Are the banks using TARP money to – successfully – lobby the Senate? Sure looks that way. I first heard this story on Keith Olbermann’s Countdown when he interviewed Arianna Huffington. But the best story is by Ryan Grim on the Huffington Post.
The Senate on Thursday rejected an effort to stave off home foreclosures by a vote of 51 to 45. It was an overwhelming defeat, with the bill’s backers falling 15 votes short — a quarter of the Democratic caucus — of the 60 needed to cut off debate and move to a final vote.
The death of the bankruptcy reform measure — which would have allowed a small number of homeowners who met strict conditions to renegotiate mortgages under bankruptcy protection — is a major tactical win for the banking industry. But allowing the foreclosure crisis to continue unabated may end up being a failed strategy for the financial sector.
A little background from the Washington Post.
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.
This would impact owners who are seeing home values drop to the point that the mortgages are larger than what the home is worth. Sentator Richard Durbin was the primary sponsor and the bill was back, a little tepidly, by the Obama Administration. So back to Ryan Grim.
The Chamber of Commerce has deemed the vote a crucial one that will be heavily counted in its annual scorecard, and those who voted yes will pay a financial price from the Chamber and the banking industry.
Other Democrats stuck with the banks against the homeowners. Sen. Robert Byrd (D-W.Va.) was wheeled into the chamber and pointed his finger in the air, signaling a yes vote, then dramatically swung it down, as if taunting the backers of the bill.
Sens. Jon Tester (Mont.), Mary Landrieu (La.) and Ben Nelson (Neb.) all voted with the banks, as they told the Huffington Post they would. Sen. Blanche Lincoln (D-Ark.) voted no, as did the new Democratic Sen. Arlen Specter of Pennsylvania.
Sen. Michael Bennett (D-Colo.), Sen. Tim Johnson (D-S.D.) and Max Baucus (D-Mont.) voted no as well.
Earlier this week, Durbin concluded that banks that “frankly own the place.”
How much did the Senate go for?
The banking and real estate industry has funneled roughly $2,000,000 into Landrieu’s campaign coffers over her 12-year career, according to data from the Center for Responsive Politics. The financial sector is Nelson’s biggest backer; he’s taken $1.4 million from banks and real estate interests and another $1.2 million from insurance firms. Tester has fielded roughly half a million in his two years in office. Lincoln has taken $1.3 million from banking and real estate interests.
Carper has raked in more than $1.5 million. Baucus, chair of the finance committee, has been on the receiving end of $3.5 million over his career. Specter has hauled in more than $4.5 million and Johnson has gotten some $2.5 million.
So don’t these Senators realize how we got into this mortgage mess to begin with? I see crazy loans made way above a homes value even in good times whose owners are now in trouble. Where are the mortgage bankers getting the money to lobby? I thought they were in trouble and needed taxpayer help. I say, no more bailout for any mortgage bank which lobbied against this bill.
By the way, there is also a list of Senators who voted their consciences: Evan Bayh, Mark Warner, Jim Webb, and Ted Kaufman (who is not running for re-election). We need to thank them for their votes.