The Hill is reporting today that the Democrat-sponsored bill that would have allowed bankruptcy judges to rewrite mortgages (changing principle and interest payments–known in the industry as ‘cramdown’) has been defeated in the Senate. The White House supported the bill, the financial industry strongly opposed it. The bill would have played havoc with contract law–the bank or mortgage company contracts signed with consumers would have been worth nothing if they could be changed by a judge. Financial institutions would have to charge more for mortgages to allow for the possibility of changes to the mortgages in the future without the input of the financial institution.
The interesting part of the defeat of this law is the list of the Democrat Senators who voted against it. According to the article:
“Democrats voting against the measure were: Sens. Max Baucus (Mont.), Michael Bennet (Colo.), Robert Byrd (W.Va.), Byron Dorgan (N.D.), Tim Johnson (S.D.), Mary Landrieu (La.), Blanche Lincoln (Ark.), Ben Nelson (Neb.), Mark Pryor (Ark.), Jon Tester (Mont.), Tom Carper (Del.) and (Arlen) Specter.”
Well, Democrats, welcome to the world of Arlen Specter!