There may be some second thoughts, but the huge Housing and Economic Recovery Act of 2008 — as it eventually came to be called — is now the law of the land. President Bush showed his disdain for much of the law by foregoing any formal ceremony and signing the measure at 7:00 a.m. in the presence of the Treasury Secretary and some economic advisors. “It’s good that the Democratic Congress has finally acted,” a deputy press secretary groused about the bill Bush had promised to veto a week or so before he signed it.

Bush relented in his opposition after the bill became the vehicle for the Treasury’s plan to save Fannie Mae and Freddie Mac by extending a line of credit to the pair and allowing the Treasury to buy their shares in an emergency. The new law also provides more oversight for the companies that own or guarantee nearly half the nation’s $12 trillion in home mortgage debt.

Bill Seen as Necessary, Not Popular

Conservative Republicans, who had worked hard to block the bill before the Fannie Mae/Freddie Mac crisis rendered their efforts hopeless, had the strongest objections to the measure, and the Fannie/Freddie provisions caused them the most pain. “This bill has moral hazard written all over it,” declared Rep. Jeff Flake (R-Ariz.). “We are pretending to chain a monster here, and we are, instead, letting that monster loose.”

Another prominent conservative, Sen. Charles Grassley (R-Iowa), declared, “This bill has fallen prey to the special interests on Wall Street and K Street at an unjustifiable expense to taxpayers and homeowners on Main Street.”

The former head of the Government Accountability Office, David Walker, declared in an interview with The New York Times that President Bush should not have signed the bill. “Providing authority to the Secretary of the Treasury to extend credit [to Fannie and Freddie] or to buy stock . . . will end up costing taxpayers tens of billions of dollars,” he warned. Previous bailouts, such as the Chrysler one in 1980, had allowed the government to profit in the end. “The way this is structured,” Walker warned, “It’s only a matter of how much the taxpayers are going to loose.”

However, more liberal legislators were not exactly dancing in the aisles. Rep. Barney Frank (D-Mass.), who worked as hard as anyone to enact the measure, called it “the best response we could make” under the circumstances. “It cannot solve all of these deep rooted problems [in the housing and mortgage markets] immediately,” he added, “but the bill does represent a mutually reinforcing set of approaches that will begin to diminish the problem.”

Rep. Melvin Watt (D-N.C.) was among those who were happy with the bill. “This could well be the most important legislation to impact housing, responsible credit, and economic recovery that we have passed in the 16 years I have served in Congress,” he said. However, even he was not happy with the whole process. “I wish we hadn’t needed a crisis to get to this point, but unfortunately, necessity is more of a driving force than foresight.”

Perhaps the most interesting lesson in this process is how quickly things can change. A politically polarized Congress that seemed unable to deal with any significant issue abruptly put its differences aside and — for better or for worse — rewrote the rules for huge segments of the mortgage and financial markets in one abrupt coup.