One congressional reaction that emerged — Senate Banking Committee Chairman Chris Dodd’s (D-Conn.) response to the rescue package — wasn’t favorable to many of K Street’s banking clients, who oppose one provision in particular: giving bankruptcy judges the power to lower mortgages for distressed homeowners.
“We are vigorously opposing that,” said Steve Verdier, a lobbyist for the Independent Community Bankers Association (ICBA). “If that happens, then the mortgage rates for other consumers are going to go up.” ICBA sent out a new “issue alert” to its members on Monday in response to the Dodd proposal, and encouraged members to send a new letter to Capitol Hill even if they already signed a grassroots message on the ICBA website. “‘Hit ’em harder’ is our message,” Verdier said.
The American Bankers Association joined in the criticism of the so-called “cram-down” provision. “Authorizing write-downs of mortgages by bankruptcy judges will increase the risks of mortgage lending at a time when the market is already struggling” the ABA said in a letter it sent to Capitol Hill on Monday.
So it is the Bankers vs. The American People now. Hit the people harder is the bankers' message. Here is what the American People need:
Consumer and labor groups, meanwhile, welcomed additional homeowner protections in Dodd’s bill that were not included in the Treasury Department’s proposal. “We cannot support, and urge you to oppose, legislation that fails to help the millions of families in danger of losing their homes, while spending hundreds of billions of dollars of taxpayer money to bail out those who caused the problem,” groups like the NAACP, National Fair Housing Alliance, and the Service Employees International Union wrote lawmakers on Monday.
The bankers do not care:
Banking lobbyists said once Treasury takes control of securities it will have the power to change the terms of the underlying mortgages. But that shifts the financial costs of reducing the price of the loans to the taxpayer rather than the shareholders in the bank that made the bad loans in the first place.
In addition to the added bankruptcy protection, labor groups pressed Congress to include a second stimulus package as part of the bailout bill. “Any taxpayer bailout of Wall Street must be balanced with economic relief for ordinary Americans dealing with the economic consequences of Wall Street’s outrageous conduct and the government’s own inaction,” AFL-CIO President John Sweeney told congressional Democrats in a letter.
As d-day says, follow the lobbyists.
By Big Tent Democrat, speaking for me only
