Lawmakers Fast-Track Help for Mortgage Giants
Monday, July 14, 2008; 4:57 PM
A Treasury Department plan to bolster beleaguered mortgage giants Fannie Mae and Freddie Mac will be added to a massive housing package working its way through Congress, to be to the president's desk within days, key lawmakers said today.
In an interview, House Financial Services Committee Chairman Barney Frank said he will incorporate the Treasury initiative -- which would extend unprecedented government support to the two shareholder-owned, government-chartered companies -- into the housing package. The measure will be put to a vote in the House on Thursday and then go to the Senate for final approval, and on to the White House early next week, Frank said.
"I do think there's a reason for speed," Frank (D-Mass.) said. He and other observers added that some Republican lawmakers, particularly in the Senate, are likely to oppose the initiative. But, Frank said, "I don't see a major problem."
A handful of Republicans have used Senate rules to slow down the housing package, which would create a strong new regulator for Fannie and Freddie, modernize the Federal Housing Administration and extend a financial lifeline to hundreds of thousands of homeowners who took out exotic mortgages with rapidly rising monthly payments and are now at risk of foreclosure.
After Fannie and Freddie stock nosedived last week on fears that the companies had insufficient cash to cover bad mortgage debts, Treasury Secretary Henry M. Paulson Jr. proposed expanding the legislation to include a plan to increase the amount the companies can borrow from the government and to make it possible for Treasury to invest government money in the firms by buying their stock.
That plan, announced yesterday, eased the pressure on Fannie and Freddie in the stock market today. Shares of both companies rose steeply in the morning but fell as the day progressed.
A spokesman for Senate Minority Leader Mitch McConnell (R-Ky.) said McConnell would support the Treasury initiative, especially if it were handled as a separate piece of legislation and could move quickly. One of two senators who delayed the larger housing package, Sen. John Ensign (R-Nev.), said through a spokesman that he would not delay that package further. But the intentions of the second lawmaker, Sen. Jim DeMint (R-S.C.), are unclear.
Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) said this morning that he was thinking about offering the Treasury initiative as a separate bill. But in a conference call with reporters this afternoon, Dodd said he has reconsidered and that it makes sense to add the initiative to the larger housing package. Dodd said the senior Republican on his panel, Sen. Richard C. Shelby (Ala.), agrees with that decision.
Dodd said Paulson; Ben S. Bernanke, chairman of the Federal Reserve Board; and Christopher Cox, chairman of the Securities and Exchange Committee, will appear before his committee tomorrow morning to answer questions about the initiative.
Dodd also urged House leaders to dispatch the housing bill before Thursday so the Senate could wrap up its work on the bill this week. And he urged Frank to avoid making changes to the bill that would draw "a hostile Senate reaction." Versions of the legislation have been approved in both chambers with strong bipartisan majorities.
Under Senate rules, "a handful of people can tie this up," Dodd said. "We don't need to make the perfect the enemy of the good."