White House threatens veto of foreclosure rescue

Administration officials said they oppose the inclusion of $4 billion in the measure to help states buy and rehabilitate foreclosed properties, and a plan to have government-sponsored mortgage giants Fannie Mae and Freddie Mac pay for the rescue.

They announced those and other objections as two GOP senators said they would try to block the package until a committee can investigate how much Countrywide Financial Corp. and other lenders stand to gain from it.

House and Senate Republicans are voicing reservations about the bill in light of allegations that Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., one of its architects, and Senate Budget Committee Chairman Kent Conrad, D-N.D., got cut-rate home loans through a VIP program at Countrywide, a leading subprime lender at the center of the mortgage meltdown.

Both said they neither sought nor knew about the special treatment.

"This bill has come together in such a way as to raise questions all over this country that we need to answer before we move ahead," said Sen. Jim DeMint, R-S.C.

The Senate rejected, 70-11, the move by DeMint and Sen. Jim Bunning, R-Ky., to send the housing package back to Dodd's panel, which would have essentially killed the measure.

The election-year bill, which could help hundreds of thousands of struggling homeowners, appeared to be drawing wide bipartisan backing.

The Senate overwhelmingly defeated two amendments by Sen. Kit Bond, R-Mo., that would have derailed the measure. Both failed on margins large enough to override a promised veto, suggesting the plan could survive a showdown with President Bush.

Dodd and Sen. Richard C. Shelby of Alabama, the senior Banking Republican, said the veto threat was "disappointing," given that their compromise plan includes several elements Bush has demanded, and said they hoped the White House would reconsider.