Could Have Lifted A Finger

by dday

The New York Times takes notice of White House silence in the wake of Sen. Durbin's failure on cramdown.

The Obama administration sat by last week as 12 Senate Democrats joined 39 Senate Republicans to block a vote on an amendment that would have allowed bankruptcy judges to modify troubled mortgages.

Senator Obama campaigned on the provision. And President Obama made its passage part of his antiforeclosure plan. It would have been a very useful prod to get lenders to rework bad loans rather than leaving the modification to a judge.

But when the time came to stand up to the banking lobbies and cajole yes votes from reluctant senators — the White House didn’t. When the measure failed, there wasn’t even a statement of regret.

Digby has mentioned the coming second wave of ARM recasts and accompanying foreclosures, not to mention the acceleration of foreclosures brought on by mounting job loss. As Durbin said in his floor speech, when he first offered up the cramdown option 2 million homes were threatened by foreclosure. Now we're looking at 8 million, and nobody should expect that number to go down the next time the very serious Senate kills the provision. The Times estimates that 14 million homeowners are underwater on their mortgages. As Atrios says today, "I don't want to hear any of this 'nobody could have predicted' crap from Larry and Timmeh."

With opposition that strong, I'm not sure the President could have brought around all twelve Democrats who voted no to his side. But they might have given it a try. Because it's clear now that the best tool for dealing with the second-order foreclosure crisis, which will affect the banks and the greater economy in an exponential way, is lost for the near future, and the consequences will be deep.