Financial analysis firm Global Insight Inc. says that Congress’s concerns with the proposed plan to buyout illiquid mortgage-backed securities are important, but they likely aren’t fatal. The firm anticipates a revised version of the plan to be approved in relatively short order.

On Tuesday, U.S. Treasury secretary Henry Paulson and U.S. Federal Reserve chairman Ben Bernanke testified to the Senate Banking Committee regarding their response to the credit crisis and making their case for a move to a more comprehensive and fundamental approach. Both Paulson and Bernanke stressed the urgency of decisive action by the Congress, it notes.

However, Global Insight points out that “Congress has raised a number of concerns about how the plan would ultimately help beleaguered homeowners who may be facing foreclosure as well as the legal framework under which the new agency would operate so as to ensure arm’s-length transactions and adequate oversight of activities.

“These concerns are legitimate, but they are not deal breakers in and of themselves,” it concludes. “As such, the expected legislation from Congress is likely to include quid pro quos from financial institutions that sell distressed assets to provide more assistance in general to homeowners to restructure mortgages to make them more affordable.”

Additionally, it expects provisions to ensure oversight of the new agency; it raises the possibility that the government may take equity ownership in the financial institutions that sell distressed assets; and it may impose limits on executive compensation for the financial institutions that benefit.

“Congress is weighing in heavily on the proposal, as it should, and its legitimate concerns need to be addressed. While we do not see these concerns as insurmountable, they will require some careful crafting of the enabling legislation that may delay it for perhaps a week or so,” it concludes. “Ultimately, a more refined and comprehensive package is expected to be drafted and moved expeditiously forward through Congress, with passage expected within weeks.”