As friction in Congress continued over the emerging Senate version of the financial stimulus bill Monday, two political adversaries sat down to friendly debate at the American Securitization Forum in Las Vegas. Karl Rove and James Carville never seem to fail to provide entertainment; the two also met in October at the Mortgage Bankers Association conference in San Francisco. The political environment and national awareness of the housing market has changed in the months since, but Rove and Carville are the same as ever. In a lunch hour conversation littered with mild profanity and the occasional crescendo from civil discussion to an all-out yelling match, former deputy chief of staff Karl Rove went so far as to blame GSEs Fannie Mae (FNM) and Freddie Mac (FRE) for "increasingly more imprudent" behaviors that led to the current credit crisis. In response, Carville harshly criticized the GOP (with words we're not comfortable publishing) for nitpicking the spending initiatives in the financial stimulus bill after causing the massive deficit handed to the new President Barack Obama. Carville, who was the lead strategist on the campaign of President William Clinton, defended government spending and changed roles of GSEs and other government agencies to lead the economy out of recession. "This country has been hit by a tsunami," he said. "Everything is going to change. It may be better, but it's going to be different." However, rebuilding trust in the market will be gradual, Carville said, mirroring events that followed the Great Depression, when people were hesitant to spend and invest in the market. "Government has got to let private investors get some skin in the game," he said. Rove, of course, took the conservative view, saying the more important changes in the face of the crisis should take place outside the political arena. He predicted consumer behavior will change; people will start asking themselves if they need to consumer as much and leveraging on debt will shrink as consumers adopt "much more prudent views of risk," according to Rove. The government role in the crisis should be building positive responses (rather than Obama's warning of "catastrophe" without action) and careful inspection of the stimulus package to determine which government spending initiatives will really create jobs and promote economic growth, he said. But Carville called attention to President George W. Bush's push for action on passing the Troubled Asset Relief Program with few administrative details which would later come under criticism for a lack of oversight. "Didn't I hear months ago if we didn't pass TARP, the 'whole sucker could go down'?" Carville said. "It's time we level with people. We've got to deal with this, and we've got to do it now. We can't spin our way out of it." Rove pointed out inconsistent spending initiatives within stimulus bill that he said will not do enough to create jobs, specifically investments in education, which already displays job growth, and health care IT, the goal of which he said is making computer systems more efficient and cutting down on manpower. "Let's do something good" about the situation, he said. "Let's not pass this piece of trash.... It kills jobs." The $830 billion-plus fiscal stimulus bill passed a Senate vote mid-Tuesday. Write to Diana Golobay at Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.