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Senate dispute stalls housing rescue plan

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Bloomberg News / July 25, 2008

WASHINGTON - A housing rescue package designed to shore up confidence in Fannie Mae and Freddie Mac and stem mortgage foreclosures stalled in the Senate yesterday after a lawmaker insisted on last-minute concessions.

Republican Senator Jim DeMint of South Carolina demanded a chance to amend the plan to curtail the mortgage firms' ability to lobby Congress. Senate Majority Leader Harry Reid rejected the demands, saying any changes would delay getting the plan to President Bush because the House would have to approve it again.

Senate Banking Committee chairman Christopher Dodd, a Connecticut Democrat, said the demands were blocking a final vote on the badly needed legislation - perhaps keeping the Senate in session until tomorrow.

DeMint said he wanted to ensure the lenders didn't use tax dollars that could come with the bailout plan to lobby Congress.

The House voted 272 to 152 Wednesday to approve the legislation, which would give Treasury Secretary Henry Paulson the power to inject capital into Fannie Mae and Freddie Mac and allow the government to insure refinanced home loans. The Treasury chief said the measure was critical to US financial market stability and persuaded Bush to drop a veto threat.

The bill also provides for a federal agency to insure up to $300 billion of refinanced mortgages for struggling homeowners.

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