We have got some phone calls to make people. Cramdown is back, as predicted by Dick Durbin.
An amendment allowing judges to modify mortgages on primary residences for homeowners in bankruptcy will finally find a home as part of the Wall Street Reform and Consumer Protection Act (H.R. 4173).
The amendment, which is being offered by Representatives Conyers (D, MI), Turner (R, OH), Lofgren (D, CA), Marshall (D, GA), Cohen (D, TN), Miller (D, NC), Nadler (D, NY), Delahunt (D, MA) and Waters (D, CA), is potentially the best news homeowners and our economy have had in quite some time.
The amendment is essentially the same as H.R. 1106, a bill passed by the House on March 5, 2009, by a vote of 234-191, but subsequently defeated in the Senate by a vote of 51-45. The measure needed 60 votes to pass over Republican objections, and 12 Democrats succumbed to pressure from the banking lobby and voted nay.
Update below re. Explosive Durbin remarks re. a conspiracy between GOP lawmakers and banks, via Alternet
Fire Dog Lake notes that Blue Dog Jim Marshall and even Republican Mike Turner (OH) are on board as co-sponsors.
Senator Richard Durbin (D-IL) first introduced a similar bill in 2007, and after making some key compromises in order to gain the support of Citigroup and others, brought it back in 2009 only to see it defeated by the banking lobby once again. Senator Durbin, speaking bitterly on his hometown’s radio station immediately following the defeat of H.R. 1106 said:
“It’s hard to believe in a time when we’re facing a banking crisis that many of the banks created – they are still the most powerful lobby on Capitol Hill. And frankly, they own the place.”
Here's Durbin's famous rant on the Senate Floor, transcribed on Fire Dog Lake
One other argument that I think takes the cake: “Senator, you understand the moral hazard here. People have to be held responsible for their wrongdoing. If you make a mistake, darn it, you’ve gotta pay the price. That’s what America is all about.” Really, Mr. Banker on Wall Street? That’s what America is all about? What price did Wall Street pay for their miserable decisions creating rotten portfolios, destroying the credit of America and its businesses? Oh, they paid a pretty heavy price. Hundreds of billions of dollars of taxpayer’s money sent to them to bail them out, to put them back in business, even to fund executive bonuses for those guilty of mismanaging. Moral hazard, huh? How can they argue that with a straight face? [...]
We want America to be strong, but if it’s going to be strong, you should be respectful, Mr. Banker, of the people who live in the communities where your banks are located. You should be respectful of those families who are doing their best to make ends meet in the toughest recession that they’ve ever seen. You should be respectful of the people that you want to sign up for checking accounts and savings accounts, and make sure that they have decent neighborhoods to live in. Show a little loyalty to this great nation instead of just your bottom line when it comes to profitability. Take a little consideration of what it takes to make America strong…
I’ll offer this Durbin amendment as I did last year. When I offered it last year, they said, “Not a big problem, only two million foreclosures coming up.” They were wrong. It turned out to be eight million. And if the bankers prevail today, and we can’t get something through conference committee to deal with this issue, I’ll be back. I’m not going to quit on this [...] At some point, the Senators in this chamber will decide, the bankers shouldn’t write the agenda in the United States Senate.
Here is John Conyers statement on introducing the new amendment:
“Over the past 3 years, millions of Americans have lost their homes through foreclosure and millions more are at risk of losing their homes. Relying solely on taxpayer-financed incentives to encourage the lending industry to voluntarily resolve our Nation’s foreclosure crisis has proven to be woefully inadequate.
Thankfully there is an answer. Today, several of my colleagues and I have introduced an amendment to H.R. 4173, the “Wall Street Reform and Consumer Protection Act of 2009 ,” that will give American families facing foreclosure a critical lifeline by which to save their homes. Our amendment – which won’t cost taxpayers a single penny – will allow a homeowner under the supervision of a bankruptcy judge to extend a mortgage’s repayment term; reduce excessive high interest rates and exorbitant hidden fees; and, under certain limited circumstances, allow the principal amount of the mortgage to be adjusted to the home’s fair market value.
Our amendment rectifies an anomaly in current law that allows virtually every other type of secured obligation to be modified, except for home mortgages. Most importantly, my amendment will help stop the endless cycle of foreclosures that lead to abandoned homes in communities across our Nation and that, in turn, cause neighborhood property values and tax revenues to further decline. I am hopeful that passing this amendment will send the signal that the House feels strongly that this provision must be passed into law to help resolve the ongoing mortgage crisis.”
What can we do to help.... the blog Mandelman Matters has taken the lead on the foreclosure crisis, it's packed with helpful news and articles.. and he says it best...
And here’s the real truth of the matter: If judges are allowed to modify mortgages in bankruptcy, they’d likely never be given the chance… the banks would modify the loans themselves, again… like they’re supposed to, remember.
H.R. 4173, the Wall Street Reform and Consumer Protection Act will be considered by the full House of Representatives beginning this Wednesday, December 9th. You can read the bill here:
And you can read my much more in-depth, yet not boring in the least feature story, “A Time for Good Judgment – The jury is in and we need banks to modify the way banks behave,” here.
We need this amendment to pass as it’s written. But don’t get lulled into a false sense of security… it’s the banks we’re up against and they’ve managed to defeat what this amendment would allow twice before. We need to let our voices be heard LOUD & CLEAR.
You can help by taking action at three different levels:
- Call Your Representative – Calling your elected representatives is effective, because you can count on the fact that you won’t be the only one placing such a call. Next year is an election year and the entire House of Representatives is up for reelection. When your representative hears from hundreds or thousands of his or her constituents, it makes a real difference because he or she knows that for every call received, there are dozens of others in your district that feel the same way you do, but didn’t take the time to place a call.
Ask to speak with the staff person who is handling H.R. 4173, the Wall Street Reform and Consumer Protection Act. Identify yourself as being a constituent.
- Email Your Representative – Writing to your elected representatives has even more impact that calling does. That’s because it requires a bit more effort, and therefore your representative knows that there are hundreds of others in your district that feel the same way you do, but didn’t take the time to write and send an email.
- Drop By and Say Hello – Writing a letter, printing it out, placing it in an envelope and delivering it to your congressional representative’s district office has even more impact than emailing, for the same reason that emailing has more impact than calling. You don’t have to worry about your representative being there… staff members will let him or her know when a group of people all stop by to drop off a letter related to the same issue, because it’s highly likely that thousands of people in the district feel the same way.
DURBIN Alleges Conspiracy between GOP and Banks?
In a little-noticed but potentially explosive remark last Friday, Senator Dick Durbin (D-Ill.) accused Republican leadership of signing a political pact with the banking industry: in exchange for help defeating a measure that would make it easier for homeowners to restructure failing mortgages, GOP leadership in the Senate would help banks defeat any additional efforts at regulatory reform.
The allegation of a quid pro quo was based on an email that Durbin received last spring after his amendment to allow judges to modify mortgages for homeowners who enter bankruptcy was defeated on the Senate floor. During a discussion to promote publicly-financed elections on Friday, the Illinois Democrat relayed that, shortly after the defeat of his "cram-down" amendment, a "banker friend" forwarded him the note from Tanya Wheeless, president & CEO of Arizona Bankers Association.
"I have contacted the market presidents for each of the three banks (Chase, Wells and Bank of America) and explained that in my humble opinion it's a big mistake to cut a deal with Durbin and alienate our (in Arizona) Senator," Wheeless's email reads. "I also told them that I thought this would drive a wedge in our industry. [Senator Jon] Kyl has pointedly told them not to make a deal with Durbin and then come looking to Republicans when they need help on something like regulatory restructuring or systemic risk regulation."