US legislators pass major bill tackling housing crisis

May 9th, 2008 - 7:34 am ICT by admin  

Washington, May 9 (DPA) The US House of Representatives Thursday approved a costly bill tackling the housing crisis that is largely blamed for an economic slowdown in the US, setting up a confrontation with the White House. The legislation, pushed through by Democrats with some Republican support, allows the government to guarantee $300 billion in loans to help struggling homeowners in danger of foreclosure.

US President George W. Bush Wednesday threatened to veto the costly bill, which he derided for rewarding “speculators and lenders” rather than individuals struggling to stay in their homes.

Government agencies have worked to help homeowners refinance their mortgages, but the Bush administration has opposed using taxpayer money to bail out homeowners or speculators who took excessive risks or took out mortgages they could not afford.

Opponents of the new bill say the burden will be placed on taxpayers, should people taking the federal loans end up defaulting on their mortgages.

The centre-left Democrats argued that halting a rash of foreclosures since August was critical to get the wider economy back on track. Party leaders in the Senate were thrashing out the details of a similar bill.

“Foreclosures have caused and are causing serious economic problems,” said Barney Frank, who wrote much of the bill and chairs the House Financial Services Committee.

A dramatic drop in home prices in the last 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.

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