Housing rescue plan passed in US

Click to follow

The House of Representatives has passed legislation that aims to help 400,000 strapped American homeowners facing repossession and prevent troubled mortgage giants Fannie Mae and Freddie Mac from collapsing.

Yesterday's 272-152 vote reflected a congressional push to send election-year help to struggling borrowers and to reassure jittery financial markets about the health of two pillars of the mortgage market.

The measure is on track to pass the Senate and become law within days. President George Bush dropped his opposition earlier in the day.

The White House swallowed its distaste for 3.9 billion (£1.95 billion) dollars in grants the Bill would provide for devastated neighbourhoods.

In return Congress gets a measure to rein in Fannie Mae and Freddie Mac and the power to throw them a financial lifeline.

Foreigners have millions of dollars invested in the two quasi-government agencies.

The administration and politicians in both parties teamed to negotiate the measure, which also accomplishes top Democratic priorities, including federal help for homeowners, a new permanent affordable housing fund financed by Fannie and Freddie, and the 3.9 billion dollars for hard-hit neighbourhoods. The grants are for buying and fixing up repossessed properties.

"It is the product of a very significant set of compromises," said Barney Frank, a Democrat and the Financial Services Committee chairman.

"We are dealing with the consequences of bad decisions, and inaction, and malfeasance from years before. Obviously, it requires a joint effort."

In a policy statement on the Bill, the White House said that parts of it "are too important to the stability of our nation's housing market, financial system, and the broader economy not to be enacted immediately".

Mr Bush had objected to the neighbourhood grants, saying that they would help bankers and lenders, not homeowners who were in trouble.

Still, Dana Perino, the White House press secretary, told reporters that a showdown with Congress over the funds would be ill-timed.

But it was a striking split for Mr Bush and congressional Republicans. Party leaders denounced the housing legislation as a bail-out for irresponsible homeowners and unscrupulous lenders, even as they acknowledged it was probably necessary.

"It's a Bill that I wish I could support. It's a Bill that the market clearly needs... but this is not a Bill that I can support," said John Boehner, the Republican minority leader.