"One is a free-market Republican from Wall Street with roots in the rural Midwest and a passion for bird-watching. The other is a rumpled, union-hall Democrat from Bayonne, N.J., who once famously described himself as "a left-handed, gay Jew."

About the only thing Treasury Secretary Henry M. Paulson Jr. and Massachusetts Rep. Barney Frank have in common is a Harvard degree. Yet the two have forged a remarkably productive relationship in the waning days of the Bush administration, steering complicated bills to overhaul two federal agencies through the Democratic House and shaping Washington's response to the nation's credit crisis.

Now that relationship is about to be tested. Frank, along with Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.), is championing Washington's most aggressive response to the rising tide of foreclosures that has dragged down the nation's economy -- a $300 billion plan to help thousands of distressed homeowners. The White House has declared its opposition to the bill. But Frank plans to tie it to some of the administration's top housing priorities in hope that Paulson will help him push the package across the president's desk.

"There would be a lot to urge the president to sign it," Frank said. "You may have a critical mass saying: 'Hey, guys, this is everything reasonable.' "

In an interview, Paulson refused to discuss Frank's bill beyond stating the administration's view that it is "a bit too prescriptive and goes too far in shifting some of the risk" of bad home loans from lenders to taxpayers. But he commended Frank, who chairs the House Financial Services Committee, as a market-savvy pragmatist who consistently "looks for areas of agreement because he wants to get things done."

"Barney, I think, is in many ways unique in that he really grasps" the forces behind the housing crisis and its reverberations in global markets, Paulson said. "I thought it was remarkable when I came down here to find someone who had not been in the private sector and the capital markets who understood the capital markets as well as Barney Frank did."

Such praise may seem surprising for one of the most liberal lawmakers in Washington, a man who was the focus of Republican attacks during the 2006 campaign. With Democrats poised to take control of Congress, Vice President Cheney warned that Frank could become a powerful committee chairman, and "I don't need to tell you what kind of legislation would come." Rep. John Hostettler, an embattled Indiana Republican, ran a radio ad charging that a Democratic takeover would "put in motion [a] radical plan to advance the homosexual agenda, led by Barney Frank," Washington's first openly gay lawmaker.

Two years later, Hostettler is gone, Cheney is on his way out and Barney Frank has hardly lived up to the hype. The investment banks, mortgage lenders and other powerful industries subject to his committee's scrutiny give him mostly glowing reviews.

"He's become a good chairman," said Rick Lazio, a former Republican representative from New York who worked on housing issues with Frank and is now a managing director at J.P. Morgan Chase. "You'd have to give him pretty unreserved respect for the way he has managed that committee. He hasn't veered off into crazy land. In fact, he has been responsible and constructive and inclusive."

Frank also has developed a good working relationship with the Bush administration, a task made easier, Frank said, by Paulson's decision in the spring of 2006 to leave his post as Goldman Sachs chairman and become Bush's third Treasury secretary.

Paulson has close relationships with many Democrats in both chambers, including House Speaker Nancy Pelosi and Senate Majority Leader Harry M. Reid. But he won Frank's special gratitude last summer when, at Frank's request, Paulson appealed to Chinese Vice Premier Wu Yi to release one of Frank's constituents. Pro-democracy activist Yang Jianli was quickly freed after spending five years and four months in Chinese prisons.

Paulson is "a transactional kind of guy. He makes deals," Frank said. "He is very smart. Very pragmatic. And reality-driven. And that's what has enabled us to work together."

Frank's first collaboration with Paulson came soon after the 2006 election, just as problems in the subprime mortgage market were becoming apparent. Paulson was paying courtesy calls on the new Democratic leaders. As he sat in Frank's office, Frank recalled, "we talked about things and it became clear that we had a common interest in a good GSE bill."

Until then, Frank and the Bush administration had been far apart on a proposal to reform the regulator that oversees mortgage financiers Fannie Mae and Freddie Mac, often referred to as GSEs, or government-sponsored entities. Frank wanted to restrict the government agency's control over the firms' mortgage portfolios and capital requirements, which provide a financial cushion. Treasury wanted a more powerful regulator and had previously opposed Frank's ideas.

"There was some skepticism among ideological conservatives in the administration" about the role of the GSEs, Frank said. But "Paulson, coming from the markets, understood how important they are."

After weeks of meetings, they reached a compromise and the bill passed the House in May 2007.

Frank and Paulson also worked together on legislation to modernize the Federal Housing Administration, a division of the Department of Housing and Urban Development that is the nation's largest issuer of mortgage insurance. That bill passed the House in June.

For months, the bills stalled in the Senate. But last month, public anxiety over the darkening economic picture spurred a fresh round of negotiations. The Senate approved a version of the FHA bill; talks are continuing over GSE regulation. Both measures are aimed at unfreezing the mortgage markets by providing financial support to lenders and by offering federal mortgage insurance to a wider range of borrowers.

Meanwhile, Frank has emerged as a reliable supporter of some of Paulson's most controversial initiatives, including a plan to dramatically reshape the regulation of financial institutions. And Frank defended the decision, in which Paulson played a key role, to rescue the troubled investment giant Bear Stearns.

Along with other congressional leaders, Frank has served as a sounding board for Paulson as the subprime mortgage market fell into crisis and the broader economy began to sag. On Jan. 2, Paulson called Frank in Maine, where he was vacationing, to report that the economy was doing worse than he had previously thought.

"I talked to members and told them the economy was going down and got their views," Paulson said. "And Barney was definitely one of the early people."

Two days later, President Bush announced that he was considering a plan to stimulate the economy through government spending. Paulson helped negotiate congressional passage and within six weeks Bush was signing the bill.

Now Frank hopes Paulson can help forge a compromise on his housing plan, which would make federal mortgage insurance available to even the riskiest borrowers in the belief that lenders will forgive a portion of their debt and help them keep their homes.

HUD has already adopted a more cautious version of the proposal. Two weeks ago, when HUD issued a letter declaring that the administration "strongly opposes" further action along the lines of Frank's plan, Frank said he got a reassuring call from Treasury. That same day, Paulson told Reuters: "We are behind the objectives. We like some parts of it better than others and we have not issued a veto threat."

Frank said he has since discussed the matter with Paulson. The bill that the House will consider this week contains several changes aimed at addressing administration concerns.

"You can start from different ideological perspectives," Frank said. "But there is some point you realize that there is enough in common so that you have a relationship that can be mutually beneficial -- and, more importantly, helpful to what I think the country should be doing."" (Lori Montgomery and David Cho, The Washington Post, May 5, 2008)