Bush Threatens To Veto Foreclosure Relief Legislation

Washington, DC (AHN) - U.S. President George Bush has indicated he would veto the foreclosure relief bill being tackled by Congress because the legislation appears to reward speculators and lenders.

After a meeting with Republicans in Congress, Bush said, quoted by the Los Angeles Times, "I will veto this bill that's moving through the House today if it makes it to my desk, and I urge members on both sides of the aisle to focus on a good piece of legislation that is being sponsored by Republican members."

Connecticut Sen. Christopher Dodd, chairman of the Senate Banking Committee, said he was surprised by the veto threat from the president since he was led to believe Bush had "guarded support" for the bill. Even Federal Reserve Chairman Ben Bernanke was in favor of the legislation.

Under the proposal, the Federal Housing Administration would guarantee $300 billion refinanced mortgages for distressed homeowners who could no longer keep up with their payments. The bill also called for reforms in the FHA and stricter supervision over large mortgage lenders like Fannie Mae and Freddie Mac.

Meanwhile, Treasury Secretary Henry Paulson told the AP the U.S. credit crisis appears to be fading, but the prolonged housing crisis remains "the biggest risk to the economy." While Paulson foresees the worst of the credit crisis about to pass, he admitted it was not the same case for the housing industry.

"Even the optimists here believe that you're going to continue to see in the next several months newspaper headlines that will say prices have declined even further and foreclosures have increase," Paulson told the AP.