WASHINGTON (Reuters) – The biggest housing market rescue plan yet seen from the U.S. government has won House of Representatives approval, but faces resistance in the Senate, a White House veto threat, and questions about whether it will work.
Defying the Bush administration and their own leaders, dozens of House Republicans joined Democrats on Thursday to support the plan, reflecting a desire to be seen helping homeowners ahead of November’s elections.
The plan goes next to the more closely divided Senate, where the same election-year calculus will determine whether Democrats can gather enough votes to proceed with the bill.
“It’s politically dangerous to oppose this (bill),” said Douglas Elmendorf, an economist at the Brookings Institution think tank. “There are a lot of negative forces still at work in the economy… The idea that we’re maybe out of the woods is a mistake.”
In addition to paying interest and principal, the borrower would pay a monthly insurance fee, which would go into a fund to protect taxpayers from losses. The Congressional Budget Office has estimated that up to 500,000 refinancings would be generated over the next five years, at a cost to taxpayers around $2.7 billion.
http://www.revver.com/video/860064/refinance-bills-rushing-through-congress/
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http://www.revver.com/video/855555/refinance-recovery-in-sight/
To sweeten the package for the administration, Mr. Frank’s legislation included two measures that Mr. Bush has long demanded — a modernization of the Federal Housing Administration and tighter regulation of the government-sponsored lenders Fannie Mae and Freddie Mac.
Mr. Frank made several other changes while drafting the bill to address concerns raised by the White House, but Mr. Bush and aides have denounced the legislation as a bailout for irresponsible home buyers and greedy lenders.
After Thursday’s vote, the White House scolded Democrats for persisting with their effort.
Why are those who are prudent with their financiers being asked to bail out those who gambled and lost?
This makes no economic sense to me.
Yeah, but it seems so compassionate.
I hope this goes nowhere.
The following bill was overwhelmingly passed by Democrats.
Big surprise.
Anything for more government intervention.
Bush said the bill would “reward speculators and lenders,” while Republicans loyal to him threw delaying tactics at the legislation on the House floor and criticized it as a bailout.
Even if Republicans change their tune later and cut a deal on the bill in the Senate, some Wall Street analysts said the sweeping House bill is riddled with uncertainties.
“I’m really skeptical,” said Rod Dubitsky, a senior strategist in the asset-backed securities group at financial group Credit Suisse. “The Frank plan, and any FHA solution, depends on a number of moving parts.”
Brian Gardner, vice president at investment firm Keefe Bruyette & Woods, said housing markets have stabilized somewhat recently, but mostly due to moves by the Federal Reserve, not the prospect of House legislation.
