion shortfall. The Fed’s emergency liquidity fund was able to cut its investment in the financial system by more than two-thirds. And the country’s nine largest banks had paid back the U.S. Treasury, returning the $67 billion in TARP funds they’d received—with interest.

Almost nine months after the fall of Lehman Brothers, the panic appeared to be over.

—

MORE THAN A DECADE has passed since those perilous days at the start of my presidency, and although the details are hazy for most Americans, my administration’s handling of the financial crisis still generates fierce debate. Viewed narrowly, it’s hard to argue with the results of our actions. Not only did the U.S. banking sector stabilize far sooner than any of its European counterparts; the financial system and the overall economy returned to growth faster than those of just about any other nation in history after such a significant shock. If I had predicted on the day of my swearing in that within a year the U.S. financial system would have stabilized, almost all TARP funds would be fully repaid (having actually made rather than cost taxpayers money), and the economy would have begun what would become the longest stretch of continuous growth and job creation in U.S. history, the majority of pundits and experts would have questioned my mental fitness—or assumed I was smoking something stronger than tobacco.

For many thoughtful critics, though, the fact that I had engineered a return to pre-crisis normalcy is precisely the problem—a missed opportunity, if not a flat-out betrayal. According to this view, the financial crisis offered me a once-in-a-generation chance to reset the standards for normalcy, remaking not just the financial system but the American economy overall. If only I had broken up the big banks and sent some white-collar culprits to jail; if only I had put an end to outsized pay packages and Wall Street’s heads-I-win, tails-you-lose culture, then maybe today we’d have a more equitable system that served the interests of working families rather than a handful of billionaires.

I understand such frustrations. In many ways, I share them. To this day, I survey reports of America’s escalating inequality, its reduced upward mobility and still-stagnant wages, with all the consequent anger and distortions such trends stir in our democracy, and I wonder whether I should have been bolder in those early months, willing to exact more economic pain in the short term in pursuit of a permanently altered and more just economic order.

The thought nags at me. And yet even if it were possible for me to go back in time and get a do-over, I can’t say that I would make different choices. In the abstract, all the various alternatives and missed opportunities that the critics offer up sound plausible, simple plot points in a morality tale. But when you dig into the details, each of the options they propose—whether nationalization of the banks, or stretching the definitions of criminal statutes to prosecute banking executives, or simply letting a portion of the banking system collapse so as to avoid moral hazard—would have required a violence to the social order, a wrenching of political and economic norms, that almost certainly would have made things worse. Not worse for the wealthy and powerful, who always have a way of landing on their feet. Worse for the very folks I’d be purporting to save. Best-case scenario, the economy would have taken longer to recover, with more unemployment, more foreclosures, more business closures. Worst-case scenario, we might have tipped into a full-scale depression.

Someone with a more revolutionary soul might respond that all this would have been worth it, that you have to break eggs to make an omelet. But as willing as I had always been to disrupt my own life in pursuit of an idea, I wasn’t willing to take those same risks with the well-being of millions of people. In that sense, my first hundred days in office revealed a basic strand of my political character. I was a reformer, conservative in temperament if not in vision. Whether I was demonstrating wisdom or weakness would be for others to judge.

And anyway, such ruminations came later. In the summer of 2009, the race had only just started. Once the economy was stabilized, I knew I’d have more time to push through the structural changes—in taxes, education, energy, healthcare, labor law, and immigration—that I had campaigned on, changes that would make the system fundamentally more fair and expand opportunity for ordinary Americans. Already, Tim and his team were preparing options for a comprehensive Wall Street reform package that I would later present to Congress.

In the meantime, I tried to remind myself that we had steered the nation away from disaster, that our work was already providing some form of relief. Expanded unemployment insurance payments were keeping families across the country afloat. Tax cuts for small businesses were allowing a few more workers to stay on the payroll. Teachers were in classrooms, and cops were on the beat. An auto factory that had threatened to close was still open, while a mortgage refinancing was keeping someone out there from losing a home.

The absence of catastrophe, the preservation of normalcy, wouldn’t attract attention. Most of the people impacted wouldn’t even know how our policies had touched their lives. But every so often, while reading in the Treaty Room late at night, I’d come across a letter in my purple folder that began with something like this: Dear President Obama,

I’m sure you’ll never read this, but I thought you might want to know that a program you started has been a real lifesaver…

I’d set down the letter after reading it and pull out a note card to write the person a brief response. I imagined them getting the official envelope from the White House and opening it up with a look of puzzlement, then a smile. They’d show it to their family, maybe even take it to work. Eventually the letter would fall into a drawer somewhere, forgotten under the accumulation of the new joys and pains that make up a life. That was okay. I couldn’t expect people to understand how much their voices actually meant to me—how they had sustained my spirit and beat back whispering doubts on those late, solitary nights.