Yesterday, we noted
that the Democratic House leadership looks poised to consider two bills
dealing with workers' rights in the first week of the upcoming
session: the Paycheck Fairness Act and the Lilly Ledbetter Fair Pay Act.
Senate Majority Leader Harry Reid has his own priorities as well. The American Prospect’s Tim Fernholz got his hands
on a list of 10 bills the Senate hopes to unveil when Congress reconvenes, as
sent by leadership to various staffers. While the memo doesn’t contain specific legislative language, there are some
encouraging details.
Indeed, third on the list is the “Homeowner Protection and Wall Street Accountability Act of 2009, which -- along with a moratorium on foreclosures and new regulations for the financial industry -- includes Sen. Dick Durbin’s plan to aid struggling homeowners by allowing the terms of their mortgages to be revised in bankruptcy court.
This is excellent news. One of the Drum Major Institute’s 10-best public policy ideas of the year, some have estimated that Durbin's proposal would keep 600,000 homeowners from losing their properties.
One thing that's clear from the memo is that Reid is emphasizing President-elect Barack Obama’s stated priorities. The first three bills deal almost exclusively with the financial crisis. Healthcare reform, energy, Iraq/Afghanistan, and education all follow. How much of the agenda Reid and company can expect to pass is unclear. Certainly, different goals will be split up into separate pieces of legislation. Reauthorizing No Child Left Behind, providing funding for early education, and increasing college affordability won’t be tackled in one fell swoop. For a little context, Fernholz looks back at the 110th Senate:
A quick perusal of the 110th Senate’s first ten bills suggests about half of that legislation was passed by Congress (it included ethics reform, the minimum wage increase, stem cell research, the 9/11 Commission reforms and legislation to increase higher ed access) though not all of it was signed by the President. We’ll see if the Dems have better luck this year.
UPDATE (1:59 PM): Right on schedule, Sen. Durbin formally introduced the Helping Families Save Their Homes in Bankruptcy Act, which will allow at-risk homeowners facing foreclosures to modify the terms of their mortgages in bakruptcy proceedings. From Durbin's press release, sent minutes ago:
“For nearly two years, we’ve heard dire predictions about the housing crisis and its effects on the economy. Sadly, they have not only come true, but have been far worse than anyone imagined,” Durbin said. “The question that faces us now is this: after committing over one trillion dollars in taxpayer money to address the financial crisis, why don’t we take a step that would indisputably reduce foreclosures and that would cost taxpayers nothing?” Durbin asked.
Rep. John Conyers (D-MI) introduced a companion bill in the House of Representatives today as well.
Comments
Dan Morris (not verified) on Tue, 01/06/2009 - 14:00
Adam,
Thanks for mentioning DMI's 2008 best of public policy list--again!
We'll be closely following and analyzing these Senate bills and other new pieces of Congressional legislation over at www.themiddleclass.org, DMI's web-based toolkit for holding Congress accountable.
Dan
Prof. Samuel D.Bornstein (not verified) on Tue, 01/06/2009 - 23:18
Senator Durbin's proposed legislation will not only help homeowners avoid losing their homes, but it also impacts the millions of self-employed small business owners who fell prey to the "toxic" mortgages that will reset in 2009 and will take their homes, their businesses, and result in job loss for their employees.
It is a tragedy when an individual borrower defaults on the mortgage and loses his/her home. The tragedy is magnified when the borrower is a small business owner, employing from 1 to 10 employees. The loss of jobs related to mortgage defaults and the resulting business failures will further weaken our economy and prolong the recession.
On December 14, 2008, CBS’s 60 Minutes had a segment on the 2nd Wave of Foreclosures. They indicated that experts were expecting another wave of mortgage defaults on ALT-A and Option ARMs mortgages which will dwarf the Subprime Mortgage Crisis. CBS MISSED A VERY IMPORTANT FACT!
Many fail to realize that there are millions of self-employed smaller businesses, who employ from 1-10 employees, that are holding the mortgages that are going to reset in 2009 through 2012. These borrowers are Prime and Near-Prime borrowers who hold ALT-A, Option ARMs, Interest-Only mortgages. There are $1 Trillion ALT-As, and $500-600 Billion Option ARMs.
So, here we have a major problem… Not only will these small business owners lose their homes, but there will be the resulting JOB LOSSES on their business failure. Note, although President-Elect Obama is stressing the need to create 3 million new jobs, we must understand that “JOB RETENTION IS AS IMPORTANT AS JOB CREATION”.
I authored a survey which was conducted by the National Association for the Self-Employed (NASE) to its national membership. The NASE Survey disclosed disturbing facts. The NASE survey is at http://www.nase.org . See the NASE News for the Survey on Toxic Mortgages. Please read my Commentary.
According to this survey, it is estimated that 3,709,800 small business owners hold Alt-A and other toxic mortgages, and 1,279,800 are already delinquent as they have missed one to three or more monthly mortgage payments at mid-November, before the expected Resets that are scheduled to begin in 4th Quarter 2008 through 2012.
The solution lies in the hands of Congress as they meet in January to structure an economic stimulus package. Congress should take note of this survey and be “proactive” in addressing the situation, rather than “reactive” as the case has been in the Subprime Mortgage Crisis.
We can’t afford another shock to our economic system at this time. This 2nd Wave of Foreclosures which will be caused by the ALT-A and Option ARMs will not only result in Foreclosures, but also Job Loss.
Prof. Samuel D. Bornstein
Kean University School of Business
bornsteinsong@aol.com
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