Rescue plan hits opposition in Washington

WASHINGTON, July 16 (UPI) -- A plan to quickly restore confidence in the two largest U.S. mortgage companies has slowed amid bipartisan criticism, sources said.

The U.S. Treasury Department and the White House have lobbied to allow the government to extend loans and buy equity in the Federal Home Loan Mortgage Corp. and the Federal National Mortgage Association.

After earlier signals the plan would find enough support, critics of the plan spoke up Tuesday at a Senate hearing, The New York Times reported.

"I fear we're sitting on a financial powder keg," Sen. Richard Shelby, R-Ala., told Treasury Secretary Henry Paulson Jr., who testified on behalf of the plan.

"How is it that we can tell the taxpayers that there is no way you are going to be put on the hook here?" asked Sen. Robert Menendez, D-N.J.

Sen. Jim Bunning, R-Ky., referred to the plan as "socialism" and said "I will do everything I can to stop it."

Criticism of the plan came mostly from Republicans, who urged Democrats to study the plan before rushing to judgment, the Times reported.