Partisan rancor behind a housing rescue bill

Wonder why it seems to be taking so long for Congress to agree on a housing rescue bill that most can live with? Not surprisingly, the fact that it's an election year has made the politics even more complicated. From a CNNMoney.com story:

The momentum behind congressional efforts to let the government offer more aid to struggling homeowners has hit stiff resistance...

The wild-card: it's an election year. Republicans who hail from states with big subprime problems could be on the hot seat with constituents if the housing picture doesn't improve and Congress lets the bill die.

The full Senate is not expected to address the housing issue before early June.

Dodd's bill would let the Federal Housing Administration back mortgages of at-risk borrowers if lenders voluntarily write them down to an affordable level, a proposal similar to one passed by the House last week.

Republicans have said the plan amounts to a bailout that would put taxpayer dollars at risk and help lenders and borrowers who took imprudent risks.

Democrats counter by saying that the cost of the FHA plan - the House's version is estimated at $1.7 billion - is not a big price to pay considering that the Federal Reserve is backing JPMorgan Chase's purchase of Bear Stearns with $29 billion to curb systemic risk on Wall Street. They also contend that the point of the FHA proposal is not just to help individual homeowners but to prevent a rash of foreclosures in financially hurting communities, where home values and property taxes are already taking a hit.

And presumptive Republican presidential nominee John McCain has proposed an FHA rescue plan that is similar in parts to Dodd's proposal...

Another sticking point in the negotiations over Dodd's bill is a measure that would provide for stricter oversight of the two biggest players in the mortgage market - Fannie Mae and Freddie Mac. The two government-sponsored enterprises guarantee the purchase and sale of home mortgages in the secondary market. Both have experienced accounting scandals in the past and both saw steep first-quarter losses.

Key Republicans, such as the Banking Committee's ranking member, Richard Shelby, R-Ala., have been campaigning for more stringent safeguards than Dodd's bill provides. In particular, Shelby wants the agencies to hold a bigger financial cushion in reserve to protect them during housing market downturns and to allow their regulator more latitude in changing those capital requirements as the regulator sees fit...

Lawmakers are under pressure to act quickly. They have little more than 5 legislative weeks left before they break for the July 4 recess. After that, political analysts say, the focus will shift solely to the elections and most legislative business will grind to a halt.