White House drops veto threat on housing bill

The White House announced Wednesday morning that it will not veto housing legislation offering help to mortgage holders and the troubled mortgage giants Fannie Mae and Freddie Mac.

White House press secretary Dana Perino said Wednesday morning that Treasury Secretary Henry Paulson recommended to the president that he sign the bill because of the urgency required in offering help to beleagured mortgage giants Fannie Mae and Freddie Mac.

{mosads}Perino said that Paulson told the president he could not afford to wait "a month-and-a-half at best" to battle Congress in a veto fight, but the president continues to believe the $3.9 billion for the Community Development Bloc Grants (CDBG) included by the Congressional Black Caucus (CBC) is a "bail-out" for lenders.

"The president would not sign this bill if we had a lot of extra time on our hands, but we don't," Perino said, pointing to Congress' planned August recess.

Perino said the White House was confident it would win a veto fight with Congress, but Paulson recommended the president sign the bill in its current form because Paulson "believes he needs these authorities now."

The House is expected to vote on the housing measure later today. Rep. Barney Frank (D-Mass.) on Tuesday revealed the latest version of the bill, which included the $4 billion in grants opposed by the administration.

The Treasury Department would have temporary authority to extend an unlimited line of credit to the mortgage giants and to purchase equity in them. The Federal Reserve would have the power to consult with Fannie’s and Freddie’s regulator on capital levels and other matters that could pose a risk to the financial system.