White House Won't Veto Housing Bill

Washington, D.C. (AHN) - President George W. Bush will no longer veto a Democratic-backed housing legislation expected to pass this week, following a recommendation from Treasury Secretary Henry Paulson about the need for immediate action on the housing crisis.

'We believe this is not the time for a prolonged veto fight, but we are confident the president would prevail in one," White House Press Secretary Dana Perino said in a conference call with reporters on Wednesday, according to the New York Times.

Lawmakers are scheduled to go on a five-week recess beginning August 9.

The House is expected to vote Wednesday on $300 billion housing legislation to establish a new regulator for Fannie Mae and Freddie Mac and give the Treasury Department temporary authorities to strengthen the nation's two largest mortgage companies.

Under the bill, the Treasury Department can extend credit to and buy stock from Fannie Mae and Freddie Mac, which own $5.2 trillion of U.S. home mortgages.

Congressional Budget Office Director Peter Orszag has said in a letter to lawmakers that the mortgage rescue package will likely cost the government $25 billion. But Orszag was also quick to say that there is "a significant chance - probably better than 50 percent" that the the cost "could be zero" and that the government will not need to use its new authorities.

The President has repeatedly said he would veto the the housing bill because a provision giving $4 billion for state and local governments to buy up or refurbish foreclosed properties "constitute[s] a bailout for lenders and speculators."

Paulson had urged lawmakers Tuesday to pass the measure this week, saying in a speech at the New York Public Library that immediate, short-term action is "vital to emerging from the housing correction."