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It's actually amazing in the divisive political climate in which we live that we can find consensus on subjects. Maybe it's a testament to exactly how bad the housing market is that there is no attempt at spin by Sen. Jon Kyl (R-AZ) to dismiss or diminish how bad it is and to congratulate Chris Dodd on his legislation to get things on track. But that's not to say there isn't hackery afoot. Kyl says that the Bush administration is not to blame for the crisis, but it's Congress' fault for not taking a tighter leash in regulations to the mortgage industry.

BLITZER:(H)ow much of the blame does the Bush administration deserve for allowing this kind of situation to deteriorate, as it has?

KYL: Virtually none.

BLITZER: Why?

KYL: We've been predicting for years that this problem would come along. When I was chairman of the Republican Policy Committee, we wrote papers on it.

BLITZER: But isn't the federal government responsible for making sure this kind of situation doesn't happen?

KYL: The problem is, there is very little regulatory authority. That's why this legislation that Senator Dodd has been working on, the one good feature of it is additional regulation. But we should have had that regulation four years ago.

Um, who was in charge of Congress four years ago? Oh that's right, the Republicans. Can you imagine Tom Delay 'hammering' tighter mortage regulations through the House four years ago? Me neither. But Kyl claims they were predicting it would happen. Hmmmm....

Funnily enough, you know who was in office more than four years ago who did lay the foundation for this situation with the legislation he pushed through the Senate? Phil Gramm. Remind me again, what's he been up to lately? And before we absolve the Bush administration completely, it would be appropriate to remember that the watch-dogs to make sure this kind of thing doesn't happen is the SEC. Who appoints the SEC panel? That would be the Failure in Chief. Just sayin'.

Transcripts below the fold

BLITZER: A lot of people, Senator Kyl in Arizona, in the housing market out there, they're suffering big-time right now. How much of the blame, and I know you're a blunt guy, how much of the blame does the Bush administration deserve for allowing this kind of situation to deteriorate, as it has?

KYL: Virtually none.

BLITZER: Why?

KYL: We've been predicting for years that this problem would come along. When I was chairman of the Republican Policy Committee, we wrote papers on it.

BLITZER: But isn't the federal government responsible for making sure this kind of situation doesn't happen?

KYL: The problem is, there is very little regulatory authority. That's why this legislation that Senator Dodd has been working on, the one good feature of it is additional regulation. But we should have had that regulation four years ago. The other problem, here, is that much of the bailout here is for the people holding bad loans, not the homeowners. It's for the speculators, the investors. I know in the oil crisis, everybody's concerned about the speculators driving up the price. What do you think happened in the housing market?

BLITZER: Senator Dodd, go ahead and respond.

DODD: No, no, no. Very specifically, Jon, we absolutely seclude speculators from having any benefit all the under the act. That's very clear in the law. Of course, this is a highly regulated industry, Jon. This isn't like hedge funds. The mortgage market has been a highly regulated industry. Where were the cops? Why weren't they out there saying when brokers were luring people in and saying I'm your financial adviser, a fully indexed price, don't worry about it, lie about it if you want, we'll get you into that home.

Those were people that had a responsibility, that failed in that responsibility, and the regulators watching them should have been doing a better job and they didn't do it. That's a major reason why we're seeing the problems we're seeing today. KYL: Just one quick example. There's much to be said. The provision that Chris alluded to that the Bush administration opposes and would veto the legislation over are these CDBG grants. They don't help.

BLITZER: You've got to explain what that means.

KYL: The community development to block grants, which enable local governments to purchase homes from the people who are holding them, the investors that are holding them. It doesn't help the homeowner at all. They're in foreclosure. It helps the people holding the paper, the money. It's a good example of how --

BLITZER: I want to move on, but I'll let Senator Dodd respond.

DODD: The community development block grant is money that goes directly to governors and mayors in order to help them rehabilitate foreclosed properties so they can put them on the market and sell it. It doesn't go to the homeowner at all.

KYL: That's my point.

DODD: That money, because you have declining property values, that is the resources coming from for police and fire and other matters. These are things that mayors need. We provide that when you have floods and hurricanes. This is a national crisis and our communities need to help. But you're not purchasing mortgages with that money at all.