Free Markets, Free People
“Cram Down” Bill Defeated By Senate
An moment of sanity prevailed in the Senate today:
For the second time in two years, a provision to allow bankruptcy judges to modify mortgages died in the Senate today, handing the Obama administration a significant defeat in its plans for arresting the foreclosure crisis.
Supporters argued the measure would keep 1.7 million borrowers in their homes, but it ultimately foundered in the face of fierce financial industry and Republican opposition. The bankruptcy modification provision, which was offered an amendment to a broader housing bill, failed by a vote of 45 to 51.
I love how this is reported by the WaPo. The measure failed because of ‘fierce financial industry and Republican opposition?”
Apparently it failed because 14 Democratic Senators said “no”.
Of course, passage of such a measure would make legal contracts in this country subject to review by the courts and arbitrarily changed based on political concerns. Certainly, in this case, such power is only being given for changing mortgage amounts – but as we all know, precedent is what courts operate under, and such a precedent would just as certainly be used to attempt to give the court similar power with other types of contracts.
It’s a phenomenally bad idea, but one you can expect to see attempted again and again, as promised by Dick Durbin:
“I’ll be back. I’m not going to quit on this,” said Senate Majority Whip Richard J. Durbin (D-Ill.), who sponsored the measure.
“At some point the Senators in this chamber will decide the bankers shouldn’t write the agenda for the United States Senate. At some point the people in this chamber will decide the people we represent are not the folks working in the big banks, but the folks struggling to make a living and struggling to keep a decent home.”
You’ve got to love the populist rhetoric and the absolute misrepresentation of what he and those that were trying to get this monstrosity passed were attempting. A fundamental change in how this country has operated since its inception. If courts can arbitrarily change the terms of a contract for social/political reasons, we’re doomed. And that’s precisely what Durbin and his ilk are proposing.
Unfortunately I have no confidence that he won’t manage, at some future time, to push this piece of legislation through. But at the moment, it’s where it needs to be – in the virtual garbage heap of bad legislation.