As expected, the House of Representatives Wednesday afternoon approved a lifeline package for the Federal National Mortgage Association, known as Fannie Mae, and the Federal Home Loan Mortgage Corp., or Freddie Mac. The measure was included in a housing bill that passed 272-152.
What little chance there was of slowing the bill died when the White House early Wednesday dropped its threat to veto the bill over a new fund for acquiring foreclosed homes.
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The lifeline plan would provide a liquidity backstop to the government sponsored enterprises, or GSE. Each would receive an increase through 2009 in their lines of credit with the Treasury, now at $2.5 billion each. Second, to ensure the GSEs have access to enough capital to continue operating, Treasury may temporarily purchase equity in either GSE if needed. Third, to protect the financial system from systemic risk, the Federal Reserve Board would be given a "consultative role" in helping the new regulator set capital requirements, and safety and soundness standards.
The Senate has passed its own housing bill, but leaders there have agreed to approve the House version and send it to the president quickly. - Bill McConnell
