Correction Appended

The Bush administration’s capitulation on the unprecedented housing bailout package Wednesday left House Republican leaders and conservatives at a loss.

GOP leaders had been whipping against the bill Tuesday and told reporters they had enough votes to sustain Bush’s repeatedly threatened veto, restated yet again as recently as Monday. But then they got the call Tuesday night that the White House was caving.

“We got nothing,” said one disappointed GOP lawmaker.

The veto threat centered on a Democratic proposal to add a $4 billion fund for local governments to buy foreclosed properties. The administration blamed the urgency of the housing crisis for going back on its veto threats.

“We don’t think that waiting until mid-September at best would be prudent,” said Bush spokeswoman Dana Perino, warning of the risks of a drawn-out veto fight.

But that didn’t satisfy Republican lawmakers, who thought Democrats would have compromised before going home for the August recess if Bush had stuck to his guns.

“I’m deeply disappointed the White House will sign this bill,” said House Minority Leader John Boehner (R-Ohio), who ripped it as a “multibillion-dollar bailout for scam artists and speculative lenders at the expense of American taxpayers.”

Republicans were prepared to back a bailout of Fannie Mae and Freddie Mac, but they objected to Democratic plans for expanding their missions to underwriting larger mortgages, as well as a new tax that would fund an affordable-housing initiative they labeled a slush fund. Conservatives also wanted to limit Fannie Mae’s and Freddie Mac’s influence in the future.

The bill passed 272-152, with Republicans maintaining a veto-sustaining minority even after Bush backed down.

“I’ve regretfully concluded that Fannie and Freddie are clearly too big to fail today, but I will not support a legislative package that will not ensure that we are not back here in one, two or three years,” Republican Study Committee Chairman Jeb Hensarling (Texas) said.

“I think panic is driving it,” said Rep. Paul Ryan (R-Wis.), ranking member on the Budget Committee, referring to the White House’s sudden acquiescence. “They are just so concerned about a financial meltdown that they’ll take anything.”

Ryan said the bailout package was stunning in scope, with an $800 billion debt-limit increase attached, particularly given that the legislation would make it easier for the troubled mortgage giants to expand their reach.

“We had an opportunity to rein in [Fannie and Freddie] this week and we missed it,” Ryan said. “We are giving them a shovel to help them dig deeper.”

Ryan blamed Fannie and Freddie’s political muscle.

“We’ve got a Congress run by Fannie and Freddie apologists, and we may well have an administration willing to turn a blind eye, which may well lead to a bigger taxpayer bailout in the future.”

Rep. Tom Price (R-Ga.) also expressed disappointment in the White House. “If the American people want Western European socialism, this is a step in that direction.”

Price predicted Members will “rue the day” they voted for the package.

The split between the White House and House Republicans has been widening all year. After holding the line on a series of vetoes in 2007, party rank and file recently balked at backing up the president’s vetoes on the farm bill and the fix for Medicare doctor payments. A mere 37 Republicans voted against a highway spending bill Wednesday that Bush threatened to veto.

The housing deal gives Democratic leaders a huge political victory heading into the August break, with Financial Services Chairman Barney Frank (D-Mass.) and Speaker Nancy Pelosi (D-Calif.) exerting their newfound leverage over the housing crisis to maximum effect.

Frank dismissed Republican criticism, arguing that the new authority given to the Treasury secretary to invest in Fannie and Freddie would likely not be needed and would likely not cost nearly as much as predicted by conservatives.

And he got in a few digs about the split between Congressional Republicans and the White House, calling it “a classic situation of where the right hand doesn’t know what the far right hand is doing.”

Frank noted that the Congressional Budget Office set a $25 billion budget score on the package, a far cry from the $5 trillion in loans backed by the two mortgage giants. Frank also pointed to a new regulatory framework overseeing the companies and said nothing in the bill guarantees Fannie and Freddie’s debt.

“How does $25 billion become $5 trillion? By fantasy. If every single mortgage paid nothing, then you would have $5 trillion, but it wouldn’t be ours.”

Correction: July 25, 2008

The article misquoted House Financial Services Chairman Barney Frank (D-Mass.). Frank actually referred to a split between the White House and Congressional Republicans as “a classic situation of where the right hand doesn’t know what the far right hand is doing.”