(04-30) 04:00 PDT Washington —

The Democrats’ housing rescue plan is picking up converts among Republicans who are shrugging off White House objections after getting an earful from voters struggling to stave off foreclosure.

The GOP support is coming from regions hardest hit by the housing crisis, a sign that battle lines over how to address the mortgage meltdown are more geographic than partisan.

Rep. Steven LaTourette, an Ohio Republican, says housing officials in his area have warned him that “a ton” of his constituents have adjustable-rate mortgages that will reset to unaffordable rates this year or next.

Lawmakers who fail to work together on a solution will do so “at their peril,” said LaTourette, who is backing a plan by Rep. Barney Frank, D-Mass.

“This has the ability to keep people in their houses,” said LaTourette, a seven-term congressman who is facing a competitive re-election race.

As for President Bush’s opposition, he says Bush and his team are “just not thinking clearly on this.”

FHA loan help

The measure, sponsored by Frank, the Financial Services Committee chairman, would allow the Federal Housing Administration to take on up to $300 billion in refinanced loans for struggling homeowners.

The Depression-era mortgage insurer would have to relax its standards to let people with bad credit, a hefty debt load and a history of missing payments qualify for government-backed loans now restricted to financially stable borrowers.

Homeowners would have to show they could afford to make the new payments, and lenders would have to agree to take substantial losses on the existing loans so borrowers could refinance into cheaper, fixed-rate mortgages.

The vast majority of Republicans still side with Bush, whose top housing officials have said the plan would open the government to excessive risk. The administration backs a far narrower program that would loosen FHA standards but would be limited to borrowers with good credit, less debt and a history of making timely payments. That plan wouldn’t force lenders to take big losses on the distressed mortgages.

But Frank, known for reaching across party lines, has been working intensely to draw GOP support for his plan. His efforts appear to be paying off as the House possibly heads toward a vote on the bill next week.

Rep. Gary Miller, R-Diamond Bar (Los Angeles County), apologized profusely to Republicans on the Financial Services panel for his decision to break with them and support Frank’s bill.

“Politics is being set aside on my part. I’m a conservative. I really wish I could support my Republican colleagues on this,” Miller said as the committee began work on the measure last week. But he added, “I’m very concerned about the marketplace. I’m concerned about the economy. … People are suffering in this country.”

Aside from having the second-highest foreclosure rates, California has some of the highest housing prices in the country. Miller wants Congress to raise loan limits for the FHA and for Fannie Mae and Freddie Mac, the government-sponsored financiers and guarantors, to bring down interest rates on larger mortgages.

Frank has said the final housing package will include such steps.

Voluntary program

Republicans backing the measure say they’re cheered by certain elements included in the hopes of drawing bipartisan support. The program is voluntary, so no mortgage servicer would be forced to participate.

It lets the government share a hefty portion of the proceeds from any sale or refinancing to discourage homeowners from using the program to flip their houses for a profit on the government’s dime. And because the FHA would collect fees and premiums on the refinancing as well as sharing in any appreciation of the properties, Frank says the two-year program would cost only $3 billion to $6 billion.

It’s unclear how broad the GOP support will be, and whether it will extend to the Senate, where Chris Dodd, D-Conn., the Banking Committee chairman, is working on a similar plan. Frank’s bill is expected to get a final vote in his committee this week, after lawmakers consider dozens of mostly minor changes proposed by members of both parties.

Republicans are more united in their opposition to another piece of the Democrats’ housing package that is expected to be paired with Frank’s bill when the House considers it next week: sending $15 billion in loans and grants to states to buy and rehabilitate foreclosed properties. The Bush administration has indicated the president would veto that plan, but even it has some GOP advocates.

“These lawmakers are hearing from their mayors; they’re hearing from their state representatives; they’re hearing from their governors. There’s a real recognition at the state and local level that this is a problem that’s going to require some government intervention,” said Andrew Jakabovics, a housing analyst at the Center for American Progress.

“These guys are up for re-election, and they’re going to need to be able to face voters and say. ‘Look, we’ve done everything we can.’ “

(04-30) 03:54 PDT SINGAPORE, (AP) —

The economic engines of India and China will help keep Asia-Pacific economies on track amid a global slowdown, but a protracted U.S. slump and rising inflation pose possible hazards, a report said Wednesday.

The most significant threat to the region’s macroeconomic stability is inflation, in particular the recent surge in food and oil prices, according to the report by Standard & Poor’s Ratings Services.

“There are some visible threats to the region in the form of food and energy prices, which may adversely affect performance over the next couple of years,” said S&P Asia-Pacific chief economist, Subir Gokarn, according to a statement. The most important challenge facing regional policy makers was managing inflation while sustaining economic performance, Gokarn said.

The region’s economies are expected to grow more slowly this year and in 2009, although they will maintain a relatively fast pace on the back of strong regional drivers, the S&P report said.

China and India, two of the three largest economies and the fastest growing, will together continue to grow at about 8 percent or more over the next two years, it said.

“This momentum will help sustain a positive growth environment for Asia-Pacific as a whole,” S&P said. “The ability of the region’s economies to insulate themselves against a U.S. recession is enhanced by their ability to exploit the opportunities in the region through greater economic integration.”

Japan’s return to positive growth is another factor in the region’s resilience, although the economy is predicted to slow compared to the expansion rates of more than 2 percent in the past two years, the report said.

“Japan’s growth, in turn, reinforces the growth impulses in other countries in the region,” S&P said. The report forecasts Japan’s real gross domestic product to be above 1 percent this year and as much as 2.2 percent next year.

The report said that Asian economies were also more resilient because they have become less dependent on exports to the U.S. as recent efforts to expand regional integration start to bear fruit.

“Asian countries have been extremely active in entering into trade and broader commercial agreements, both within and outside the region,” the report said. “Fast-growing neighbors, particularly those whose growth is driven from within, offer enormous opportunities for all these countries Д and they are all trying their best to exploit those opportunities.”

S&P said, however, that sustained Asian growth depended on the U.S. recession being moderate and brief.

“A prolonged slump in the U.S. economy and the effect it will have on demand for imports, particularly of consumer goods from the region, will impact on wage incomes and investment activity in the region,” it said.

(04-30) 04:09 PDT BRUSSELS, Belgium (AP) —

The European Union has approved a $7.8 billion bailout for Germany’s regional WestLB bank, which was rattled by it’s exposure bad U.S. debt.

The German regional bank had a net loss of 1.6 billion euros ($2.5 billion) last year, significantly higher than predicted because of the crisis. The state of North Rhine-Westphalia joined the rescue bid to help cover payment defaults. The EU Commission approved the package to protect the bank from volatile markets Wednesday.

“The Commission’s investigation found that the risk shield constitutes state aid, but that the aid is in line with EU rules” since the aid is limited in time and is reversible,” the EU said in a statement.

In February, the German state, WestLB’s biggest shareholders, moved to shield it from further subprime risks, reaching a deal to provide 3 billion euros ($4.67 billion) to help cover its risks in a struggling securities portfolio.

That came after the Duesseldorf-based bank said its original risk shield of 2 billion euros ($3.11 billion) would not be enough.

“The Commission has demonstrated again that it can move very fast in order to provide legal certainty and financial stability to banks in difficulty,” said EU Competition Commissioner Neelie Kroes.

State aid programs must be vetted by the European Commission to make sure it does not impede the rules of fair competition with the 27-nation EU.

Germany now has to present the Commission with a full restructuring plan by Aug. 8.