UNDERNEWS

Undernews is the online report of the Progressive Review, edited by Sam Smith, who has covered Washington during all or part of one quarter of America's presidencies and edited alternative journals since 1964. The Review has been on the web since 1995. See main page for full contents

January 23, 2009

PELOSI DOES SOMETHING RIGHT FOR A CHANGE

This was one of the ways that the New Deal got things done fast and well in the Depression. It is an indication of the times we live in that today some consider it radical

Washington Post - House Speaker Nancy Pelosi gave her support to legislation that would allow bankruptcy judges to modify troubled mortgages, saying it is a "very high priority and should be passed as soon as possible."

Democrats have been considering whether to include the provision in the economic stimulus package making its way through Congress or attempt to pass it as a stand-alone bill. "Either way, I'd like to get it passed as soon as possible," the California Democrat said.

House Majority Leader Steny H. Hoyer (D-Md.) told reporters that the provision has support in both the House and Senate, but its inclusion in economic stimulus legislation would probably make it more difficult for that package to pass in the Senate. "President Obama, as you know, said he is for doing this but would prefer not to do this in the package because this package is so critical to get this done," Hoyer said. "Whether or not it is included in this bill or subsequent bill still remains to be seen."

Some Democrats, including Sen. Richard J. Durbin of Illinois, have been pushing for the provision since 2007, but have faced strong resistance from the banking industry. The effort received a boost earlier this month when Citigroup reached a deal with Senate leaders to support the provision. According to a congressional aide, two other large banks are actively negotiating with Durbin.

Pelosi's comments came as the House Judiciary Committee debated versions of the legislation, which would allow bankruptcy judges to change the terms of a mortgage by reducing its interest rate, extending its length or lowering the loan balance, known as cram down provisions.

"A year ago modifying mortgages in bankruptcy seemed radical," Adam J. Levitin, a Georgetown University associate law professor, told the committee. "Now it is a moderate response. Our choices today are bankruptcy modification or nothing."

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