PI Original Josh Kalven Monday January 26th, 2009, 5:20pm

Durbin's Cramdown Proposal Shelved ... Again

If you've been reading us lately you know we'd been hoping to see Sen. Dick Durbin's foreclosure prevention measure included in the economic recovery package being formulated by Congress.  Last week, House Speaker Nancy Pelosi pledged "[W]e will get it done," though ...

If you've been reading us lately you know we'd been hoping to see Sen. Dick Durbin's foreclosure prevention measure included in the economic recovery package being formulated by Congress.  Last week, House Speaker Nancy Pelosi pledged "[W]e will get it done," though she hinted that the stimulus bill may not be the best vehicle for the measure.  Then the AP reported over the weekend that the proposal has been shelved for the timebeing -- at President Obama's request:

Sen. Dick Durbin, D-Ill., the chief Senate sponsor of the bill, said Obama persuaded him in a White House meeting Friday to remove the bankruptcy proposal from an economic recovery package to ensure it doesn't jeopardize the stimulus bill. But Obama pledged his support for the bankruptcy solution, Durbin said.

Obama said he would work with Durbin to attach the proposal to other "must pass" legislation with the hope that supporters of the overall bill would not vote against it because of the bankruptcy provisions. 

Durbin's bill -- which has provoked fierce opposition from the banking industry ever since he first introduced it last year -- would allow bankruptcy judges to revise the terms of mortgages held by struggling homeowners.  It represents a crucial step towards stemming the foreclosure crisis.  And as Open Left's Chris Bowers writes today, you can't help but get frustrated watching it stall again and again:

It is pretty sad that, even with the Democratic trifecta and even with the collapse of the credibility of the banking industry, that the banking lobby can still delay, and possibly even stop, good legislation like this. They can twist Congressional arms into forking over trillions of dollars on their behalf, all the while twisting those arms to make sure homeowners facing foreclosure get nothing. At least it makes it clear who is actually running the country.

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