Democrats and administration stake claims on best way to stabilize housing, as Senate nears vote on $15B bill and House panel readies debate mortgage plan.

The effort to find a way out of the debacle is complicated by the blame shared by many players: lenders who had lax underwriting standards, investors and ratings agencies who failed to assess the real risk of subprime mortgages, brokers who pushed unconscionable loans on home buyers, regulators who failed to impose prudent standards and homeowners who took out loans they couldn't afford.

The proposal at the heart of Wednesday's hearing, from House Financial Services Chairman Barney Frank, D-Mass., would let the Federal Housing Administration (FHA) insure $300 billion in troubled loans if lenders voluntarily write them down to at least 85% of the homes' appraised value.

In testimony before the committee, Sheila Bair, chairman of the Federal Deposit Insurance Corp., gave the proposal high marks with some caveats about the risk the plan poses to taxpayers in her testimony.

Frank's proposal would go farther in expanding the FHA's reach than a similar White House proposal presented at the hearing by Brian Montgomery, assistant secretary for housing.

Like Frank, the administration's proposal would also encourage lenders to voluntarily write down a loan's principal in exchange for FHA insurance - which would cover the lender 100% if the loan goes south. But the requirements for borrowers would be different than they are under Frank's bill.

The White House plan marks the first time the administration has encouraged lenders to write down principal, something housing advocates have been calling for.

"I'm pleased to see that the Bush administration now agrees with that approach," Frank said, warning that anyone who doesn't think principal should be written down in some cases will have to contend with both him and the administration.

Senate likely to vote on bill today

Meanwhile, also on Wednesday the Senate is expected to vote on a $15 billion package that includes a tax break for homebuilders and other businesses, plus a new tax credit and deduction for homeowners and home buyers.

Critics on the left and right say the Senate legislation - drawn up after 24 hours of bipartisan negotiation last week - does more for homebuilders and other businesses than it does for homeowners. Even if it passes in the Senate, the bill faces an uncertain fate in the House, which is expected to craft its own bill.

The Bush administration gave the Senate legislation the thumbs down on Tuesday. "The bill would likely do more harm than good by bailing out lenders and speculators and passing on costs to other Americans who play by the rules and honor their mortgage debt obligations," said White House spokesperson Dana Perino.