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Bush Drops Opposition to Housing Rescue Bill

The U.S. House of Representatives has approved a major housing rescue bill aimed at providing government support for the struggling housing industry.

The House voted Wednesday to pass the legislation, after President George Bush dropped his opposition and vowed to sign the bill.

The rescue plan would allow the Treasury to extend additional credit to government-sponsored lenders Fannie Mae and Freddie Mac. It also would allow the government to buy the companies' stock if necessary.

President Bush had objected to a provision giving nearly $4 billion to communities to buy and repair foreclosed property.

Treasury Secretary Henry Paulson called the provision "wasteful", but said he encouraged the president to support the bill.

The bill will go next to the Senate.

Paulson emphasized the importance of a separate provision in the measure that grants the Treasury Department authority to expand government support for the troubled mortgage lenders.

The two large lending institutions have lost billions of dollars from a wave of recent mortgage defaults.

Congressional budget analysts say the bill could cost taxpayers about $25 billion. But they say there is a better than 50 percent chance the government will not have to use its emergency authority

The U.S. Central Bank today issued a report indicating the economy slowed during the past two months, while inflation rose.

The so-called "beige book" report compiles information from the Federal Reserve's 12 regional banks. Policy makers will consider the report when deciding whether to raise interest rates to fight inflation, or lower rates to help boost economic growth.

But many economists expect the Federal Reserve to leave its key interest rate unchanged at two percent at its next policy meeting on August 5.

Some information for this report was provided by AP and Reuters.

 

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