House votes to back Fannie Mae, Freddie Mac, stem foreclosures
Bush drops his veto threat and signals he will sign the measure as Republican lawmakers argue that the plan is a government bailout. Senate could approve the measure by next week.
WASHINGTON — The House approved a sweeping plan today that responds to the most serious housing crisis since the Great Depression by providing a federal backstop for struggling mortgage giants Fannie Mae and Freddie Mac and aid to homeowners facing foreclosure.
In a sign of election-year anxiety over the economy, the White House, in a turnabout, dropped its veto threat and signaled that Bush would sign the measure, even though it includes a provision he opposed to provide $4 billion for communities to buy and fix up abandoned properties.
"This is the most important piece of housing legislation in a generation," said Senate Banking Committee Chairman Christopher Dodd (D-Conn.). The Senate could approve the measure before the end of the week.
The measure includes a plan by Treasury Secretary Henry Paulson aimed at bolstering confidence in Fannie and Freddie by allowing the government to temporarily increase its lending to the government-chartered but privately owned companies and to buy stock in them, if necessary.
It also aims to stimulate the housing market and help keep 400,000 or more homeowners out of foreclosure. It includes about $15 billion in housing tax breaks, including a tax credit of up to $7,500 for first-time home-buyers.
Of interest to California and other states with high housing costs, it would permanently raise to $625,500 the cap on mortgages that Fannie Mae and Freddie Mac can buy or guarantee.
"This bill offers hope that if we can get this industry up and moving again and provide security for distressed homeowners, maybe the economy will respond and get back on track as well," said Rep. Richard E. Neal (D-Mass.).
The 272-152 House vote came a day after a report that a record number of Californians lost their homes to foreclosure in the last three months, adding urgency to congressional action.
The vote laid bare divisions within the Republican ranks as its members came under pressure from the White House to support the measure but also expressed concern about its potential cost to taxpayers.
"Just because the housing market has tumbled doesn't mean we should capriciously finance a big fat government bailout," said Rep.Sam Johnson (R-Texas).
House Republican leader John Boehner of Ohio expressed disappointment that the president would sign a "multibillion-dollar bailout for scam artists and speculative lenders at the expense of American taxpayers."
