White House Silence May Have Doomed Mortgage Cramdown Bill

Washington Independent:

Though mortgage bankruptcy reform has been a central component of the Obama administration's foreclosure prevention strategy, the White House all but abandoned the proposal in the days leading up to last week's Senate vote, providing some Democrats with the political cover to kill the bill and leaving supporters scratching their heads in wonder why the administration didn't push harder for passage.

The proposal, sponsored by Sen. Richard Durbin (D-Ill.), would have empowered bankruptcy judges to reduce, or "cramdown," the terms of primary mortgages, allowing some struggling homeowners to avoid foreclosure. Obama supported the measure on the campaign trail last year, and endorsed it again in February as he unveiled his anti-foreclosure plan.

Read the whole story: Washington Independent

Comments

[tel8034]

If the White House was that powerful, then 100% of democrats in congress would vote 100% of the time for ALL of pieces of legistlation the White House puts forward. ................ And in 100 days President Obama would have gotten EVERY ITEM ON HIS 4 YEAR AGENDA passed.

Why would President Obama have to spread out his agenda over 4 years, if he was 100% certain that he could always count on 100% support from the democrats in congress?

The members of the democratic congress have proven to have minds of their own, and are not easily persuaded by the White House on anything.

The blame for the failure of the Mortgage Bill rests solely with the Members of the Senate who voted against the bill, and NOT the White House.

The entire article is disingenuos.

[dcrinaz]

You obviously do not understand how politics in Washington works. The president, whether Obama or anybody, does have to do with the passage of legislation, even if it is indirect. By ignoring a topic he said he supported, he did signal to the blue dog Democrats that he tacitly agreed with stabbing homeowners in the back, a big shift from his earlier statements.

President Obama is human, he's not perfect. He screwed up on this. It is our job to remind him when he does.

[nowarpleez]

Interesting photo. Nearly perfect symmetry.

[dcrinaz]

The Obama administration's refusal to support bankruptcy reform with cramdown was a cynical, calculated political move--and it was the wrong thing to do. Bankruptcy reform with cramdown is the only thing that will make banks cooperate and save the housing market and the personal wealth of millions and millions of Americans who have their wealth in their homes.

The Huffington Post has a lot of good articles and commentary to help understand this issue. Here are links to some articles so you can know the issues:

"In Their Own Words: Why Dem Senators Screwed Homeowners" at http://www.huffingtonpost.com/2009/05/01/in-their-own-words-why-de_n_194589.html

"Defeating Homeowners: a Pyrrhic Victory for Bankers" at http://www.huffingtonpost.com/ann-pettifor/defeating-homeowners-a-py_b_195182.html

"Why are Banks Still Being Treated as Beltway Royalty" at http://www.huffingtonpost.com/arianna-huffington/why-are-bankers-still-bei_b_194242.html and

"Cramdown Vote: Banks Bought Senators on the Cheap" at http://www.huffingtonpost.com/2009/04/30/cramdown-vote-banks-bough_n_193674.html

I hope the Obama administration realizes its mistake and corrects it soon. Credit card reform should not leave Congress without bankruptcy reform with cramdown and make sure it is available to as many Americans as possible. No limits to who can use it!

[daveincolorado]

Michael Benet gave this response in a form letter to constituents yesterday:

"As you may also know, Senator Durbin of Illinois introduced an amendment to S.896 that would allow bankruptcy court judges to modify the terms of a mortgage for borrowers participating in bankruptcy proceedings, a process often referred to as “cramdown.” The amendment, which needed 60 votes to pass, failed by a vote of 45-51. I voted against the amendment because, though well intentioned, it was far too broad and not sufficiently focused on the middle class. The amendment posed the risk of unfairly punishing small lenders and local bankers who have been making a good faith effort to provide credit to their communities. In addition, it very likely would have had the unintended consequences of raising interest rates for all homeowners, potentially delaying real housing recovery."

Not sure i but that arguement, especially when someone with a second home or vacation home does get the use of a cramdown if they are having problems. Why not people on their first home?

[Prakosh]

That's been my point form the start on this--it has to be a class issue. If you can only afford one house and you are having trouble paying for it--you're to poor to spend much time on!!!!

[dcrinaz]

Michael Benet forgot to state the major reason, the real reason he voted against bankruptcy reform with cramdown: he's a tool for the banks. That's all. He is owned by the banks. His rationale for not supporting it is phony. It sounds good to people ignorant of the issue. But this whole bill was completely focused on the middle class? Who owns the bulk of housing--which has lost up to 60% of its value in some areas? The middle class! The poor don't own lots of housing and the rich have enough money so that it doesn't matter to them, especially if they are bankers! And if small and middle banks made risky loans or participated in predatory lending, they deserve what they get. His real concern is the huge banks who have bought his soul.

[jhNY]

Strong support of the bill by Obama, with speeches devoted to the topic and a few presidential visits to neighborhoods blighted by mass foreclosures might well have caused several wishy-washy senators to vote for it. But we'll never know, since none of that happened and the bill died on the senate floor, thanks to the power of the banksters: "Frankly, they own the place." (R. Durbin, D, IL)

Meanwhile trillions of dollars have been funneled, with more trillions to come, by this administration to the financial sector, which was also the largest sector of business donors to Obama's campaign, a sector which has payed itself bonuses out of the money and cain't nobody stop them, as the contracts are iron-clad and adamantine, while negotiated contracts between workers and management have become inoperative at the whim of management and the approval of the administration.

I voted for Obama and still hope he can bring himself to do the right thing, despite all the advice and counsel of the experts with whom he has surrounded himself, but facts are facts. Obama let the bill die without trying hard to get it passed, and his donors have been protected and rewarded for thieviing and failure. Live with it.

[TeeLolly]

Obama has been Geithnered. Check the nuance: his stated support has been for "appropriately tailored bankruptcy language" and "balanced bankruptcy reform"--not generalized reform focused on homeowners. Obama has put forth his own plan providing "financial incentives" to mortgage servicers to modify loans. More and more, the plans to help stem foreclosures are starting to look like the plans to help Wall Street.

[mcantwell]

Can the Democrats on Capital Hill get ANYTHING accomplished on their own?

[Progressive Pete]

It's not like they don't have huge majorities.

[Prakosh]

Evidently not!!!

[Jalenth]

So now the president is suppose to hold the hands of the Senators on every vote? Is he to constantly stop what he's doing with all the other problems he has, to convince the senate to vote on things that are important to the American people?

This is getting ridiculous. Why don't we place the blame with it belong....On the Senators. Quit blaming the president for everything.

[simplify]

More speculation from HP

[nomobull]

i say that about sums it up.

[cordyc]

As home value fall as much as 40 to 50 % in some areas, the only way out is to reduce the mortgages for folks who bought late in the bubble.

Why shouldn't a lender who made a bad decision by writing the loan share in the loss along with the homeowner? That would be free market capitalism.

Bankruptcy judges have the experience to do forbearance (cramdown) on commercial and rental property.

Until forbearance is addressed realistically for homeowner real estate will continue to decline. The Alt A loans are starting to default and will increase in the next few years. Look out below as real estate prices continue to decline.

[lovesds]

Hell quit blaming the prez. Blame the darn democrats in the congress that stopped this from going through. The moderate democrats are doing everything that the money people are telling them to do. Remember money talks. You give some democrats power and it goes to their damn heads. Blame these moderates who could careless about the people. If you don't like what these moderate democrats did vote them out.

[DJ23]

Exactly! Thank you.

[fame]

Yeah, but the point of this article stands... Obama didn't lead on this issue.

[fya]

Thank you. It's CONGRESS!

[Totto]

The votes of quasi-Democrats like Nelson and Landrieu weren't surprising,
but Byron Dorgan ought to be ashamed of himself.

[californiadreamer]

Even though Dodd voted aye on the foreclousure bill he really did like Obama and sort of backed away from actively supporting it. He has done this in several instances regarding banker's bonuses, credit debt, etc. He has received massive amounts of banking money for his re-election campaign in 2010. I suggest those who are frustrated with the members of Congress in the pay and sway of the bankers concentrate on this one senator and send a message by defeating him and his banker money in Conneticutt in 2010. Though he is a colleague and former supporter of Dodd, I believe that if Ned Lamont who ran against Lieberman in 2006 were to get into the primary against Dodd if he does espouse principals of putting the taxpayer first, then you would have a race that would alert the other members of Congress that the time has come to go back to work for your constituents, not your fund-raisers. But to lose would also send a message that they can get away with it because the voters are so disorganized and fractured they don't really have any power. Let's see if a movement begins to form.