Whose side is Obama, on?. His constituents or the big banks who have been the recipients of Bush and Cheney’s and his administration’s largesse?
Rhetorical question, right?
Yes, but the novelty is that the outline (at least) of Obama’s betrayal is recorded in the NYT, in a front page story on how the banking lobby removed the “centerpiece” of the Helping Families Save Their Homes Act, namely giving judges the power to lower the amount owed on a home loan. (See excerpts from the Times story below.)
Never mind that keeping families in their homes is an important key to stabilizing neighborhoods and perhaps also to the nation’s economic recovery.
You’d think such a provision would be a priority for this government. But the sad story is that the banks and Secretary Geithner didn’t like it and so the Obama administration didn’t push for it, leaving a vacuum that the banks and the Republicans were all too happy to fill. In the void left by Geithner/Obama, the banks had little trouble rounding up a gaggle of Senate Democrats to seal the deal.
Selections from: The New York Times
June 5, 2009
(Ailing, )Banks Still Field Strong Lobby at Capitol
By STEPHEN LABATON
Throughout it all, the banks took advantage of the Obama administration’s seeming ambivalence. Despite its occasional populist rhetoric, the White House was conspicuously absent from weeks of pivotal negotiations this spring.
“This would have been a much different deal if Obama had pressed it,” said Camden R. Fine, head of the Independent Community Bankers of America and one of the chief lobbyists opposing the bankruptcy change. “The fact that Obama effectively sat it out helped us a great deal.
In the end, the banks’ startling success in defeating the provision, which was pushed hardest by Senator Richard J. Durbin, Democrat of Illinois, caught even their lobbyists by surprise. Not only did they defeat the cramdown provision, but the banks walked away with billions in new bailout money.
Housing advocacy groups argued that it was unfair that bankruptcy judges have had the authority since 1978 to modify mortgages on vacation homes, farms and even luxury yachts, but not on primary residences. They also argued that a string of federal programs to help reduce foreclosures had been ineffective because of resistance by lenders and investors who own pools of loans, all of whom stand to lose money when a mortgage is modified.
Those arguments won the day in the House, which adopted the legislation on March 5 by a 234-191 vote.
In the Senate, where Republicans were looking for a chance to recoup after narrowly failing to block Mr. Obama’s huge stimulus package, the banks argued that the proposal interfered with their contractual rights.
But the real threat was to their profits. The proposal would have shifted negotiating power to the millions of troubled homeowners who could use the threat of bankruptcy to wrest lower monthly payments from lenders. The banks claimed that that would force them to raise rates.
That claim is in dispute. For one thing, the legislation would not have applied to new mortgages….
While Mr. Obama reaffirmed his support for the proposal shortly after becoming president, administration officials barely participated in the negotiations, a factor that lobbyists said significantly strengthened their hand. Lawmakers who have discussed the issue with the administration said that the president’s senior aides had concluded that a searing fight with the industry was simply not worth the cost.
Moreover, Timothy F. Geithner, the Treasury secretary, did not seem to share Mr. Obama’s enthusiasm for the bankruptcy change.
Mr. Geithner was lobbied by the industry early. Two days after he was sworn in, he invited Mr. Fine from the community bankers to his office for a private meeting. The association, with influential members in every Congressional district, is one of Washington’s most powerful trade groups.
A senior adviser to Mr. Geithner said the administration supported the cramdown proposal, but it preferred that distressed homeowners seek to modify their loans through the Treasury’s new $75 billion program, which rewarded banks if they modified home loans, rather than through bankruptcy court.
Mr. Durbin acknowledges that it was a mistake not to call on the administration for help.
“If I would have known how it would unfold, I would have called on the White House earlier to get involved,” he said….
There was no counterweight to that legislative muscle. Bankrupt homeowners do not have a political action committee or lobbyists.
Mr. Fine reports that the political action committees run by his association alone have built a war chest of nearly $2 million, a 40 percent jump over the last year, even though members have had to cut other expenses in the recession.
“The banks get it,” Mr. Fine said. “They understand you need a strong political action committee to get access to the fund-raisers. That’s where the lawmakers are.”