Banks Win, Homeowners Lose
I haven’t been a fan of every part of Pres. Obama’s economic policies, but I was a big fan of his plan to stop the mortgage crisis. One part of this plan was urging Congress to change bankruptcy laws to allow bankruptcy judges to “cramdown” and renegotiate mortgages. This is already done with second homes, but is illegal for primary residences. This common sense reform would keep thousands of people out of foreclosure. It would stop the bleeding in the mortgage industry which was one of the first dominoes to fall in the recession.
Sen. Dick Durbin (D-IL) has led the battle in the Senate for the bankruptcy reform. Yesterday, he expressed his frustration saying of Congress, “the banks own this place.” Today, he was proven right. The Senate, including 12 Democrats, sided with the banks over homeowners. This is extremely discouraging because it shows that big money is so corrupting that progressive reform is difficult. It would be impossible to replace 12 bank-over-homeowners Democrats with 12 pro-cramdown Democrats in 2010–and ZERO Republican senators voted for reform.
By contrast, during the Great Depression, the federal government guaranteed home mortgages directly–and every dime was repaid with 90% of homes saved.
Thanks, Congress for making economic recovery harder and loving banks (whom we taxpayers are saving) over ordinary Americans.
This is why electoral politics must be supplemented with street protests and other forms of movement politics.
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