POLITICS
06/01/2009 05:12 am ET Updated May 25, 2011

In Their Own Words: Why Dem Senators Screwed Homeowners

Only 45 Senate Democrats voted Thursday to oppose the banking industry and pass legislation aimed at stemming foreclosures. The bill would have allowed bankruptcy judges to allow homeowners who met strict conditions to renegotiate mortgages -- a process known as cramdown. It would have only applied to mortgages entered into before 2009.

Earlier in the week, the measure's lead proponent, Sen. Dick Durbin (D-Ill.), concluded that banks "frankly own the place."

Of course, the 12 Democrats who voted "no" have a more charitable view of their own motivations. So we asked them what their reasoning was. In their own words, here is how (those we could find) explained their vote:

Byron Dorgan (D-N.D.): "A number of things. I thought the 31 percent is an arbitrary number. I think there are a whole lot of folks, are likely folks, out there who have little debt outside their home who could -- I just thought it was an arbitrary number and I didn't like the way it was constructed."

Dorgan is referring to the percentage of a person's income that a judge could determine should be dedicated to paying the monthly mortgage. The figure is roughly in line with what financial analysts agree is appropriate.

Is Durbin right? Do banks own the Senate?

"I don't know who he's speaking about," said Dorgan. "He worked on this for a long, long time. And I wish they would have found a way to reach an agreement that would have allowed the legislation to get through...I don't know the context of which he said that."

Is the bill totally finished? "I don't know. I think I wish they had found some middle ground by which they could have moved a piece of legislation. They didn't do that. And you know, this legislation went well beyond subprime, as you know."

Ben Nelson (D-Neb.): "I've not supported the cramdown for a variety of reasons, not the least of which is that I hate to see that authority to determine what the future contract is ceded to the court."

Evan Bayh (D-Ind.), who ultimately voted yes: "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."

Tom Carper (D-Del.): "One of the reasons why usually mortgage rates are cheaper for primary homes is that the markets have the certainty that the judge won't be invited to come in and change the terms of the mortgage."

Of course, the Senate package only included mortgages pre-2009, so interest rates on future mortgages would be unaffected. So what would it take to get Carper's vote?

"We talked earlier about limiting the range of the mortgages that can be modified from those originated, say, in 2003 to maybe through 2007. That would've been very helpful. The other thing is, the House has a provision that says if a mortgage is modified on behalf of a homeowner and later on that homeowner sells the house and realizes the profit--the House has a provision that if the lender participates, the first year [the lender recoups] 90 percent [of that profit], second year is 70 percent, third year is 50 percent, fourth year, 30 percent. I thought that was a better formula for participation. So those two points would have done it for me. Not that that would have made the bill perfect, but it would have done it for me. And it's unfortunate we didn't have a chance, given the nature of the agreement, announced by Senator Reid, that we wouldn't have a chance to offer any amendments."

Is Durbin right about who owns the Senate?

"The banks sure don't think so. My guess is they don't feel like they have much [power] at all. Let me just say, I don't that's true. Not even close. But we could have had this provision--could have passed something close to what was on the floor--could have passed if we'd had, maybe on the floor, a chance to perfect it."

Could it come back again?

"My guess is we're not going to see this again."

Really?

"I don't think we're going to see this again."

Jon Tester (D-Mont.): "I just think a deal's a deal. I have a lot of empathy for folks who tend to get led astray, but I just think it's going to create some problems -- pretty obvious, actually. I don't have to list them. I'm generally opposed. I don't think it works well."

Mary Landrieu (D-La.): "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."

The Huffington Post asked a few Republicans, too, since they still do, after all, vote.

Mel Martinez (R-Fla.): "We're working through this crisis. It's not quite as impending an issue as it may have been four months ago, because I think we're beginning to ease -- the crisis is sort of working its way through."

George Voinovich (R-Ohio): "I evaluated it and it harms more than it helps. It's the precedent that it sets in terms of a lot of people who are out there quite frankly very responsible. Our credit unions were giving money to people who were responsible. You've got some people who were being very responsible and doing their job and come to you and say if this happens we're going to have to change the interest rate, recalculate. I mean, I want to encourage those people. I don't want to discourage them."

Susan Collins (R-Maine), on how her vote will play at home: "I think it'll play just fine, because I view it as increasing the costs for homeowners, so it just wasn't the right approach."

A yes vote, John Kerry (D-Mass.), also weighed in: "They don't own me and I'm in the Senate. I think it's unfortunate. I don't know what the rationale is behind people's votes. I don't know what motivates -- some senators don't like changing of a contract. Some senators don't like to have courts have the power. There are different reasons."

Millions of different reasons, perhaps.

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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