WASHINGTON — A key Senate committee Tuesday overwhelmingly approved a plan to rescue up to 500,000 homeowners at risk of foreclosure, clearing a major political hurdle on the path to a broad bill to address the nation’s housing crisis.
Eight Republicans joined the Senate Banking Committee’s Democrats to back it, after extracting a major concession to pay for the foreclosure-prevention plan by diverting money intended to pay for housing for the poor.
Under a deal struck between committee chairman Christopher Dodd, D-Conn., and Sen. Richard Shelby, R-Ala., the panel’s senior Republican, a portion of the profits from mortgage giants Fannie Mae and Freddie Mac would be used to cover the cost of a program to help troubled borrowers trade exotic mortgages with escalating monthly payments for more affordable loans backed by the federal government.
The measure also would create a new, stricter regulator for Fannie Mae and Freddie Mac, with broad power to control the financial condition of the companies.
The committee’s vote clears the way for Senate approval of the plan, which is likely to come soon after the Memorial Day break. Dodd predicted the measure could clear Congress by July 4.
The vote also raises hopes that President Bush will sign the measure. The White House threatened to veto a similar bill that passed the House this month, citing the potential cost to taxpayers as a primary concern.
“I believe the White House will support this,” said Sen. Richard C. Shelby, the panel’s senior Republican. “I don’t know why they wouldn’t.”
The White House, however, called that assessment premature.
The nation’s housing crisis has so far thrown more than 1.5 million homeowners into foreclosure. With foreclosures rising, home prices have fallen by more than 10 percent, leaving many borrowers both unable to make their mortgage payments and unable sell or refinance because they owe the banks more than their homes are worth.
House OKs financial relief for military personnel
The House voted unanimously Tuesday to provide financial and tax relief to military personnel.
In the run-up to Memorial Day, the House was taking up more than a dozen bills either to help or honor veterans and those on active duty, highlighted by the $2 billion tax package.
The bill, passed 403-0, allows active-duty reservists to make penalty-free withdrawals from retirement plans, and makes permanent a law including combat pay as earned income for purposes of the Earned Income Tax Credit.
It provides a tax credit of up to $4,000 for small businesses that continue to pay their National Guard and Reserve employees while they are on active duty and makes thousands of veterans eligible for low-interest homeowner loans.
The tax relief measure, said Rep Jim McDermott, D-Wash., would “ensure that service to our nation does not disadvantage those who serve.”
House targets OPEC
The House voted Tuesday to let the Justice Department pursue energy antitrust and price fixing cases against members of the OPEC oil cartel, although energy experts and legal scholars said such attempts would likely be fruitless and could prompt a backlash from oil producers.
The bill, approved 324-84, also would create a special Justice Department task force to investigate energy markets to root out manipulation and unwarranted speculation.
Rep. Steve Kagen, D-Wis., chief sponsor of the anti-OPEC bill, contended it’s time to stand up to the international oil cartel that openly establishes production limits among member countries to influence prices. Recently OPEC has refused to increase production, although oil prices have reached record levels, nearing $130 a barrel as the House voted Tuesday. OPEC leaders argue that there’s plenty of oil and the high prices are not the result of a supply shortage.
The White House on Tuesday threatened a veto.
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