President Obama signed the Helping Families Save Their Homes Act last month but the Bill left out a key provision that would have allowed federal bankruptcy courts to modify the terms of nontraditional and subprime mortgages made on homeowners’ primary residences. In other words, a Bankruptcy Judge could have modified a ripoff mortgage. Unfortunately, the measure failed and there will be no “cramdown” provision in the law. An explanation of why this measure failed was given in the New York Times. Key Quotes:
The defeat of the bankruptcy proposal is a testament to the enduring influence of banks, even as the industry struggles financially and suffers from its role in the economic crisis.
The [banking] industry also steadfastly refused offers to negotiate over a weaker version. And it poured millions of dollars into lobbying: four of the industry’s top trade groups spent nearly as much on lobbying in the first three months of this year as they did in all of 2001.
Now here is the part in the article that gives me the gripes:
Throughout it all, the banks took advantage of the Obama administration’s seeming ambivalence. Despite its occasional populist rhetoric, the White House was conspicuously absent from weeks of pivotal negotiations this spring.
“This would have been a much different deal if Obama had pressed it,” said Camden R. Fine, head of the Independent Community Bankers of America and one of the chief lobbyists opposing the bankruptcy change. “The fact that Obama effectively sat it out helped us a great deal.”
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While Mr. Obama reaffirmed his support for the proposal shortly after becoming president, administration officials barely participated in the negotiations, a factor that lobbyists said significantly strengthened their hand. Lawmakers who have discussed the issue with the administration said that the president’s senior aides had concluded that a searing fight with the industry was simply not worth the cost.
I can understand the Obama administration wanting to fight fights it can win, but to give trillions out in bailouts to some of the financial organizations responsible for our current economic travails and then refuse to help Americans victimized by ripoff loans is unconscionable.