Put this into the file marked Unexpected Internecine Warfare Among Republicans.
Mike Oxley, the former Republican chairman of the House Financial Services Committee, is blaming Alan Greenspan and the White House for quashing a bill that would have given Fannie Mae and Freddie Mac a stronger regulator. (Thanks to Paul Krugman for the tip.)
The House bill, the 2005 Federal Housing Finance Reform Act, would have created a stronger regulator with new powers to increase capital at Fannie and Freddie, to limit their portfolios and to deal with the possibility of receivership.
Mr Oxley reached out to Barney Frank, then the ranking Democrat on the committee and now its chairman, to secure support on the other side of the aisle. But after winning bipartisan support in the House, where the bill passed by 331 to 90 votes, the legislation lacked a champion in the Senate and faced hostility from the Bush administration.
Adamant that the only solution to the problems posed by Fannie and Freddie was their privatization, the White House attacked the bill. Mr Greenspan also weighed in, saying that the House legislation was worse than no bill at all.
Oxley isn't too happy about all the criticism Congress is getting for letting Fannie and Freddie get too big.
"All the hand wringing and bedwetting is going on without remembering how the House stepped up on this," he says. "What did we get from the White House? We got a one-finger salute."
My question: What would have happened if Fannie Mae and Freddie Mac had been fully privatized? Remember, the two government-sponsored enterprises were relatively cautious, compared to Wall Street, in participating in the craziest excesses of the subprime derivative boom. Isn't it reasonable to assume that as fully private entities they would have felt more pressure to go along with the rest of the herd, possibly leaving the housing market in even worse shape than it already is?