House Republican leaders today attacked a Democratic housing stimulus package the chamber will consider Wednesday as an unwise bailout to reward speculators and scam artists, but top Democrats remain confident they will be able to peel off numerous GOP members. Top Republicans said the housing package would help lenders and lawyers while failing those trying to move into homeownership. The measure, sponsored by House Financial Services Chairman Barney Frank, would allow the Federal Housing Administration to insure up to $300 billion in new mortgages for borrowers at risk of foreclosure and provide $11 billion in tax breaks. Minority Leader Boehner argued Democrats are refusing to include GOP ideas in the package. "What we are talking about here is a ... bailout for those who were scamming the market." Boehner said. Republicans will offer a narrower package that will center on providing a tax credit of up to $10,000 for homebuyers.
Frank contends a number of Republicans will end up voting for the bill, given that areas such as the Midwest and Sunbelt have seen a wave of foreclosures. He noted that 10 Republicans voted for the bill in committee. CBO has estimated the bill will cost $2.7 billion and serve about 500,000 at-risk homeowners, a lower figure than the 1 million to 2 million borrowers that Frank originally envisioned helping. "It's a best guess," Frank said of the CBO estimate. Frank said he is optimistic that the package will not get a White House veto threat because it contains three items that the administration wants passed: a revamping of FHA's mortgage insurance program; new oversight for Fannie Mae and Freddie Mac; and an increase of the cap for mortgage revenue bonds. Minority Whip Blunt said he believes Republicans will have the votes to sustain a veto from President Bush on portions of the measure if the administration goes that route.
Meanwhile, banks have geared up a last-minute lobbying effort against one amendment that may be considered. The measure, offered by Reps. Brad Miller, D-N.C., and Steven LaTourette, R-Ohio, would clarify that federal regulators could not pre-empt state foreclosure laws. Lenders argue that it would roll back a recent Supreme Court ruling that pre-empted state consumer-protection laws against the banking industry and that it attempts to solve a problem that does not exist. Frank said he supported the measure. "It's either paranoia or political distortion of the worst sort," Frank said of the opponents' claims. "How can a bill that says that foreclosure isn't pre-empted, pre-empt things that don't deal with foreclosure? Can you please explain to me? What language are you speaking?"
This article appears in the May 10, 2008 edition of National Journal Daily PM Update.