Tuesday´s House Financial Services Committee hearing was meant to be forward-looking but representatives from both sides had a hard time overcoming the past.
Though many committee members began their opening remarks with a pledge to put fingerpointing to rest, most of those same members tossed a few last words into the stew of blame. The subject was GSE reform. Republicans accused Democrats of blocking it, while the Dems claimed their minority status before 2007 was the problem.
Republican Rep. Donald Manzullo of Illinois kicked off the GSE reform credit contest. "Fannie Mae and Freddie Mac were right in the thick of things," he said. "Some of us in Congress have been fighting the unethical, illegal and outright stupid underwriting practices at Fannie and Freddie for many years, and our efforts are a matter of public record."
Rep. Manzullo then detailed the history of his efforts at GSE reform, including a 2005 bill to curb the GSEs that was passed by the House but failed to gain traction in the Senate. Rep. Judy Biggert, another Illinois Republican, echoed Rep. Manzullo´s refrain. "We saw the handwriting on the wall," she said.
But it was New Jersey´s Rep. Scott Garrett who emerged as the main Republican Provocateur.
"The esteemed chairman has noted that he and his party were the ones to finally get a new GSE regulator over the finish line, albeit a little bit too late," he said, referring to Rep. Barney Frank. "However, a distortion of facts allows them to claim the mantle of being a champion of reform in Fannie and Freddie."
Rep. Garrett said Republicans had offered "a number of amendments" to reform the GSEs during the Republican majority, but "each and every time the Chairman and everyone on the democratic side of the aisle voted against these proposals."Rep. Frank was prepared, however. He cited a litany of sources, including an article on GSE reform and a book by Mark Zandi, an economic advisor to Sen. John McCain, that supported his version of history.
"It does seem important for me to set the record clearly before us," he said. Then Rep. Frank unleashed his collection of sources selected to show how Democrats had supported reform efforts all along, and Republicans had thwarted them.
"I was unable to stop" the Republicans, Rep. Frank said, adding to GSE reform a list of other hot-button issues such as President Bill Clinton´s impeachment proceedings, the Iraq war, and "irresponsible tax cuts." And it was President George W. Bush´s "one-finger salute," Rep. Frank said, that finally killed earlier GSE reform efforts.
But "it is time to move forward," he said. "Yes, it´s too bad that we didn´t do anything about subprime lending. I wish that the bill that the Congress passed on Fannie and Freddie in 2007 in this committee and 2008 had been passed earlier-and I wish I could eat more and not gain weight."