From the Los Angeles Times:
The financial services industry is in trouble over its role in crashing the world economy, but that doesn’t mean its lobbyists have lost all their muscle on Capitol Hill.
Exhibit A: The Senate delivered a stinging rebuff to President Obama and consumer advocates Thursday by rejecting a measure to help homeowners facing foreclosure.
The vote was 51 to 45, with 12 Democrats joining Republicans in opposing the proposal, under which bankruptcy judges could order lenders to reduce the principal on home mortgages.
The proposal, which sailed through the House in March, was a key part of Obama’s plan to reduce the tide of home foreclosures.
Damn! Even Evan Bayh voted yes! Not so these twelve, who…
Original DVD cover.
Don’t worry, kids, I won’t leave ya hangin’. Here’s the key of who’s who:
1. Byron Dorgan (North Dakota) 2. Max Baucus (Montana) 3. Arlen Specter (Pennsylvania) 4. Mark Pryor (Arkansas) 5. Robert Byrd (West Virginia) 6. Tim Johnson (South Dakota) 7. Mary Landrieu (Louisiana) 8. Blanche Lincoln (Arkansas) 9. Ben Nelson (Nebraska) 10. Michael Bennet (Colorado) 11. Jon Tester (Montana) 12. Tom Carper (Delaware)
Its defeat in the Senate marked a turnaround for the Democratic supporters of the bill, who had hoped that the party’s new majority would boost its chances for passage.
Instead, Democratic leaders were furious to see bankers lobbying against consumer protection measures after Congress had approved enormous sums to shore up the financial services industry.
“I am sick and tired of being asked to give billions to these banks,” said Senate Democratic Whip Dick Durbin (D-Ill.), who threatened to oppose any further industry bailouts. “If they have no sympathy for homeowners facing foreclosure, I don’t have any sympathy for them.”
According to the Center for Responsive Politics, commercial bank employees donated $22.5 million to congressional candidates — more than half of it to Democrats.
The banking lobby will face another — possibly tougher — test next week when the Senate considers legislation to impose new consumer protections on credit card companies — a measure with broader populist appeal. The House passed that bill Thursday by an overwhelming 357-70 vote; 105 Republicans voted for the bill, which would give consumers safeguards against unexpected interest rate increases, hidden fees and other alleged abuses.
Consumer advocates hope the strong House vote will give the issue more momentum in the Senate.
Bank lobbyists welcomed their hard-fought victory on the mortgage measure.
“A deluge of 12,450 letters from ABA members, in addition to numerous phone calls, personal e-mails and correspondence from Direct Contact Bankers and the state associations, paid big dividends today,” the American Bankers Assn. said on its website.
The success came after a nationwide lobbying effort by the ABA and others, including a video appeal from the chairman of the Mortgage Bankers Assn. urging members to come to Washington to lobby on the Senate vote.
The home loan measure, sponsored by Durbin, would allow judges to reduce, or “cram down,” the principal owed on an existing mortgage for a primary residence. It would remove an oddity in current bankruptcy law:
Judges handling bankruptcy cases can already reduce the principal — and thus the size of the payments — on a vacation home, car or boat, but not on a mortgage for a primary residence. The bill would have changed that. Sponsors hoped that would give banks an incentive to modify loans to give relief to borrowers facing foreclosure.
The proposal, which previously had been defeated in Congress, was thought to have much better prospects this year because it was backed by Obama as part of his plan to help distressed homeowners.
With the collapse of the housing market forcing mortgage holders into bankruptcy, and loan defaults climbing 81% last year, the bill had won wider support, even gaining the backing of some in the construction and mortgage lending businesses.
[Bankers] argued that changing the law would add risk and uncertainty to mortgages and encourage unnecessary bankruptcies.
The Democratic opponents of the bankruptcy measure included several, like [Ben] Nelson [Nebraska], who come from Republican-leaning states.
Others represented states with a big bank presence, including Sen. Tom Carper (D-Del.), who argued that the measure was too broad and could encourage too many borrowers to file for bankruptcy protection.
Senator Dick Durbin on WJJG 1530 AM Radio:
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