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| Bunning Votes Against Middle Class America over Housing Crisis |
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Senate Readies Bipartisan Bill to Deal With Housing Slump
By DAVID M. HERSZENHORN and VIKAS BAJAJ
Published: April 1, 2008
WASHINGTON — With both parties in Congress voicing a new urgency to help millions of homeowners at risk of foreclosure, the Senate voted overwhelmingly on Tuesday to move forward with a package of housing legislation.
The measures in the package include an expansion of mortgage counseling, money for local governments to buy foreclosed properties, and a contentious provision that would allow bankruptcy judges to modify the terms of loans on primary residences.
The 94-to-1 Senate vote, while a procedural one, was a clear sign of a growing consensus among Congress, the Bush administration and financial regulators that further government intervention is needed to stem the crisis. The aim is to forestall further collapse in the housing and residential mortgage markets and safeguard the broader economy from a worsening downturn.
“The time has come for us to legislate, not continue our bickering,” Senator Harry Reid of Nevada, the Senate majority leader, said at a bipartisan news conference that reflected the eagerness of legislators in both parties to address the problems in the housing market.
The Republican minority leader, Senator Mitch McConnell of Kentucky, said, “We’ve arranged a way to go forward that we think makes sense, not only for the Republicans and the Democrats, but for the American people.”
Senators Christopher J. Dodd, the Connecticut Democrat who heads the Senate Banking Committee, and Richard Shelby of Alabama, the panel’s ranking Republican, will confer and report back by noon on Wednesday with the core of legislation to which amendments can be offered, Mr. Reid and Mr. McConnell said.
“Inaction is not an option,” Mr. Dodd said. “Failure is not an option.”
Mr. Shelby agreed. “Inaction’s never an option when you have a crisis of confidence in the housing market and in the financial markets,” he said.
Senator Jim Bunning, Republican of Kentucky, was the only lawmaker to vote “no” on the procedural motion on Tuesday afternoon, a “cloture” vote meant to begin formal consideration of the measures by the Senate. It easily attracted more than the 60 votes required to pass under Senate rules. The three major presidential candidates and two other senators were absent and did not vote on the measure.
Lawmakers said that the Senate bill could speed up bigger aid packages now in development, including a proposal for an additional $300 billion to $400 billion in federal loan guarantees for homeowners who are at risk of default. Both the Senate Banking Committee and the House Financial Services Committee are working on such bills, and the Bush administration is developing its own similar plan.
Banking trade groups, while eager to see further details of the bill, said on Tuesday that they were cautiously supportive of the plans, which call for the voluntary cooperation of lenders and loan-service firms.
Despite the sharp ideological differences among the political players, the competing plans all have three crucial elements in common.
First, they seek to restrict assistance as much as possible to homeowners who want to keep a roof over their heads, while avoiding the unappetizing prospect of helping speculators as well.
Second, all the plans rely on the holders of mortgages — the lenders or the secondary investors who bought the notes from the lenders — to voluntarily forgive part of the outstanding balances on mortgages, taking sizable losses.
Third, they all seek to reduce the risk to taxpayers by offering help only in cases where a property’s value and the owner’s finances minimize the chances of future default.
By doing so, though, the measures may minimize the number of people who qualify for assistance, and exclude some who are in the most difficult straits.
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