The defeat of Obama’s mortgage cramdown bill has been chalked up to the power of the banking lobby. Despite the populist appeal, several Democrats became convinced that the law would decrease the availability of mortgages at precisely the time the government is trying to expand lending.
Rhode Island Senator Sheldon Whitehouse said the banks were being “Greedy, stubborn and unreasonable.”
More blunt was Senator Dick Durbin of Illinois who said, earlier this week: “And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.””
None of this is really an indictment on the banks, of course. It’s a critique of Congress, which has let itself be sold. It wasn’t ridiculous for the Senate to vote down the cramdown bill — it had a lot of flaws, and even many critics on the left. What is ridiculous is that a Senator would vote against the bill at the behest of a certain lobby — one which played a central role in the current crisis — rather than vote agaisnt the bill just because they were convinced that it would’ve been bad policy.
Meanwhile, to get more sense of the post-vote spin, check out NYT which says the bill would’ve allowed judges to “fix” a mortgage contract, and it also says that with only 45 votes, the bill fell well short of a filibuster-proof majority. Hello, it fell well short of just a regular old-fashioned majoriy.