Progress Illinois

Considerable ink has already been spilled over Senate Democrats' failed attempt to stem the foreclosure crisis: from Sen. Dick Durbin's frustrating negotiations with the trade groups over his mortgage modification bill, to the Obama administration's seeming indifference to the measure itself, to it's eventual defeat. So a New York Times article today by Stephen Labanton, the lastest installment in the paper's series examining the battle to reshape the financial industry, doesn't shed much new light on why the common-sense legislation went down in flames. But his report includes interesting new context regarding the Capitol Hill negotiations. It also reinforces Durbin's comment on WJJG in April that the banks "frankly own the place." From the Times: 

Documents and interviews with lawmakers, lobbyists and administration officials show that the banks defeated the bankruptcy change — the industry picturesquely calls it the “cramdown” provision — by claiming that it would push up interest rates and slow the housing market’s recovery, even though academic studies have countered such claims.

The industry also steadfastly refused offers to negotiate over a weaker version. And it poured millions of dollars into lobbying: four of the industry’s top trade groups spent nearly as much on lobbying in the first three months of this year as they did in all of 2001.

In one particularly telling anecdote, 30 bankers from Louisiana crowded into a room off the Senate floor to make their case to Sen. Mary Landrieu (D-LA). The year before, the conservative Democrat had distanced herself from the banker's dubious claims about the effect cramdown would have on mortgage rates. This time around, Donnie Landry, a senior executive vice president at MidSouth Bank of Lafayette, told the Times that "she could not have been more cordial."

This also brings home a point made in this week's issue of The Nation by Chris Hayes, the magazine's Washington editor and a friend of the site. Hayes writes that progressives spend too much energy focusing on the petty minutiae of far-right Republicans and pundits. Instead, their biggest enemy should be the banking sector, which will fight tooth and nail to kill or severely weaken any attempts at health care reform, student aid relief, cap-and-trade, labor law improvements, or financial regulation. In other words, the defeat of Durbin's bill wasn't an anomaly. It's part of a gameplan the industry will continue to follow until resistance is applied.

Image used under a Creative Commons license by Flickr user JCKole.