Senate panel set for housing vote Thursday: source

WASHINGTON (Reuters) - The Senate Banking Committee is due on Thursday to vote on legislation that would greatly expand a federal housing program and create a new regulator for Fannie Mae and Freddie Mac, a committee source said on Monday.

No iron-clad deal has been reached between Connecticut Sen. Christopher Dodd, Democratic chairman of the committee, and Alabama Sen. Richard Shelby, the panel's top Republican, but talks will continue until the vote, the ranking Republican on the committee said.

"We're still talking ... We haven't gotten to an agreement yet, but we are negotiating," Shelby told Reuters in an interview. "Will we reach an agreement between now and Thursday? I'm not sure. We're going to continue to talk and work."

The housing initiatives cleared the U.S. House of Representatives last week. In that vote, lawmakers passed legislation that would expand the Federal Housing Administration and create a new regulator for Fannie Mae and Freddie Mac, two government-chartered enterprises and the country's largest sources of housing finance.

The House bill would provide $300 billion in mortgage insurance to help stabilize a housing market roiled by falling prices, record foreclosures and a credit crunch.

Earlier on Monday, Democratic banking committee staff were briefed by senior Dodd aides about the legislation that was expected to be introduced later in the day.

According to the conventions of the Senate, legislation that does not have bi-partisan support at the committee level has trouble clearing the Senate. With that in mind, Dodd is likely to spend the next few days continuing to work with Shelby for a compromise, said Jaret Seiberg, policy analyst at the financial firm Stanford Group.

"There is nothing like a hard and fast deadline to force compromise," Seiberg said. "If Sen. Shelby signed on to this legislation, it would be a signal to Republicans that it would be alright to climb on board."

Democrats have 49 Senate seats and can rely on two independents, but 60 votes are needed to advance any major legislation in the upper house of the U.S. Congress. Otherwise, opponents can set up procedural roadblocks.

Shelby, who has been a vociferous critic of Fannie Mae and Freddie Mac, said on Monday that he was content to let a bad bill fail.

"It would not bother me if at the end of the day, we are not able to work something out and in my judgment and the judgment of my colleagues on the Republican side, we collectively felt that this was not a good piece of legislation," Shelby told Reuters.

(Reporting by Patrick Rucker; Editing by Chizu Nomiyama, Gary Crosse)