A bill rejected, is a plan thwarted.
Remember when Pres. Obama spoke in his campaign and favored the plan of allowing judges to cut mortgage terms of homeowners so they can avoid foreclosure? The president repeated this assurance that earned him applause from his supporters whenever he went. But last April 30, the Senate voted 51-45 against the bill and subsequently denied troubled homeowners of declaring mortgage modification by bankruptcy judges.
But what prompted the Senate to trash a bill that would have helped 9 millions homeowners? In a Bloomberg interview, Sen. Jon Kyl of Arizona said, “The measure would force mortgage companies to offset losses in court. The result will be higher interest rates for home loans and fewer Americans will be able to afford to buy a house. The answer is not to incentivize bankruptcy by making it the means to save one’s home.”
Here’s Rep. Michele Bachmann explaining the benefits of the bill to an audience of four – yes, four.
Take note on how she emphasizes how the bill violates private contracts and the rule of law. At the end of the video, it’s pretty convincing on how she managed to explain the bill’s disadvantages to lenders and banks.
Finally, banks have lobbied for sometime already against the bill. It’s the reaction that you’d expect from them since their profits are obviously on the line. The day before the bill was rejected, the Mortgage Bankers Association was almost sure of the outcome. Here’s how they celebrated in advance.
The bill would have succored homeowners but it’s the moral hazard that the Senate was most worried about. It would have been much better if the loopholes were reviewed first before passing it to Congress. Bankruptcy judges would’ve been busy this year.