Garrett's Responsibility for the Failure of Fannie and Freddie

According to an article in today's Financial Times, Mike Oxley, the former Republican chairman of the House Financial Services Committee, is blaming Alan Greenspan and the Bush White House for killing a bill that "could well have prevented the current crisis."

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.

We missed a golden opportunity that would have avoided a lot of the problems we’re facing now, if we hadn’t had such a firm ideological position at the White House and the Treasury and the Fed,” Mr Oxley says.

While Oxley lays the responsibility for this at the feet of Greenspan and Bush, it is worth noting that even though the House passed the bill, Scott Garrett was one of 90 congressmen to vote nay. Keep that in mind the next time Scott Garrett tries to claim he saw this crisis coming and tried to stop it. Or has a plan to fix it.