The deal, if finalized later Thursday morning, could breathe new life into congressional efforts to stabilize the rocky housing sector. The bill would also overhaul supervision of mortgage-finance giants Fannie Mae, Freddie Mac, and the 12 Federal Home Loan Banks, an issue that has been a priority for the Bush administration for several years. If the fragile talks collapse, it would become extremely difficult for Congress to move forward with any housing policy package.
Staff members on the Senate Banking Committee have discussed legislation for weeks, and as recently as last week talks appeared to be faltering. But staff members for Senate Banking Committee Chairman Christopher Dodd (D., Conn.) and the panel's ranking Republican, Richard Shelby of Alabama, broke major ground Wednesday and continued talking until 2 a.m. Thursday.
The lawmakers have largely agreed on how to create new oversight for Fannie Mae and Freddie Mac, an area where lawmakers have been unable to find bipartisan agreement for several years.
One unresolved issue is how to fund the expanded government program to insure refinanced mortgages for distressed homeowners. Sen. Shelby has pushed to have the program funded, at least in part, by Fannie Mae and Freddie Mac.
The House of Representatives passed a housing package last week that is similar to the one Senate lawmakers are considering, though the White House has threatened to veto it. Sen. Dodd has enough votes on the committee to narrowly pass legislation through to the Senate floor without Republican support, but he said last week that passing a partisan bill could prevent the measure from ever becoming law because Senate Republicans could easily block it.