Perfect Storm Forces Democrats to Nix Housing Vote

Different wings of the House Democratic caucus Thursday forced House Speaker Nancy Pelosi, D-Calif., to nix a scheduled vote on a bill designed to resuscitate the flailing housing industry.

Lawmakers from the moderate, business-minded New Democrat Coalition and fiscally-conservative Blue Dog Coalition helped force the delay until next Tuesday.

"They weren't confident they had the votes today," said a senior House aide.

Rep. Walt Minnick, D-Idaho, a freshman member of the Blue Dog Coalition was more direct.

"I think the reason the bill is being pulled is that it might not pass," he said.

Another House Democrat who spoke on the record on the condition he not be identified agreed with Minnick's assessment.

"There was enough concern expressed that (the bill) was derailed," the Democrat said. "It was better to have a discussion and get people on board I think."

The banking industry applied significant pressure on the New Democrats and Blue Dogs to vote against the bill which would let judges slash interest rates and principal owed by debt-ridden homeowners.

"We thought that the language was a little loose and needed tightening up," said Rep. Allen Boyd, D-Fla., a leading figure in the Blue Dog Caucus. Boyd added that the bill needed to ripen in the coming days to gain support.

One issue of contention was how the legislation could make bankruptcy a more palatable option for troubled homeowners. Advocates for the plan argued privately that an increase in bankruptcies might be one of the only ways to get the attention of lenders to modify rates for struggling homeowners.

Rep. Ellen Tauscher, D-Calif., the head of the New Democrat Coalition, worries the plan doesn't do enough to help average homeowners who are having trouble meeting their monthly mortgage payments.

"Right now there is a disconnect between the services and the banks are actually offering people and what we consider to be sustainable loan modifications that will stop these foreclosures and people back in their homes," said Tauscher.

In addition, many Democrats wanted to limit the scope of the bill to apply only to current loans. Banks preferred to narrow that focus to only sub prime or so-called exotic loans.

Some lawmakers were rattled at a news report that indicated Senate Majority Whip Dick Durbin, D-Ill., might push for the sub-prime option.

"I'm willing to restrict this ... to sub prime mortgages," Durbin is quoted as saying in today's edition of American Banker.

In addition, other lawmakers worried that the Senate could pirate the Houses version of the legislation. They indicated they were frustrated with the Senate's tendency to big-foot what the House approves.

"We might change it, of course," Durbin told American Banker.

Durbin spent some of Wednesday night speaking with House members to try to quell their fears about the bill.

He told reporters Thursday that his comments to American Banker had been taken "the wrong way" and tried to soften his statements about the sub-prime option.

"That is not an issue at this point, because, quite frankly, there are that many mortgages left of a subprime nature," Durbin said.

Pelosi said the postponement of a vote until next week was necessary to give the bill more context. She asked Housing and Urban Development Secretary Shaun Donovan to brief House Democrats Monday night on what the Obama administration wants from the bill. Pelosi said that would give skeptical Democrats "a fuller picture of the timing of some of the initiatives that the administration has announced on housing."

Tauscher welcomed the timeout.

"What we are looking for is more muscle on the bones of this program," Tauscher said. "We need to know exactly how it is going to work and who is going to qualify."

Rep. Dan Maffei, D-N.Y., said that lots of lawmakers had no idea what was in the product they were about to vote on because of overnight modifications.

"A lot of stuff got done in the last 24 hours," said Maffei. He said that one lawmaker argued against one of the bills provisions in a Democratic caucus meeting without realizing leadership had already addressed his concern.

But another Blue Dog Democrat who declined to be quoted on the record suggested that the real problem was with who wrote the bill.

Most of the committee chairs skew a certain direction said the lawmaker, indicating that liberals in the Democratic caucus penned the legislation, leaving conservative and moderate voices out of the process.

Meantime, Republicans used the pause as an opportunity to rip the package.

"Clearly the Blue Dogs realized something today that Pelosi and (Financial Services) Chairman Barney Frank can't admit: this was really, really bad policy," said Brad Dayspring, a spokesman for House Minority Whip Eric Cantor, R-Va.

FOX News' Mosheh Oinounou contributed to this report.