The bankruptcy cram-down and the Massachusetts election
Today’s New York Times blames the Democratic defeat in the Massachusetts Senate election, in part on the failure of the Obama administration to help people reduce their mortgages to save their homes. Copy this link: http://www.nytimes.com/2010/01/21/opinion/21thur1.html
That’s the bankruptcy cram-down that candidate Barack Obama promised to support, but President Obama orphaned. Without Presidential support, it passed the House of Representatives, but died in the Senate. Before the election, based on his promise, I personally told a hundred people that they had a chance to save their homes if Obama was elected. (That was my advice as their lawyer; personally, I voted for the other guy.) Well, Obama got elected but he didn’t help and they lost their homes.
(The Washington Post January 9, 2010, had an excellent article by Kevin Huffman explaining why action is still needed, or foreclosures will continue and housing values will continue to fall. Otherwise, “this crisis could go on for years, dragging down the chance of real economic recovery.” http://www.washingtonpost.com/wp-dyn/content/article/2010/01/08/AR2010010803377.html)
Obama’s failure to push the bankruptcy cram-down had at least small impact in Massachusetts, and maybe a big one. The small impact was that probably ten thousand homes went to foreclosure there that could have been saved. Now, that by itself does not reverse a hundred thousand vote defeat.
The big impact would have been evidence that Obama’s recovery plan had something in it for the ordinary family.
Businesses have always been allowed to use bankruptcy to reduce what’s owed on an apartment or warehouse or office building. Allowing people to do the same to save their homes would show that Obama’s recovery plan included something for the middle class. Voters might would have been more willing to trust him on health care and the other issues, if he had fought for them on something they could see and understand.
So far, the only thing people can see that Obama has done is to throw money at the banks. And that wasn’t change; Republicans would have, and did, do the same thing. Think it was Harry Truman who said, if there’s a choice between a Republican and a Republican, the Republican will win most every time. That’s what happened in Massachusetts.