Breakthrough on housing

Senate Democrats and Republicans are edging closer to a bipartisan housing bill after a surprise breakthrough Tuesday on the top issue facing Congress.

Under the deal, Senate Banking Committee Chairman Chris Dodd (D-Conn.) and ranking Republican Richard Shelby (Ala.) are to produce a product by noon Wednesday that can patch up the country’s tattered housing industry.

{mosads}The unexpected development was marked by a joint press conference that brought Senate Majority Leader Harry Reid (D-Nev.) shoulder-to-shoulder with Minority Leader Mitch McConnell (R-Ky.) — a visual image so rare that Reid promised reporters it wasn’t an April Fool’s joke.

“This is important, and the picture that we have here says it all,” Reid said, calling it a “breakthrough in this very difficult political year.”

“We can both go and do our separate press availabilities and beat up on the other, [but] the time has come for us to legislate.”

Reid pointedly said the mid-day deadline was “simply artbitrary,” meaning that votes could be delayed until later in the week if Dodd and Shelby need more time to work through potential problems.

Senators from both sides agreed the linchpin for Tuesday’s breakthrough was the different environment caused by last month’s collapse of Bear Stearns, the unprecedented role the Federal Reserve played by stepping into it and Monday’s resignation of Alphonso Jackson, the Bush administration’s secretary of Housing and Urban Development.

“What happened two weeks ago, when the Fed intervened with Bear Stearns, then people said, ‘Gosh, the Fed has intervened. What’s Congress done?’” Shelby said.

Democratic Whip Dick Durbin of Illinois said, “Our Republican friends went home for Easter, looked around at all the ‘For Sale’ signs, and decided they needed to reconsider their position.”

McConnell, who started the day by leading a GOP press conference criticizing the Democratic-written bill, at the joint press conference with Reid said he shared his counterpart’s optimism.

{mospagebreak}“We’re not just going to have a check-the-box exercise, we’re going to legislate on a bipartisan basis,” McConnell said. “This gives us a maximum chance of demonstrating to the American public that we can deal with important issues, on a bipartisan basis, quickly.”

Amendments to any bill crafted by Dodd and Shelby are expected, both Democrats and Republicans said, raising the possibility that Tuesday’s bipartisanship could quickly erode later in the week. Both Reid and Durbin said they expect an up-or-down vote on the bill’s bankruptcy provisions, which had stalled movement on the legislation for more than a month.

Democrats had pushed for a five-part package of homeowner counseling assistance, increased refinancing options, more funds for communities dealing with foreclosed homes, a revised loan process and the rewriting of bankruptcy laws to allow judges to revise mortgage terms.

{mosads}Republicans have preferred a package providing tax breaks and credits, updating Truth-In-Lending laws, reforming the Federal Housing Administration and providing $10 billion in bond authority for refinancing subprime mortgages.

Shelby avoided specifics, saying only that he and Dodd would try to work out an agreement.

“We’re trying to see what we can agree on, what is palatable that we can get through the Senate and will be a substantive message to the American people and to the homeowners and the financial folks,” he said.

The announcement came as senators were voting 94-1 to invoke cloture and proceed to the housing bill — a critical test, since it was just such a procedural vote that tripped up a first housing bill in a 48-46 vote on Feb. 28. Sen. Jim Bunning (R-Ky.) cast the lone dissenting vote.

The bill’s bankruptcy provisions have mainly been to blame for the impasse between the two parties, as Republicans charge they would force an interest rate increase that would harm more than 6 million Americans.

“Their legislation raises the risk involved in mortgage lending and would lead to higher interest rates and higher monthly mortgage payments for American families,” said Senate Republican Conference Chairman Lamar Alexander (Tenn.).