Washington : US President George W. Bush promised Wednesday to veto a costly initiative making its way through Congress to address the housing crisis at the centre of an economic slowdown in the US.
Democrats are pushing for a broad bill that would create a $300- billion fund to help homeowners threatened with foreclosure and provide tax incentives for people to buy new homes.
Bush said the Democrats’ housing plan would “reward speculators and lenders” rather than individuals struggling to stay in their homes, and urged the House of Representatives to adopt a rival Republican version that is less expansive.
But Speaker Nancy Pelosi – the leading Democrat in the House – said the bill had support from both parties as members began debating the new initiative Wednesday.
“American families confronting foreclosure deserve better from the president than a veto threat,” she said.
Government agencies have worked to help homeowners refinance their mortgages, but the Bush administration has opposed using taxpayer funds to bail out homeowners or speculators who took excessive risks, or took out mortgages they could not afford.
The new House bill would allow the Federal Housing Authority to guarantee $300-billion- worth of loans to help borrowers in danger of foreclosure. Opponents say the burden would be placed on taxpayers should those who take up a federal loan end up defaulting.
A dramatic drop in home prices in the past two years prompted a record number of foreclosures since August. Investment banks and lenders have been hit with huge losses from the mortgage defaults, contributing to a wider economic downturn in the United States.
The House bill was approved by the Financial Services Committee last week with support from Democrats and a number of Republicans. Democrats in the corresponding Senate committee were working on similar legislation.
A vote in the full House was possible by late Wednesday, though the debate was stalled throughout the day over a separate spat between the two parties over funding for the war in Iraq.