Two Key Dems Throw Cold Water On Bankruptcy Bill

Sen. Dick Durbin announced Monday night that after weeks of negotiations between Senate Democrats and the financial industry, a compromise had been reached on bankruptcy legislation -- but it remained to be seen whether that compromise would win 60 votes.

On Tuesday, a key Democrat came out against the compromise bill, which would allow judges in certain circumstances to modify mortgage terms -- a process known as cramdown. Meanwhile, a second crucial Democratic vote said that he doubted the bill had enough support for his vote to decide it one way or the other.

Sen. Mary Landrieu (D-La.) spoke poorly of Durbin's compromise proposal, which is now being circulated. "I don't think it's much of a compromise," Landrieu told the Huffington Post. "My community bankers are really opposed to it and I think it's important for people to realize there is a big difference right now in the country between the health of these large international financial institutions and our local community banks...I think we gotta be careful about adopting processes and procedures that would really hurt our community banks."

Asked if she was a definite no, Landrieu responded that she was "pretty close to a definite No."

Sen. Evan Bayh (D-Ind.) wouldn't say whether or not he supported the compromise, but he nevertheless expressed deep skepticism.

"My concern about this is that in our appropriate zeal to help the four or five percent of Americans who might be faced with bankruptcy, we don't unduly raise the costs of homeownership on the 95 percent who never will," Bayh, who supported the legislation last year, told the Huffington Post.

Backers of the bill say that they are close to getting the 60 votes needed; Bayh and Landrieu are key votes needed for passage. Bayh, however, painted a much more pessimistic picture, saying that he was unlikely to be the deciding vote.

"I'd be surprised if that were the case," he said. "There's been a tendency on the part of some who are advocates for the legislation to overestimate the number of votes in favor...When I was actively involved at the moment it broke down it was my impression there were no Republicans who were willing to support it and at least a few Democrats have stated openly on the record that they were in opposition. How you get to 60 with those numbers is a mathematical problem."

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Sen. Jon Tester (D-Mont.) previously told the Huffington Post he opposed cramdown, dealing a blow to the bill, but he has yet to comment on the new compromise package.

Bayh, who has not been a principal negotiator over the last several weeks, said that he has not yet been briefed on the compromise and didn't rule out voting for it. "I'm not opposing anything -- I was one of 36 -- I voted for it. I was for getting something done in this area," he said, referencing his previous vote in support.

"But if we're not intelligent about it we're going to raise the cost on the vast majority of Hoosiers who will never go into bankruptcy and that would not be fair to them. I am for getting something done. I voted for it last year and I'd like to vote for it again this year. It depends on what the specifics are."

Ryan Grim is the author of the forthcoming book This Is Your Country On Drugs: The Secret History of Getting High in America

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Comments

[MyNameIsJames]

House of Reps should simply not play ball with this crap.

Its time to run a PR campaign out of the DNC that to the American people about how the Banks are trying to make it hard for those who common people who are facing Bankruptcy - to get relief.

There should be a most-wanted list of Democratic Senators who are standing in the way.

In reality it may be for the best... this is now a watered down piece of legislation.

[PhilipTaylor]

Yes after the election the PEOPLE do not matter. Then it is all about who gives her the MONEY-Banks!

[ComeOnAmerica]

Great idea. How can we get this ball rolling with the DNC?

[HST]

DINOs -Democrat In Name Only

[FoonTheElder]

The Blue Hogs of the Republicrat Party are at it again. The whole bankruptcy act of a few years ago should be reversed in its entirety. It was little more than corporate welfare written by and for the finance companies.

If clowns such as Sens. Landrieu and Nelson want to support all of the Republican bills, they should run as Republicans. After all, they spent the last 8 years being enablers for anything George Bush wanted. They are still doing the same thing today.

[ibsteve2u]

I concur with the trashing of that bankruptcy legislation. That was a major contributor to this crisis, in that the bankers felt a lessening of their risk.

Besides, what kind of animal signs off on legislation that permits the garnishing of a parent's Social Security payments, if that parent co-signed on a student loan?

[sonofsamphm1c]

Do you want two David Vitters from Louisiana? The state is red to the nines. Having a Democrat as a Senator is a minor miracle. Where she can, she supports the Democrats, and it is her ability to fend off Louisiana conservatives by denying them ammunition is what makes having her be there in those cases possible.

[Dynamohum]

The bill is NOT in the best interests of homeowners facing bankruptcy. This version of the bill was written in by the BANK'S lobbyists. It ends up not helping the people it was intended to help. It was about keeping people in their homes, which was supposed to be a win win, remember? It has morphed into nothing resembling help for this group.

[KrugnacTheMagnificent]

http://www.latimes.com/business/la-fi-mortgage11-2009apr11,0,3219271.story?track=rss

Rewriting bankruptcy laws isn't the best way to help these people in the first place.

This is nothing more than a politically motivated hit job on the financial industry.

Rahm Emanuel realizes that public opinion of banks is pretty low now, so they're exploiting it. It never was about consumers, that's just the window dressing.

[pragmaticdallasite]

What motivation do you propose Emanuel has if it's not about the consumer? The net effect of the legislation is to benefit consumers no?

[FoonTheElder]

And the whole bankruptcy act was nothing more than a hit job on those who are in financial trouble now due to the abuses and frauds of the big banks and financiers. The banks spent 10 years and bushels of money on politicians cramming the current bankruptcy act down Washington's throat until it eventually passed.

[MyNameIsJames]

News flash the Bankruptcy laws were rewritten a few years back - in a way that screwed the little guy.

[dcrinaz]

Krugnacthemundanicent, which bank are you shilling for? We can tell you work for a bank.

Bankruptcy reform is necessary. Homeowners should be allowed to declare bankruptcy on their primary home mortgages, as with all other debt. Without this relief for homeowners, the banks will still pursue foreclosures because they have no incentive to do otherwise. Bankruptcy reform will provide this "otherwise."

Remember what fueled our current recession: the downturn in housing, which mortgage lenders purposely exacerbated by refusing to renegotiate soured loans with troubled homeowners and forcing foreclosures instead.

Homeowners are not allowed bankruptcy relief on primary home mortgages, though all other loans qualify. One can declare bankruptcy on a second or investment house, but not on his primary home. So mortgage lenders have told troubled homeowners to either pay up or move out and give no other choice. Because of the economic crisis, most can't pay and thus lose their homes. Banks would prefer to foreclose and lose 50% of their investment than keep people in homes and keep 100% of the investment, which makes no sense.

The banks could renegotiate, save their principal investment and keep undervalued homes off the market, but instead they choose foreclosure, devastating the homeowner and their neighborhood by dropping property values. This has caused a huge loss in personal wealth and a tremendous drop in tax revenues. And it continues because there is no bankruptcy relief to keep banks in line. Why do you think they oppose bankruptcy reform?

[Apartment604]

You're not making much sense. Why would the industry try so desperately to kill a bill that it supposedly wrote? The fact is that this version of the bill was written by Durbin's staff, after a series of meetings with both industry and consumer/civil rights lobbyists.

After several months of negotiations, the pro-consumer groups think it's still a decent compromise that will force lenders to put borrowers into affordable loans (which is the bottom line all along), instead of "asking nicely" like Hope For Homeowners does. Those groups are still supporting it.

The industry groups are the ones who have been walking away from the table, and taking people like Landrieu with them.

[dcrinaz]

Sen. Mary Landrieu's (D-La.) statement "My community bankers are really opposed to it", meaning H.R. 1106, the bankruptcy reform bill stuck in the Senate, shows us who her masters are, and they are not Louisiana's voters. The Senate received H.R. 1106 around Mar. 9 and now we know whom to blame for the delay making it law: Republicans of course. And Democrats (?) Evan Bayh and Mary Landrieu.

At least we all know now that Sen. Landrieu is more concerned with the Banks. Now we know where her loyalties lie.

As she opposes reform, I wonder how many Louisianans and Americans all over are falling into foreclosure or have already lost their homes since early last March? I wonder how many millions of dollars in property value have been lost for Americans who didn't because foreclosed homes drove down property values?

If Sen. Landrieu cared about helping our country, she would support H.R. 1106 exactly at it arrived from the House, with no changes. H.R. 1106 is good for America because it helps Americans.

I certainly hope Louisiana's voters remember Sen. Landrieu's actions when she is up for reelection. Especially those who have lost their homes because she has favored banks over citizens and refused to pass a law that gives the Americans real relief.

Click on the link below and tell Sen. Landrieu what you think. Demand she support real bankruptcy reform in the Senate: http://landrieu.senate.gov/contact/index.cfm

[PhilipTaylor]

Yes after the election the PEOPLE do not matter. Then it is all about who gives her the MONEY-Banks!

[Progress08]

"My concern about this is that in our appropriate zeal to help the four or five percent of Americans who might be faced with bankruptcy, we don't unduly raise the costs of homeownership on the 95 percent who never will," Bayh, who supported the legislation last year, told the Huffington Post." - Evan Bayh

Hey dingus, that's why the banks got bailout money and can get bailout money... This is so we can keep people from filing Bankruptcy, becoming homeless, and destroying the banks as well as the real estate market. We need to put a cork in this leak now so people can focus on finding jobs. Some of you Blue dogs really pi$$ me off.

[sonofsamphm1c]

The banks have to pay back the bailout money, and that commitment is double backstopped.

The bill will give people something they will never have to pay back, and that means the free money has to come out of somebody's hide. There is a valid concern that when free money is being given out, lines will form.

[Teadye]

Seemed to work just fine until a few years ago when the bankruptcy laws were overhauled in favor of the banks... and didn't work so hot afterward. A lot of things that weren't broke to begin with need to go back to the way they were before the fat cat fix went in.

[unbozo]

With Democrats like Landrieu and Bayh, who needs Republicans?

[pragmaticdallasite]

Indeed.

[BPCentrisAmerican]

I think Bayh is in for a rude awakening, because average people in Indiana are being destroyed economically, and will be looking for a Senator Brown populist next's time around. They want a governmnet which works in there behalf, even republicans in the state.

[SparkyDash]

ditto

[BPCentrisAmerican]

Maybe I'm missing something here, but I don't give a dam what the banks think, there greed was more than instrumental in setting up people's current circumstances, of cause the America second crowed would have us tbelieve it was those evil poor people, but the banks need to take a big bite of the sh#t pecan pie they helped serve up.

[AmericanWarrior]

She is in a tight political spot. Most of the people who voted for her are gone.

[BPCentrisAmerican]

Really, she won relection last November.

[sonofsamphm1c]

By being very conservative on many issues.

[Stilts9]

How about a cram-down for Hank Paulsen?

[ibsteve2u]

Followed by a flush?

[NOLAMoCity]

Well, there you have it. Just when Senator Landrieu was being applauded by many for supporting US Attorney Jim Letten. Just yesterday, many people came out in gleeful support of her decision to have Letten remain at his post as US Attorney.

She now exposes the fact that she's in full support of the bankers in her community and has serious reservations about the "compromise" hurting community banks in her district. As one of her constituents, I'd like to know the names of those community banks. Her vague statements, void of detail, require clarification and explanation. She should NOT get a pass on this one!

[Apartment604]

First question you can ask her: how will this hurt any bankers or drive up lending costs when it only applies to unaffordable loans that were already made BEFORE this year?

Betcha she can't answer.

[Skyhawk]

Just what has Landrieu done for La. again?

[thaneb]

My understanding is that smaller, community banks have not been so affected by the lending crisis, in that they did not go for the "sub-prime" loan/mortgage-backed securities scheme. They are on a sounder footing than the large banks.
What Landrieu is saying is that cram-down could occur in any bankruptcy, not just those driven by the housing-finance debacle. Presently the home mortgage is not subject to cram-down.
It does seem unfair to small banks and the communities they serve to apply a new rule across-the- board if small banks were not part of the origin of the current problem.

[RoloTomassi]

What I do not understand is why this can't be categorically applied; if it's a sub-prime loan, then allow cram-down, if not, then let it pass unaltered.

Also, it not as if the key "bad apples" in regards to predatory lending are not known--why not cross-categorize with that in mind?

[pragmaticdallasite]

To difficult to define and apply the criteria.

[pragmaticdallasite]

Too

[Apartment604]

That's what Durbin & Conyers tried to push in 2008: only letting people with subprime or Alt-A loans seek a cramdown, and only for loans that were already made before the law was enacted.

But the industry wouldn't have that, either.

[KrugnacTheMagnificent]

The truth that often gets ignored here and in the left wing blogosphere is that a large majority of banks are solvent and behaved responsibly, as did most credit unions.

Dems are trying to punish irresponsible banks by throwing out this new blanket bankruptcy reform that will punish ALL lenders.

That's the thread running through most Dem "reforms". The responsible ones get punished in order to either punish or bail out the irresponsible.

[ibsteve2u]

I don't view adjusting "bubble" loans as "punishment" - it falls under "corrective actions" in my book.

The way you righties would have it, you would not only punish the consumer for the banks' greed, you would punish the consumers' neighbors, who must suffer from the blight of the newly boarded-up homes.

[KrugnacTheMagnificent]

A large percentage of borrowers facing foreclosure would still lose the house, even if their mortgage was changed to a fixed rate 30 year loan at historically low interest rates.

http://www.latimes.com/business/la-fi-mortgage11-2009apr11,0,3219271.story?track=rss

That undermines the "predatory bubble loans" meme, doesn't it?

[Franchise 551]

Anytime you increase the risk profile of loans, you will make the loan more expensive. Lefties think like a 5-year old. If a borrower can't afford their loan, just reduce the interest rate. But everybody else realizes that if you jam this down the throats of the banks, overall lending costs will go up for everybody else. When presented this argument, lefties just have a dazed look in their eyes, and issue a general "no that won't happen, or if it does, its not a big deal."

[Read Books]

I'm a quasi-Libertarian, and I agree with KrugnacTheMagnificent.

Let's take a step back folks. A key ingredient of American success is private property rights and the rule of law. Punish lenders and you'll have less lending, just when we need it most. If someone paid $500K for a starter house in California, that isn't the bank's fault. The market, distorted by the Fed and foreign capital, determined the price.

Void good faith mortgage contracts and you undermine the rule of law. The U.S. is not a banana republic.

If the mortgage contracts are modified to benefit the consumer, the banks must also get something of value.

[RoloTomassi]

Ah, I see you're continuing to express your normal abject idiocy....

[HC4BO]

Maybe, next time, they will speak out when they see their counterparts making all the wrong moves so that we will all NOT end up being punished for the mistakes of a few ...

[KrugnacTheMagnificent]

Why would they want irresponsible banks to stop gambling on risky loans?

Under normal circumstances, the shareholders and employees of the risky banks would be wiped out, and the responsible banks would swoop in to pick up the pieces and make a huge profit for their trouble.

Only in Obama-land is someone behaving responsibly blamed for the actions of the irresponsible.

[GrainOSand]

I conceived of this thought in thinking about the consumer. The consumer is the biggest component of the GDP but seems to also be the Rodney Dangerfield of the GDP -- the group gets no respect in legislative deliberation (tort reform). The financial services industry has high-priced lobbyists doing its’ bidding. Who is lobbying for the working class, the struggling class, the starving, the houseless, the cold, the sick, the uneducated, the hurt yet hopeful, the bloodied but unbowed, the person who has fallen but still believes that yes they can and that yes they will stand? Mr. Obama said the lobbyist will have a seat at the table but they will not own the tables, chairs, conference room, the whiteboard, the teleconference equipment, the handouts, the laser pointer, the overhead, or the bill for lunch. I think that lobbyist for the base of the American pyramid must have a standing invitation to any discussion on change in America, be it concerning bankruptcy, banking, business, defense spending, whatever...

If the consumer rules then let the consumer rule. Otherwise perhaps the consumer should “Strike Back” through limited spending...which only exacerbates the problem...I know. However, when the top of the pyramid gets uncomfortable due to massive failure at the base, I guarantee “thangs” will change. Three million foreclosures are said to be coming this year. That sounds like massive failure.

[scooperss]

Yep we to take up money to bribe our representatives like lobbyists do.