WRAPUP 4-US Senate on course to vote Sat. on housing bill

Fri Jul 25, 2008 1:40am BST

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* U.S. Senate vote on housing bill seen Saturday

* Fannie, Freddie shares plunge, debt demand tightens

* 14 House Republicans ask Bush to reconsider on veto (Adds House Republican letter to Bush)

WASHINGTON, July 24 (Reuters) - The U.S. Senate was on course for a Saturday vote to approve a major housing market rescue bill with a lifeline for Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research) and bond market action on Thursday indicated investors in the two mortgage finance giants were encouraged.

But a broad sell-off in the stock market hit Fannie and Freddie shares hard on a day when weak real estate data and steep losses at another large bank underlined the severity of the worst U.S. housing slump since the Great Depression.

Bill Gross, chief investment officer of Pacific Investment Management Co, the world's biggest bond fund, said the housing bill -- expected to be signed into law soon -- was "the best way to begin the long journey back to normalcy."

A handful of Republicans in the Senate and the House of Representatives were still trying to block passage of the election-year measure, despite signals of bipartisan support.

Fourteen Republican House members sent a letter on Thursday to President George W. Bush asking him to reconsider his decision to withdraw a threat to veto the housing bill. Continued...