The U.S. House Wednesday approved a housing bill that puts the federal government squarely behind home lending giants Fannie Mae (FNM) and Freddie Mac (FRE). The bill passed by a vote of 272 to 151.

Fannie and Freddie, which are known as Government Sponsored Enterprises or GSEs, either hold or back about $5 trillion in mortgage debt - roughly half of the total outstanding home loans in the United States.

Although Wednesday's bill was negotiated between the White House and bipartisan groups in both the House and Senate, a number of House Republicans leveled heated rhetoric in opposition to the measure.

Republican concerns crystallized around the idea that taxpayers might be put in the position of bailing out irresponsible investment decisions or helping to support speculators in the housing market. Meanwhile, Democrats underlined the fact that the housing bill is the latest in a line of measures taken by the government to support the housing market and improve the .

Neither Fannie nor Freddie deal directly with homeowners, instead buying loans from banks and other mortgage lenders. Still, the subprime lending crisis has fueled fears about the solvency of the lending giants and publicly traded stocks in the two companies have fallen sharply in recent weeks.

The fears prompted the Federal Reserve and Treasury Department to take steps to backstop Fannie and Freddie temporarily. In addition, Treasury Secretary Henry Paulson called for swift congressional action to extend his authority to support and regulate the GSEs.

The House bill would allow the Treasury Department to extend existing lines of credit to Fannie and Freddie for 18 months and provides for a new regulator to oversee the companies. The bill also calls for restrictions on executive salaries and dividends to shareholders until taxpayer funds are paid back.

In addition, the measure raises to $625,500 the amount of loans the companies can underwrite, according to a fact sheet put out by the House Financial Services Committee.

In speaking out against the bill during Wednesday's debate on the House floor, Rep. John Boehner, R-Ohio, the Republican leader in the House, said he wished that he could support the bill but that it contained too many risky provisions for him to support.

The bill puts taxpayers "on the hook for billions of dollars" to bail out "scam artists, speculators and banks that made bad loans," Boehner said. "The worst loans held by financial institutions will be taken in by the FHA [Federal Housing Authority] and who's going to pay the bill but the American taxpayer."

Boehner added that allowing Fannie Mae and Freddie Mac to remain private companies that offer products that are explicitly supported by the federal government was a "recipe for disaster."

Similarly, Rep. Jeb Hensarling, D-Texas, the chairman of the Republican Study Committee, an organization of more than 100 of the most conservative Republicans, lambasted the housing measure for allowing Fannie Mae's and Freddie Mac's executives to "privatize their profits and socialize their losses."

Repeating a refrain he used last week during Federal Reserve Chairman Ben Bernanke's testimony before the House Financial Services Committee, Hensarling said the GSEs' executives had manipulated profits to award themselves bonuses by "cooking the books."

Meanwhile, Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee and one of the chief architects of the bill, objected vehemently to Republicans, including Hensarling, who talked about a $5 trillion risk.

Frank cited a Congressional Budget Office report that there was a better than 50 percent chance that no federal funds would be needed to support Fannie and Freddie, and if they were it would likely cost about $25 billion over two years.

"How did $25 billion become $5 trillion? It's fantasy," Frank said. "This is a $25 billion standby authority to prevent terrible economic damage."

Frank also decried other aspects of the Republican rhetoric as "simply inaccurate and misleading," noting that everything in the bill other than the emergency support for Fannie Mae and Freddie Mac had been debated and voted on in previous House bills.

"The amount of misinformation here is enormous," he said.

Citing President Bush's decision Wednesday to lift a veto threat on the bill, Frank said the continual congressional opposition was a case of "the right hand not knowing what the far right hand is doing" - suggesting that conservatives are not in agreement about combating the measure.

Other House Democrats were as effusive in their praise of the measure as some Republicans were skeptical.

Rep. Gregory Meeks, D-NY, said the measure was "probably the most important bill we're going to pass in this 110th Congressional Session."

"A lot of the things in this bill go to the people of the United States, the taxpayers," he said. "It makes sure individuals keep their homes. It makes sure individuals receive financial literacy … and unscrupulous lenders will be wiped off the map."

Likewise Rep. Nydia Velazquez, D-NY, lauded the efforts of her colleagues in bringing the legislation forward quickly. "The time to act is now," she said, adding that the bill "protects a basic need of millions of Americans: affordable housing" adding that it "will restore investors confidence in the housing financial market."

The White House had threatened to veto the measure out of concern about community development block grants to help communities buy and rehabilitate foreclosed properties, but that objection was waived Wednesday at the urging of Treasury Secretary Henry Paulson.

"Given that the housing legislation is so essential right now, and that we need it promptly, the President agreed to accept Secretary Paulson's recommendation that it was more important to accept the bill in this form so that we could get the housing reforms in the form of the GSEs, and to go ahead and sign the bill, even though it has the CDBG money in it," Perino said at a White House press briefing.

For comments and feedback contact: editorial@rttnews.com