WASHINGTON — The White House on Monday continued to send mixed signals about its support for a housing package due for a vote this week, reiterating a veto threat against the legislation despite the inclusion of changes sought by Treasury Secretary Henry Paulson.
Mr. Paulson asked Congress last week to use the legislation to add emergency measures that would let the Treasury buy unlimited amounts of debt and equity in the government-sponsored enterprises and give the Federal Reserve Board a say in their regulation.
Banking committee leaders in both chambers appeared to be moving closer to a deal on Friday, with Sen. Richard Shelby, the Senate Banking Committee's top Republican, showing signs he was ready to compromise.
Despite the progress, however, White House spokeswoman Dana Perino said Monday that the administration remains ready to veto the bill if it includes a separate provision that would allocate $4 billion to let state and local governments buy foreclosed properties and resell them.
"Our position hasn't changed, but we've continued to work with them," she told reporters.
Lawmakers battered back the White House's attack. "This is a disappointing response," said Senate Banking Committee Chairman Chris Dodd. "We hope the White House will reconsider."
The mild threat was watered down somewhat by Ms. Perino, who said Mr. Paulson thinks Congress recognizes "the urgency of getting this done."
Observers expect President Bush to sign the bill.
Work continues on finishing up the bill's details and creating a draft that will be supported by both House and Senate.
Staffers for House Financial Services Committee Chairman Barney Frank, Sen. Dodd, and Sen. Shelby continued to work separately over the weekend and held another group meeting late Monday along with the staff for the House panel's top Republican, Rep. Spencer Bachus. More meetings are scheduled for today.
Though no final deal has yet been reached, lawmakers on both sides have shown willingness to compromise in recent days.
In an interview late Friday Sen. Shelby said he could be persuaded to give ground to Rep. Frank's interest in raising the calculation of the limits for the size of loan the GSEs could buy.
"I have never been a big advocate of pushing the loan limit up because when you push the loan limit up you put more risk out there," Sen. Shelby said. "But a lot of people have, and if that's part of the deal, and if we've got a strong regulator, and they can approve products and deal with capital requirements, as we need over the GSEs, with consulting roles for the Treasury and the Fed, that will be one heck of a big improvement."
The maximum loan limit in the House bill is $729,750, but the Senate bill would cap GSE loan purchases at $625,500.
Rep. Frank has also eased off his push to delay for six months the effective date of the GSE regulations. After meeting with Mr. Paulson Thursday, Rep. Frank told reporters that delaying the effective date was no longer an issue in part because of issuing emergency authority for the Treasury to buy an equity stake in the GSEs, extend its line of credit, and authorize the Federal Reserve Board to have a consultative role in GSE oversight. "The effective date issue frankly has … been swept aside," he said.
Lawmakers are still grappling with crucial details like how to rein in the Treasury's authority to curtail taxpayer risk and keep markets healthy. The Congressional Budget Office is expected to estimate the bill's cost, and approval of additional authority for the Treasury could cause that number to go well into the tens of billions of dollars, some congressional staff members predicted.
Sen. Shelby and Rep. Frank have discussed forcing any Treasury investment in the GSEs to remain under the national debt limit. Lawmakers are considering raising that limit by as much as $800 billion to $10.1 trillion, however.
Rep. Frank had also suggested delaying GSE dividend payments, giving any Treasury equity stake senior preferred status, and allowing the GSE regulator to approve compensation.
Ultimately, Sen. Shelby sounded positive about reaching a deal. "We have a good chance to get a bill done right now," he said.
