(Recasts with Dodd comments, background)
By Kevin Drawbaugh
WASHINGTON, April 4 The U.S. Senate was
expected to approve legislation next week that would only
modestly address the U.S. mortgage market crisis while
delivering some major tax breaks to corporations.
Senate Banking Committee Chairman Christopher Dodd said on
Friday he was disappointed that the bipartisan bill did not go
further to help struggling homeowners facing foreclosure.
"It does not really include fundamental relief," said the
Connecticut Democrat on the Senate floor as lawmakers adjourned
for the weekend. "You may be disappointed, as I am."
Dodd called the bill a step in the right direction, adding,
"Anyone who thinks this bill is the end is making a mistake."
Dodd said he plans to have committee hearings next week on
a more ambitious proposal, similar to a House plan offered by
Rep. Barney Frank that would greatly expand the Federal Housing
Administration's (FHA) role in tackling mortgage problems.
Frank, a Massachusetts Democrat, also plans to have
hearings next week on his proposal to let the FHA offer
hundreds of billions of dollars in new guarantees to help
refinance distressed mortgages written down by banks and loan
A comparatively moderate FHA reform was included in the
Senate bill debated this week and headed for likely passage on
Tuesday or Wednesday, along with a grab-bag of tax measures.
The Senate voted 76-2 on Friday to amend the bill to let
money-losing corporations accelerate their use of certain
accumulated tax credits to make new business investments.
Sen. George Voinovich, a sponsor of the amendment, said it
would help companies that are in the red and cannot take
advantage of another business tax break approved by Congress
earlier this year involving accelerated bonus depreciation.
The Senate's bill is estimated to cost as much as $20
billion, with much of it accounted for by business tax breaks.
If it is adopted next week, it will go next to the House of
Representatives, where lawmakers are already asking questions
about how to pay for the tax measures favored by senators.
Other amendments to the Senate bill were expected to come
up next week, possibly including one dealing with extending
renewable energy production tax credits.
Dodd expressed some impatience on the Senate floor with
multiple amendments only faintly related to housing.
"This isn't a Christmas tree," he said. "Why are we taking
on matters here that run the risk of tying up this process for
weeks on end ... It's a housing bill."
With the economy near recession, lawmakers are under
growing pressure to address rising foreclosures, falling home
prices and stubborn paralysis in parts of the credit market.
Demands for action on behalf of homeowners intensified last
month after the Federal Reserve engineered a massive bailout of
Wall Street investment bank Bear Stearns BSC.N.
Besides the Voinovich measure, the bill includes a
$6-billion tax break for home builders and other businesses.
The measure would extend a rule letting companies count net
operating losses against tax returns from prior profitable
years. In place for 2008 and 2009 only, the rule would allow
carry-backs for four years instead of the current two years.
The Senate bill would expand the FHA's role in the mortgage
market by raising the limit on the size of loans the FHA may
insure to $550,000. The bill also calls for a $7,000 tax
credit, spread over two years, for buyers of homes in or near
foreclosure, and for issuance of $10 billion more in tax-free
revenue bonds to help borrowers refinance their mortgages.
In addition, all home owners who pay property taxes would
get a standard deduction of $500 for single filers and $1,000
for joint filers under the bill. At present, only taxpayers who
itemize may deduct state and local property taxes.
Finally, the bill would direct $4 billion in federal grant
money to communities to buy and fix up foreclosed homes, while
devoting $100 million in federal money to debt counseling.
(Reporting by Kevin Drawbaugh; Editing by Tom Hals)