Bank lobbyists lean on Congress and defeat a key provision of new housing legislation

It's a good thing too as it slows the disappearing rule of law.

The writer of the article is a fool: she assumes that the politicians know what should be done. and the private sector, in this case bankers, do not. What are her credentials?

Mortgage cramdowns would indeed increase cost of borrowing and further tighten lending guidelines with higher down payments, both of which would further reduce housing prices if not bring a bank to its knees and decide not to lend capital altogether.

Truth is, executive branch regulators are already infiltrating banks with new board directors, chief executive officers, and chief risk officers to fix the problem from the inside, government shouldn't need the judicial branch gumming up the works. The judicial would likely complicate the work attempted by the executive branch.

dbau5 - it's a decent article. Does anyone know? There are always at least two sides to any given dispute, but in this case there may be hidden factors. It brings to mind one large bank that has no problems with the so called "sub prime" mortgage market, yet they closed two large mortgage writing facilities and laid off some 300 personnel. They don't have any capital problems and are not on any government bail out list. How do you do this? Sheer size? Large reserves? Or, could this be the bank of Mao and have one big backer that does feel inclined to tell the world that they may be in a little deep.
In general terms, the lobbyists move to squash a reduction provision could just as easily backfire right in their face. If the real estate market does not hold and continues to sink? Tell me, how motivated would an owner be to hold on. If there are no negotiations, than, the banks become property owners en mass, and with this, the taxes and upkeep. It is simply, a stupid move.

Of course there should be a cramdown provision in the bill. The days of special interests have got to end. Where are the watchdog groups and what are they doing about this? There is certain to be a backlash from the public. I, for one, am going to post an article and list on http://ndfenceofobama.blogspot.com listing all those who voted to defeat the bill. Those who did have obviously sold out to big banking.

In the long run a depression would be preferable to the insane intrusion of the (inept, corrupt, manipulated by special interest groups) government we are about to suffer. We are becomming the new France. What's next? The government setting "fair" housing prices?

This is playing out badly for free enterprise. Americans have lost more freedom in the last year than in the previous century.

This whole thing shows exactly why letting the government run things is so dangerous. On the one hand, you have pious populist rhetoric coming from the White House...designed to get people to vote for the exisiting politicos...but then they actually turn around and sell out to the banks & special interests they claim to want to "regulate"!
So it's the lesser of the the two evils...at least you can refuse to do business with banks...but Government has the power of the state behind it...any once they get in controll....you have no choice. Just wait 'till they try to "fix" healthcare!

Like others have said, it's a good thing judge-defined cramdowns have been defeated.

A contract is a contract, and there are already defined provisions for unaffordable loans. It's called moving out and renting. Renting is not the end of the world (it can be exceptional!) and living in your house is not a right.

If mortgage lenders want to agree to loan modifications (it's in the best interest in many cases) then that should be a decision between the mortage lender and homeowner.

Plus, houses are sold primarily based on 'comps', or comparisions between other nearby avaiable comparable properties. If one person gets a cramdown, then that comp which many others' house prices were based was inflated, and every one who purchased afterwards has been damaged and deserves compensation.

Let the market work...it's best for everyone.