WASHINGTON (Reuters) - The White House on Monday said it hoped for progress on a sweeping housing rescue plan by the end of this week, but reiterated a veto threat over a provision that Congress looks likely to include in the bill.
Setting up a potential showdown with Congress, the White House said President George W. Bush would veto any bill that includes a provision to send $4 billion in federal grants to states and communities to buy and repair foreclosed homes.
Bush opposes that measure because it helps lenders rather than homeowners, White House spokeswoman Dana Perino said.
“He does not think that it’s necessary,” she said. “And so our position hasn’t changed, but we’ve continued to work with them.”
Treasury Secretary Henry Paulson, who has been meeting with lawmakers, believes Congress sees the urgency in passing legislation and has said he is quite confident of action this week.
As another big U.S. bank suffered mortgage loan losses, lawmakers from both parties were working to complete a 600-page bill meant to reduce foreclosures and restore confidence in mortgage giants Fannie Mae and Freddie Mac.
Bank of America Corp, the largest U.S retail bank and mortgage lender, reported on Monday that second-quarter profits fell 41 percent from a year earlier, dragged down by a tripling in the bank’s reserve for loan losses. For details, see.
The housing bill was expected to go before the Rules Committee of the House of Representatives on Tuesday, then to the House floor for a vote on Wednesday, aides said.
That schedule could slip, but the leaders of the Senate Banking Committee and the House Financial Services Committee were committed to completing a package that would win approval in both chambers and go to Bush, aides said.
House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, said last week that the $4 billion grants provision would be in the bill. The provision originated in the Senate, so it would likely win approval there, aides said.
House Speaker Nancy Pelosi predicted last week that Bush would not veto the housing bill over $4 billion in grants.
One loose end still hanging from the bill is its potential impact on U.S. taxpayers.
The bill includes a Paulson proposal to let the Treasury extend cheap federal capital — on a temporary, but unlimited basis — to Fannie Mae and Freddie Mac.
Paulson has said the two companies — government-sponsored enterprises, or GSEs, which stand behind almost half of all American mortgage loans — will never need to tap the credit line he proposes. But, if they did, U.S. taxpayers could be on the hook for many billions of dollars.
The Congressional Budget Office is trying to estimate how much it might cost to assist Fannie and Freddie. It has scheduled a news conference for Tuesday morning to discuss “the fiscal impact of the administration’s request for new authority to provide financial support for Fannie Mae and Freddie Mac.”
The housing bill also would set up a new regulator for the GSEs and extend more government help to thousands of distressed homeowners so they can refinance from costly, exotic mortgages into more affordable, government-backed loans.
In related news, Frank announced on Monday that his committee will hold a hearing on Friday on the mortgage servicing industry and its role in minimizing home foreclosures.
Additional reporting by Lisa Lambert and Patrick Rucker, with Jonathan Stempel in New York; Editing by Jonathan Oatis