WASHINGTON (Reuters) - U.S. Senate Majority Leader Harry Reid urged President George W. Bush on Wednesday to reject a veto threat by his advisers and work with Democrats to pass a bill to curb rising home foreclosures by changing bankruptcy law.
By Thomas Ferraro
WASHINGTON (Reuters) - U.S. Senate Majority Leader Harry Reid urged President George W. Bush on Wednesday to reject a veto threat by his advisers and work with Democrats to pass a bill to curb rising home foreclosures by changing bankruptcy law.
"I write to express my disappointment upon learning that your senior advisors recommend that you veto the 2008 Foreclosure Prevention Act," Reid said in a letter to Bush.
The Nevada Democrat urged the president to "reject their advice and work with us to enact legislation that will address the housing crisis facing millions of American families."
!ADVERTISEMENT!The letter amounted to an abrupt about face for Reid.
Just hours earlier, Reid told a news conference, "I have no expectation of reaching any agreement with the White House."
"I have tried for seven years" on a host of issues and repeatedly failed, Reid said. "So we are going to do what we think is best for the country."
The Senate could turn to the housing bill as early as Thursday. But it must first overcome a possible Republican procedural hurdle that would take 60 votes to clear.
"I think we are going to get more than 60 votes," said Reid, whose Democrats control the Senate, 51-49.
But Reid said he was uncertain if he could get 67 votes in the 100-member Senate to override a Bush veto, likely prompting him later in the day to reach out to the Republican president.
The White House on Tuesday threatened to veto the bill, which is the latest congressional response to the subprime mortgage crisis that threatens to tip the economy into recession and push many Americans out of their homes.
The measure would let bankruptcy judges erase some mortgage debt and provide billions of dollars to rehabilitate abandoned properties. The White House said the bill was too costly and an unacceptable bailout for lenders and speculators.
Reid said he opposed dropping the controversial provision to modify present bankruptcy law by letting bankruptcy judges erase some mortgage debt. He said the bill has drawn support from community banks and credit unions.
However, "the big banks, there is nothing we can do to get them to help us," Reid said. "This bankruptcy provision is fair."
In his letter to Bush, Reid noted that his advisers had objected to the bankruptcy provision.
"Current law allows bankruptcy judges to assist individuals who are unable to fully meet almost any type of obligation -- including loans for luxury yachts or vacation homes -- yet it prohibits similar assistance for those struggling to stay in their own homes," Reid said.
"That makes no sense, particularly during an economic crisis that avoiding foreclosures could help mitigate," Reid added.
In the House of Representatives, another key Democratic lawmaker is crafting a plan to provide about $15 billion to help a million troubled borrowers, an aide said on Wednesday.
House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, is developing the proposal which would involve the Federal Housing Administration and government purchases of distressed mortgages.
The five-year plan would apply only to owner-occupied homes and exclude investor-owned and second homes.
Frank is also working on another plan to provide as much as $20 billion in grants and loans to buy foreclosed or abandoned homes at or below market value.
(Additional reporting by John Poirier and Kevin Drawbaugh)
(Editing by Richard Chang and Braden Reddall)
