Laura Bush's Baked Potato Soup

6 cups left over mashed potatoes
2 tablespoons butter or margarine
1 medium onion, diced
1/2 pound bacon, diced, cooked and drained well (freeze bacon for easier cutting)
1 large red bell pepper, diced
2 cups sharp Cheddar cheese, grated
1/2 cup chives, minced
About 4 tablespoons sour cream
2 to 3 cups whipping cream, half-and-half or milk
Kosher salt and fresh ground pepper to taste

In a large soup pot, saut