Bankruptcy Reform Defeated, Banking Lobbyists Win Again

Illinois Sen Dick Durbin, one of those antique FDR Dems I go on about all the time, has been trying to get a law passed that will reform Joe Biden's terrible bankruptcy bill. You know, the one demanded by his banker campaign contributors and written by those same bankers' lobbyists? We've sort of had a thing about it around here for a looooog time. We didn't care for it, not from Day One.

But Durbin is, as you might imagine, fighting an uphill battle. On Monday, in frustration, I suppose, he blurted out the truth on a radio show.

On Monday night in an interview with a radio host back home, he came to a stark conclusion: the banks own the Senate.

"And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place," he said on WJJG 1530 AM's "Mornings with Ray Hanania." Progress Illinois picked up the quote.

(emphasis added)

Indeed. They proved it today when the Senate defeated bankruptcy reform and the Corporate Tank Dems, most of them BD's natch, handed Obama a significant defeat and the banks yet another significant victory.

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'll be back. I'm not going to quit on this," said  Senate Majority Whip Richard J. Durbin (D-Ill.), who sponsored the measure. He noted that estimated foreclosures during the housing crisis has ballooned from 2 million to 8 million since his campaign for the change to the bankruptcy code began.

"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."

(emphasis added)

What an old-fashioned idea that is. Representing people? Aren't the bankers people? More importantly, aren't the bankers people who put money into Senate campaign chests? Which of these two classes of people is therefore more important to represent?

If you are a New Democrat (a la Rahm Emanuel, f'rinstance), the answer is a foregone conclusion and the question, frankly, is stupid. Not much is at stake, after all.

The measure would have allowed bankruptcy judges to modify troubled mortgages, lowering the interest rate or principal balance, a process known as a cramdown. Bankruptcy courts can already make those changes for a second home or investment property, but not a primary residence.

Note the difference that was Biden's signature accomplishment: investment property can be protected. If you're rich enough to own investment property, a judge is allowed to save it. If you're not, fuck yah. The house you actually live in goes. "Wall Street Chuckie" Schumer, is, like, baffled. He can't figure it out. The mortgage bankers are acting just like the investment bankers Chuckie always represents. Don't they know there's, like, a difference?

Added  Sen. Charles E. Schumer (D-N.Y.): "It is confounding that the banks opposed this to the very end since the proposal would have helped them by finding a floor in the housing market. Clearly the banks had enough clout to defeat this bill, certainly more than the 1.7 million homeowners who would have been helped by it."

I think we can safely say that any hope we might have held out for bankruptcy reform or credit card reform (that little ray of hope didn't last long) or, indeed, any banking reform whatever, has just been effectively killed dead. It's road kill and the Democrat Kabuki is back in action. Remember the Democrat Kabuki? Where they huff and puff and promise reforms and changes and accountability and then when they actually vote we get none of those things?

EUREKA! I just had a flash. I understand now why they went to all that trouible to convince Specter to switch. He's the Kabuki Champ of all time! (Via Avedon, of course)

 

By George, this boy will fit right in.

Ah, another reminder of Arlen Specter's habit of making really nice-sounding noises about how we should do good things instead of bad things, and then going ahead and voting for bad things. I have no doubt in my mind that Arlen Specter will now make lots of nice noises about separations of powers while failing to lift a finger to further that aim. In the same way that John McCain was against torture before he voted for it, Arlen Specter makes the appearance of probity and all-American Constitutional values while being the guy who throws the monkey wrench into the machinery of good government. And now he is "ours"!

Yup.

Comments

[eRobin]

If the banks own Congress, then they rent out space to Insurance and Pharma. As I watch the financial crisis play out, I fear deeply for what health care reform will end up looking like.

[mick]

So do I. So do all of us. Even if we get it, the current examples suggest it will be excessively insurance-industry-friendly and consumer-deadly and everybody at the top will deny it. It's going to take a HUGE push to keep it even half-way useful once it gets to the Specter/Lieberman/BD-run Senate.