There is apparently a deal in the House on mortgage write-down that satisfies proud "flexers" Ellen Tauscher and her New Democrat Coalition, who bragged to Politico about making it harder for people to qualify for bankruptcy (under the fine leadership of former bank lobbyist Adam Pase). Per CongressDaily (subscription):
The changes to the bill, which would be considered by the House Rules Committee as early as Wednesday, would place further restrictions on eligibility.
It would use the same guidelines as an Obama administration plan, to be unveiled Wednesday, that would allow up to 9 million at-risk homeowners to lower their monthly payments through an interest rate reduction.
However, in a key decision, the new language would not prevent those homeowners that consider the Obama plan from filing for bankruptcy.
Industry groups are arguing that borrowers first should attempt to determine their eligibility for the Obama plan and be required to use that option if it could keep them in their homes. If not, bankruptcy filing should only be the last resort.
The new language would only require a borrower to consider the Obama plan, not mandate that he or she take it. "It’s still a first step, but it [bankruptcy] is still not used as a last resort," an industry lobbyist said.
It also would allow the bankruptcy judge to consider whether a reduction in principal would be required if the lender has offered a loan modification that would still allow the homeowner to make his or her monthly payments. But again, it does not mandate that the judge use a modification without a reduction in principal, which the industry refers to as a "cram-down."
The changes also would require that no fees or charges be paid by the borrower to obtain modification of a loan through bankruptcy.
It also would require that a borrower’s first payment be no more than 31 percent of monthly income without any periods of negative amortization.
Conyers already made changes in a manager’s amendment to pick up support, but the vote count has been shaky because of opposition from banks, which argue that it would increase lending because investors would not be guaranteed any returns.
I cannot tell you how fucking delighted I am that we are making the banks happy. They succeeded in killing mortgage write down in 2007, they kept it out of the stimulus bill, and now they’re writing the details to make it more difficult for the people they ripped off to stay in their homes. Huzzah.
The home of former Wall Street investment banker Tauscher in Washington DC is currently assessed at a value of $3,542,090. (That’s a second home, mind you — the first one being in her district.) Her insistence that she was only doing this to make things easier for the little people rings awfully hollow, and it was frankly insulting that she would work so openly on behalf of bank lobbyists and then try to pretend anything else. These people have been operating in Drudgico culture for way too long, where things become true just because they say it does and their words don’t have to match up with their actions.
We don’t know all the details of the bill yet, and the Senate will most assuredly try to make things worse. In the mean time, above is a video of an Obama Town Hall where he discusses how important this legislation is to stopping the downward economic spiral. Here’s hoping that at long last the banks, Ellen Tauscher, the New Democrat Coalition and predatory lending lobbyist Adam Pase will stop trying to kill the bill and enrich themselves while the country burns.
And as Kagro notes, if this is all kabuki — we’ll soon know it.



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It is class war and I don’t need to tell you who’s winning every battle.
-G
I just sent Accountability Now a little something precisely because of this. It’s infuriating that the very banks that “valued” collateral at so far from its real value, will essentially be “made right” through this acceptance of an inflated price… It only reinforces the meme that irresponsible homeowners, buying too much, are the problem, not the banks, at the expense of everyone but them.
Fixed.
What has Marcy Kaptur said about this?
A disgrace to Newark, NJ, she is.
Tax payers revolt now.
Refuse to pay the banks. Screw em and their credit rating and rantings and scare tactics.
and SHU.
i don’t understand how this is the doing of the new dems. how many of them are baking these changes?
Aargh. A quote in Kagro’s post – ‘this encourages lenders to make the modifications voluntarily.”
Right. Like they’ve been voluntarily making modifications for the last 3 or 4 months, since they got the bailout money to encourage them to lend.
He’s right, you’re right Jane; only the threat of involuntary modification will “encourage” voluntary modifications.
Dammit, I’m so tired of everything getting watered down to meet the corporatists’ demands. Ick.
So think about this. I don’t need a credit rating and I hardly need credit. I am not buying a home, no intention of ever doing that. You need a credit score perhaps to rent an apartment but can’t be evicted from one if yours plunges. You do pay more auto insurance I suppose, but perhaps if I stick with my same policy I don’t need that either. Buying / leasing a car you need some sort of credit unless you pay cash. I may not bother with a car next time round.
Why play their dumb intimidation game. I am leaving their game and taking my marbles soon.
Obama’s plan and this one are kabuki. kagro is right. $75 billion and all these petty ante eligibility requirements, both show that our political elites simply don’t get it. The iceberg has hit the Titanic and they are scheming to use it to get a better dinner table for themselves and their friends.
We live in the Age of Stupid, and it is killing us.
Ellen Tauscher is a MODERATE in the same way that David Brooks is a moderate.
And in the same way that Larry Craig is a happily married heterosexual.
I think it is humorous to watch the congress do things that are meaningless gestures as they spit into the hurricane, with full press coverage. The system is meant to collapse now, it always was when the deregulation came to it’s end of cycle. It was and is, a Ponzi scheme that has now lost it’s foundation. Madoff wants to keep his stuff, it isn’t his fault all those dumb putz’ bought into his swindle?
Imagine how freaking ludicrous it is to make deals for banks that will be nationalized in the near term? Perhaps before the bill even makes it out of the chamber? Why do we have stupid leading stupid not only to their political suicide, but to anger their constituents to the point of retribution?
This is becoming a farce.
The whole FireDogLake community has been doing some seriously good reporting lately. I really think the most important work of blogs is done in January, not October.
a little bit OT, but maybe not really. via krugman, lloyd blankfein (goldman sachs) is in charge of administration policy.
Ellen needs a primary, all her sweet talk on DADT notwithstanding.
But her DADT work will make a primary harder, I imagine. She’s a heroine to the LGBT today.
Does anyone have a link to Obama’s plan, the one being referred to? Is it the one supposed to replace the Bush “HOME” plan that nobody used?
I can’t remember anything about it.
I’m feeling terribly helpless again. My Congresspeople are not just members, but leaders of the Party of No. Nothing I say/write/email to them will make the least bit of difference. They will vote no, no matter what.
Choosing to seek the protections of federal bankruptcy laws for an individual is wrenching. Unlike mega-corporations, who seek its protection as a routine way of doing business, a way to get out from under their half of a union bargain, or a way to better compete with a stronger customer, supplier or lender.
Individuals who choose bankruptcy are in extremis. The extreme unction offered by bankruptcy law is the only way left to stay whole while dealing with what life has thrown at them. They rarely seek its protections because they have been as profligate with other people’s money as Wall Street or the last Republican administration. They do so because they have lost their marriages, lost their health, or lost their jobs to non-union labor in India or China.
Making bankruptcy laws harder for individuals to use — something the “Reform” Act of 2005 did spectacularly well — is NOT a virtue. It is abandoning the principal of a fresh start. It is abandoning the principals of the Democratic Party in exchange for favorable treatment by lobbyists, banks and Meet the Kindly Press.
Bankruptcy “reform” that enables predatory lenders to reap the benefits of their predation is a false economy, an anti-stimulus, a sop to the haves and a stick in the eye to the have nots. Real reform would strengthen bankruptcy law protections and make them easier to use by working Americans desperate for a fresh start. Several million are in line to do just that, and the line is growing fast.
Surely banks that have been eaten by the FDIC can do some serious cram downs without additional legislation.
This boat is going down and there are two types of idiots out there. One thinks it’s time to get what you can amidst all the fear and confusion, the other thinks that it’s only going to become a great fire sale so they are holding their cash so they can go on a spending spree.
We ain’t getting close to the bottom yet and they have tossed 7 trillion $ at the crooks who tanked Main Street.
really. google this lady + bankruptcy or mortgage or something and it’s jane after jane after jane. I never knew who this lady was. she doesn’t appear to be a total scumbag but there are some very flawed people in or aspiring to positions of influence among Dems.
argue that it would increase lending because investors would not be guaranteed any returns.
Investors?!? What investors, what a crock of shit…
Well said, earl.
I think there is a firmly-believed myth among the corporations and the upper 5% income citizens that individuals and families just file bankruptcy willy-nilly, just like corporations do.
But you have it right; everyone I’ve ever met who had to file felt terrible about it, and avoided it to the very last minute, often till they’re so poor they can’t even afford to file (especially since the fees were jacked up in the last “reform” bill).
Many things Obama has done make me happy, but I think he needs to dump all these Goldman Sachs people and bring in some populist economists, or we are just going to keep going down.
I wish we had some idea of the distribution of the real estate mortgage backed securities. That would help us understand the relevance of these amendments. What I cannot figure out is why the bankers care. Most of them don’t have big portfolios of loans, they sold them off. Maybe we should fix it so they can’t be sued by investors in RMBS.
I looked briefly at the AIG 10-K filed yesterday, and it looks like there is a lot of interaction between credit default swaps, and other derivatives.
Why nationalize banks? Just close them and pay out the FDIC amount to depositors. Who has more than $250K sitting in a bank?
Banking should be a publicly owned utility.
Term Limits.
Ellen Taucher is a good reason for them.
I like Tim Duy’s line:
Stupid, stupid, stupid.
AIG will not survive. CitiGroup will not survive as is. BOA will not survive.
from 2007:
is this bullshit or could it be true – that there are side contracts requiring the banks to buy back loans?
A quick look at http://www.wfp.com or http://www.realtor.com reveals that $3.5 million buys a lot of house in Metro DC. It makes available top, though not the top, properties in Georgetown, Dupont Circle, Bethesda, Chevy Chase, Potomac and Alexandria. No living in SE or NE Washington or even Arlington for Ms. Tauscher.
If she were to lose all her investments in a Wall Street crash and be turned on the streets by Democrats back home, she could declare bankruptcy and protect her second home from a predatory lender. If she tried to skip on her credit card payments to pay for spousal or child support, fuggedaboutit.
that’s just brilliant.
New Jane post:
Major Changes Made To H.R. 1106, Helping Families Save Their Homes Act
i have a friends that have a farm. husband refused to use his ss # for anything but his tax return. ever. i was the same way. they went to finance something and the bank exec said he didn’t exist. former inlaws owned insurance company, they’ve been using credit checks for years.
i gave in to using mine when i couldn’t get a phone without it. i even talked with the supervisor, said it was illegal for them to require its usage. didn’t matter.doctors’ offices now requiring it. all because some people don’t pay their bills. only way to directly be able to track someone down for bad debt. that’s what its all about. corporations can delay paying debt or even write off bad debt and go right back into it again with a new name and a lower interest loan than an individual with good credit….but they will chase anyone else down for a hundred dollars. and have it hang over their heads for 7 years or whatecver the number is now.
maybe we should all incorporate our names, get write-offs, loans, company cars, meals, travel points, discounts, etc….
hmmmm.
(and visa compromised a bunch of debit cards here at our local bank, cancelled them and THEN notified people by snail mail..i don’t have a credit card (accountant father said don’t years ago, hard to maneuver without, but it can be done), so, thankfully i wasn’t out of town, i woulda been screwed…there were people all over town trying to use their debit cards for groceries, and restaurants, unknowing, and were stuck at the register…and bank closed. couldn’t get money and unless they had a credit card they were outta luck. took 12 days for my new card to get here. i woulda been screwed if i had been out of town, though i keep a little gas cash handy just in case. had to redo all of my automatic payments. what a mess.if you’re not ridin’ the credit train, you’re gonna be under the train. hate to say it.)
your 6-
Tax payers revolt now.
Refuse to pay the banks. Screw em and their credit rating and rantings and scare tactics.
yeah, go live on a boat! (grin)
The investors are a whole lot of people, including pension funds, cities and states, and investment banks. When the real estate backed mortgages were packaged, some of the tranches were kept by the institutions, and form part of their capital structure. If they are forced to recognize the true losses, it could impair their financial condition even worse.
I know who the investors are, my point is they are not investing now. Anybody want to buy a MBS now?
you mean of the tranches that are falling apart from bankruptcy’s? those tranches? yeah… right…
That woman looks like a frog who just swallowed a fly…..sorry, I couldn’t help it.
Who needs Republicans with a**hats like these?
It’s possible, but I think most mortgages are sold without recourse, meaning that the bank is not liable. A lot of the mortgages passed through banks after being made by mortgage brokers. The note is payable to the broker, and is endorsed to the bank. The notes I have seen are endorsed without recourse.
thanks. there’s been a lot of talk about unregulated side contracts so i wondered.
we’d all like your help on the next thread if you are willing…. thanks!
More on the New Democrat Coalition Old and New
I signed the petition here with this comment:
I used to work for Paul Wellstone. Sadly, he isn’t around to stand up for the little guy anymore. What would he do if he were here now? Don’t you think you should follow his lead? Don’t ask the pollsters or the crackpot Beltway pundits. Ask your conscience. Thank you.
Why would these banker assholes accept any sort of revised valuation (whether through the courts or otherwise) when they can maintain inflated asset values on their books and be made whole with taxpayer money on the other side of the balance sheet? Yeah, some loans will go bad, but as long as the key regulatory ratios are maintained (again, with free taxpayer money), why should they give a shit? Zombie Banks, indeed. This is some really nasty shit. And from a technical accounting standpoint? Pure smoke and mirrors.
It’s not like a lot of mortgage holders are contacting homeowners to offer modifications. A lot of homeowners can’t even get hold of the mortgage holder or their servicer.
We’ve got a crisis and a big part of fixing it requires mortgages be fixed or refinanced. Now isn’t the time for government to be shy about using a little force. We’ve already gone for months without doing anything and the free market hasn’t fixed things.