WASHINGTON – Even as the housing foreclosure crisis deepens, legislation to rescue homeowners and their lenders appears to be in significant political jeopardy.
The bill, which passed the House on Thursday, is becoming a casualty in a battle between the Bush administration, which says it opposes a bailout that would further encourage risky lending practices, and Democrats who say homeowner assistance is the way to contain damage to the broader economy.
Despite pledges by the White House and Democrats to work together, the bill produced partisan recriminations the day after it passed the House.
Democrats contend that the administration has sent mixed signals on whether it even wants a bill.
In a twist, Democrats sought to claim the support of Ben Bernanke, the Federal Reserve chairman, who this week called on Congress to help mortgage holders. That claim prompted a spokeswoman for Bernanke to deny that he was favoring any piece of legislation over another.
The Democrats also said that Treasury Secretary Henry M. Paulson Jr. appeared at first to encourage their bill, or at least not stand in its way. But Paulson's spokeswoman vehemently denied that.
The Bush administration said yesterday it would only support legislation that didn't require taxpayer money. The Congressional Budget Office estimates the House-passed measure would refinance as many as 500,000 homes over the next five years, at a cost to taxpayers of about $2.7 billion.
“Taxpayers shouldn't be taking on the risk of foreclosure,” said Tony Fratto, a White House spokesman.
The measure goes to the Senate, where it faces opposition among Republicans who have tapped into a broad wave of bailout resentment in states less affected by the crisis.
And the failure of the House to adopt it by a veto-proof margin is likely to further embolden Republicans in the Senate who have managed to block action, Democratic supporters of the measure said yesterday.
