Senate on course to vote Saturday on housing bill

By Kevin Drawbaugh

WASHINGTON (Reuters) - The Senate was on course for a Saturday vote to approve a major housing market rescue bill offering a lifeline to mortgage finance giants Fannie Mae and Freddie Mac, and bond market action on Thursday indicated investors were encouraged by the progress.

The depth of the housing market slump and its impact on the U.S. economy was underscored, at the same time, by new data showing the pace of sales of existing homes hit a 10-year low and by more bank losses on real estate setbacks.

Bill Gross, chief investment officer of Pacific Investment Management Co, the world's biggest bond fund known as Pimco, said the housing bill -- expected to be signed into law soon by President George W. Bush -- was "the best way to begin the long journey back to normalcy."

Fannie and Freddie, both government-sponsored enterprises, or GSEs, own or guarantee nearly half of the $12 trillion in outstanding U.S. home mortgage debt and are playing an increasingly crucial role as the housing market struggles through its worst downturn since the Great Depression.

The bill was drawing bipartisan support in the Senate, despite some efforts to block it. On Wednesday, the House of Representatives approved the bill by a 272-152 vote, hours after Bush dropped a threat to veto the election-year measure.

New Hampshire Republican Sen. Judd Gregg, speaking on the Senate floor, called the housing bill "a necessary step. ... This is something we're simply going to have to do."

A handful of Senate Republicans were trying to amend and delay the bill. But they will run out of options on Saturday, allowing the Senate to vote, said aides from both parties.

A last-minute deal could bring an earlier vote on Friday, but lawmakers and aides said that looked unlikely. Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said the bill was "about to pass, I believe."