CQ TODAY ONLINE NEWS
Updated June 19, 2008 – 2:25 p.m.
Senate Housing Bill Faces Veto Threat
By Benton Ives, CQ Staff
The Bush administration issued a veto threat Thursday against the massive housing bill the Senate is debating.
The legislation (
“The Federal Government must not prolong necessary corrections in the housing market, bail out lenders, or subsidize irresponsible borrowing and lending, at the expense of hard-working people who have played by the rules,” the White House said in a statement of administration policy.
The White House reiterated strong opposition to a provision in the bill that would provide $4 billion in community development block grants for the purchase and rehabilitation of foreclosed homes.
“The Administration believes the principal beneficiaries of this type of plan would be private lenders – who are now the owners of the vacant or foreclosed properties — instead of struggling homeowners who are working hard to stay in their homes,” the statement said.
Sen. Charles E. Schumer , D-N.Y., chairman of the Joint Economic Committee, said the White House statement “boggles the mind.”
“It’s irresponsible to say you’re going to veto this bill when the economy is in such bad shape,” Schumer said.
The administration appeared to single out the block grant money for its harshest criticism. To avoid a veto, lawmakers may have to revisit the provision, or potentially drop it altogether.
House Financial Services Chairman Barney Frank , D-Mass., the principal author of the House version of the measure, said the block grant money was important, but not essential to the legislation.
“Frankly, I expected that this was going to come,” Frank said, noting that the block grant spending might have provoked budgetary concerns in the House anyway.
Frank said he was “amenable to dropping it from this bill,” noting the House opted to move a larger package of $15 billion in grant monies as a separate bill (
He remained sanguine about the longer-term prospects for the package, saying that other than the block grants, “we’re in a negotiable situation.”
Provided the Senate can move ahead with the bill, Schumer agreed, saying “a comprise could be worked out and worked out very easily,” between the House and Senate.
Senate Housing Bill Faces Veto Threat
The Senate’s debate on the measure is expected to continue into next week. The bill enjoys bipartisan support, including an endorsement from the Banking Committee’s ranking Republican, Richard C. Shelby of Alabama.
Shelby had predicted that a committee-approved version of the bill, which was substantially similar to the version on the Senate floor Thursday, would not be vetoed.
The White House expressed objections about two other parts of the bill:
• A portion of the FHA modernization that would bar the agency from implementing a risk-based pricing structure for insuring riskier loans.
• A provision that would funnel money from mortgage finance giants Fannie Mae and Freddie Mac to cover the costs of the expanded FHA insurance program.
Countrywide Concerns
On Thursday morning, Senate leaders reached a basic accord on amendments, despite complaints from some Republicans that the bill could funnel money to embattled mortgage lender Countrywide.
Amendments will be limited to “those relating to the subject of housing,” under an agreement reached by Senate leaders.
Banking Chairman Christopher J. Dodd , D-Conn., and Budget Chairman Kent Conrad , D-N.D., have been identified in news reports as being among six current and former officials given favorable mortgage deals from Countrywide, which has suffered large losses during the nationwide housing downturn.
Dodd, a lead sponsor of the housing bill, and Conrad have said they did not know they were given special interest rates and loan terms because they are senators.
Majority Leader Harry Reid , D-Nev., refused a Republican request for an up-or-down vote on an amendment that would send the bill back to the Banking Committee with instructions to report “what direct benefits that Countrywide and other financial institutions would receive.”
In a letter Wednesday to Reid, nine GOP senators said Countrywide could receive some $2.5 billion in benefits under the package. The senators asked Reid to delay consideration of the bill so they can review it.
On Thursday, Jim DeMint , R-S.C., requested a vote on the amendment. Reid assured him “that we will sit down and talk . . . and do what we can to pacify your interest.” DeMint initially seemed satisfied, replying, “I appreciate your reasonableness . . . I trust the leader.”
Senate Housing Bill Faces Veto Threat
But later, DeMint and Jim Bunning , R-Ky., said they planned to try to force a vote on a motion to recommit the bill.
“As a member of the Banking Committee I also think we need to take a closer look at exactly who benefits from this bill and by how much,” Bunning said in a statement.
Schumer said it would be up to Republican leadership to decide whether to use the veto threat as political cover to oppose the bill.
“There is not yet an agreement on this bill — there is an agreement to debate housing-only amendments on the first day,” Schumer said.
On Thursday, Shelby spoke in support of the measure that he and Dodd negotiated over the last month.
“I strongly urge my colleagues to support this carefully crafted compromise, and I would remind my colleagues that this bill came out of the banking committee 19-2,” Shelby said.
On the House side, Frank has said that he and House tax writers are expected to make further tweaks to the legislation. It was unclear Thursday how the veto threat would affect that work.
First posted June 19, 2008 11:32 a.m.
POST A COMMENT
Oops! The following errors must be addressed: