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Obama vetoes foreclosure bill as anger grows

That the White House had to pay so much attention to the two-page bill few had heard of before this week shows just how politically charged the issue of flawed foreclosures has become.

White House press secretary Robert Gibbs said the president does not think the measure was trying to undermine protections for homeowners facing foreclosure.

Said Dan Pfeiffer, White House communications director: "The authors of this bill no doubt had the best of intentions in mind when trying to remove impediments to interstate commerce. We will work with them and other leaders in Congress to explore the best ways to achieve this goal going forward."

Senate Judiciary Committee Chairman Patrick J. Leahy (D-Vt.) said in a statement that his office heard no objections from inside or outside the Senate and even asked the Justice Department to review the language. His committee then approved the bill and it passed by unanimous consent after every Senate office was notified.

Some lawmakers worried that the foreclosure paperwork issues could become a major threat to the financial system.

On Thursday, Rep. Alan Grayson (D-Fla.) sent a letter to a newly formed council of top regulators asking it to form an emergency task force to determine whether the foreclosure problem poses a systemic risk to the U.S. economy.

"So far, banks are claiming that the many forged documents uncovered by courts and attorneys represent a simple 'technical problem' with foreclosure processes," he wrote. "This is not true. What is happening is fraud to cover up fraud."

The Treasury Department did not reply to a request for comment. A spokesman for the Securities and Exchange Commission declined to comment. A Justice Department spokeswoman referred to comments made earlier this week by Attorney General Eric H. Holder Jr., who said federal prosecutors are looking into allegations of wrongdoing.

National civil rights groups, including the NAACP, the National Council of La Raza and the Center for Responsible Lending, joined labor unions Thursday in calling for an immediate national moratorium on foreclosures.

"If we don't take drastic measures now, we can expect millions of additional foreclosures in the coming years, with a disproportionate number of them involving Latino and African American families," said Wade Henderson, president of the Leadership Conference on Civil and Human Rights.

Sen. Sheldon Whitehouse (D-R.I.) also called for a national foreclosure moratorium on Thursday, while Michigan Democratic gubernatorial candidate Virg Bernero said he would withdraw $1 billion in state money from J.P Morgan Chase banks if they refused to ease up on foreclosures.

On Thursday, Iowa Attorney General Tom Miller asked three large mortgage lenders to freeze foreclosures in the state. His office said Iowa will take the lead in coordinating with about 40 other states investigating allegations of mishandled foreclosures. The coalition has begun to call lenders to ascertain the scope of the problem.

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