Tracking the housing bills and bailouts

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The rush in Congress to agree on an emergency housing bill appears to have given way to a three-way muddle, with the House, the Senate and the White House staking out different positions. A muddle is not necessarily a bad thing, but that’s where we are:

The AP today: ‘The Bush administration announced new steps Wednesday to help more homeowners head off foreclosure. The Senate, in the meantime, worked to complete a bipartisan housing bill the White House says would worsen the mortgage mess.’

The new White House proposal could be called Dodd-Frank Lite -- a limited and voluntary version of the widespread mortgage write-downs and new guarantees favored by Sen. Chris Dodd and Rep. Barney Frank: ‘It is a more modest version of a concept Democrats have recently been pushing to respond to the housing crisis, which would have the FHA back from $300 billion to $400 billion in restructured loans for distressed borrowers if lenders were willing to take a substantial loss on the mortgages. The administration’s idea, however, would reach far fewer borrowers than the Democrats’ proposal -- roughly 100,000 rather than between 1 million and 2 million -- without requiring lenders to take large losses.’

The administration laid out its most explicit criticism of Dodd-Frank, saying it would ‘’essentially put taxpayers on the hook for a large number of non-performing loans.’ The administration also criticized the Senate’s proposal for grants to allow local governments to buy foreclosed homes, calling it ‘a costly bailout for lenders and speculators.’’

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