Bush Drops Opposition to Housing Bill

WASHINGTON, DC-US Pres. George Bush has said he will not veto the housing bill that is moving through Congress. Previously he had threatened to kill any measure that came across his desk, if it contained a $4-billion rescue package for lenders in the form of Community Development Block Grants–CDBG funds. However, according to a presidential spokeswoman, Bush has reconsidered, in part because Treasury Secretary Henry Paulson has lobbied so hard for its passage.

“Given that the housing legislation is so essential right now, and that we need it promptly, the President agreed to accept Secretary Paulson’s recommendation that it was more important to accept the bill in this form so that we could get the housing reforms in the form of the GSEs, and to go ahead and sign the bill, even though it has the CDBG money in it,” the spokeswoman said during Wednesday’s afternoon press briefing.

Paulson has been relentlessly making the rounds in Congress and in the Bush Administration to steer these two bills through Congress. There are many facets to the measure including some tax relief for homeowners. These bills are also the vehicle to which Paulson has attached his plan to bolster Fannie Mae and Freddie Mac.

The president’s promise to keep his veto power in check, plus the progress the bills are making in Congress, have cheered investors. Shares of both GSEs had increased by percentages in the double digits on Wednesday afternoon.

According to news accounts, the House is set to easily pass the bill, while the Senate will pass it, but at a closer margin. “With the veto off the table, the market is feeling more optimistic that this might actually happen,” Peter Cohan, principal with Peter S. Cohan & Assoc., tells GlobeSt.com. “I think somebody sat Bush down and presented two stark scenarios: one where he signed the legislation and one where the economy collapsed because Fannie and Freddie did not get the support they needed.”