After months of stumbles and false starts, Congress has put its stamp on a package of measures lawmakers hope will give a boost to the housing sector, where high foreclosure rates and declining prices have had a ripple effect throughout the economy.
The legislation the Senate passed 72-13 in a rare Saturday session aims to bolster the sagging housing market and shore up Fannie Mae and Freddie Mac, which together back nearly half the nation's mortgages. The president says he'll sign the bill when it reaches his desk, early next week.
Senate Majority Leader Harry Reid said the bill offered a ray of hope and "a chance to turn the page on the housing crisis and begin a new chapter that gives more families a chance at the American dream of responsible home ownership."
The bill addresses the flood of home foreclosures brought about by overly aggressive lenders and homeowners who got in over their heads. It would give several hundred thousand qualified borrowers a chance to get lower cost government-backed mortgages, if their lenders go along. It authorizes the government to back up to $300 billion worth of such loans. It also provides nearly $4 billion for communities to buy foreclosed properties and resell them, along with tax credits to encourage first-time homebuyers.
Opponents of the measure said it represented an unprecedented government intrusion into the housing market.
"No matter what's wrong with [the bill], most of the members of this Senate are going to come in and vote for it," said Republican Sen. Jim DeMint of South Carolina, who single-handedly forced the Saturday session. "[They're going to] check the box and go home and say they did something for housing. I'm afraid they may compromise the future of America as they do it."
Conservatives were especially unhappy with the rescue plan for Fannie Mae and Freddie Mac, which the Bush administration said was crucial to restore investor confidence in the institutions. The bill will give the two mortgage backers an unspecified line of credit and will allow the government to buy equity in them should Fannie and Freddie need more capital. It's unclear what the cost of all that will be to taxpayers, but Republican Sen. Kay Bailey Hutchison said Congress didn't get a very good deal.
"I am troubled by the inclusion of an unlimited U.S. Treasury credit line for Fannnie Mae and Freddie Mac, including the authority for the U.S. government to purchase stock in these private companies without the necessary intervention in their governance," she said.
But backers of the housing bill, led by Connecticut Democrat Chris Dodd said Congress had to do something.
"I can't promise it's going to work in every detail," he said. "I can't promise that we've designed a silver bullet here. All i can tell you is that ... inaction was unacceptable. Doing nothing was intolerable, and what we've done here is fundamentally alter the way we do business when it comes to housing."
A spokesman said despite some misgivings over its provisions, President Bush will sign the bill because of the need for action now.