Bush keeps low profile in market crisis

By Jeremy Pelofsky - Analysis

WASHINGTON (Reuters) - The financial industry is in convulsions and U.S. President George W. Bush has kept a low profile, delegating the heavy lifting to his key advisers.

But unlike the lambasting Bush got for appearing uninvolved when Hurricane Katrina devastated the U.S. Gulf Coast in 2005, this time observers are praising him for taking the right approach to the crisis.

Still, critics argue that Bush is dealing with a storm at least partly of his own making, thanks to the administration's deregulatory policies.

But with the turmoil now unfolding, observers said the president's tactic of delegating to Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke, and staying out of the limelight, was correct given the complex issues at stake and the risk of spooking the markets.

"As large as they are, financial issues are still largely technical in nature and it is appropriate that they are being handled directly by Secretary Paulson and Fed Chairman Bernanke," said Robert Litan, an economics senior fellow at the Brookings Institution.

"Paulson is under enormous time pressure and it is also appropriate that he appear publicly only when it is important to do so," he said.

There is precedent for such an approach. During the financial crisis that erupted in Asia in 1997 and spread to Russia and Latin America, then President Bill Clinton delegated the task of fixing it to his Treasury Secretary Robert Rubin.

When Bush entered the White House nearly eight years ago, he was seen as the CEO president -- setting the policy agenda and then delegating the details. That approach has been highlighted by his handling of the Lehman Brothers Holdings Inc's LEH.P implosion, and the rescue of insurer American International Group (AIG.N).

Paulson, lured away two years ago from the lucrative top job at Goldman Sachs (GS.N) to be treasury secretary, has been dispatched to fix the mess that sprang from a home mortgage crisis, sparked a credit crunch and sent global markets tumbling.

As the economy has seesawed over the last year, Bush has acknowledged that the country is going through a "rough patch" but he has insisted that the long-term U.S. economic fundamentals are strong.

"He (Bush) is not ... the dominant figure," said Stephen Hess, a presidential scholar and professor at George Washington University. "One can say that that's the way he runs his government anyway, through this type of delegation."

MBA EXPERTISE TAKES BACK SEAT

Bush is the first U.S. president with a master's degree in business, and he has experience in the business world -- having worked in the oil industry and owned a baseball team -- but not in financial institutions.

"Unless you have practical work experience at a financial institution, it's hard to fully grasp what's going on right now," said Gregory Brown, an associate professor at the University of North Carolina's Kenan-Flagler Business School.

As the Lehman and AIG crises unfolded, Bush and White House officials have been particularly tight-lipped, in part to avoid jolting the markets but also letting the experts who have been in the trenches at the Treasury or Federal Reserve talk.