The US Senate, a wholly owned subsidiary of the banking industry:
On the same day that the White House announced that overextended Chrysler would go into a “quick” bankruptcy — its loans rewritten by a judge to emerge for life another day — Senators defeated a proposal to allow bankruptcy judges to rewrite home loans.
The vote on a so-called “cramdown” proposal, which President Obama supported during the presidential campaign, was 45-51 despite support from the president and the endorsement of one large bank, Citigroup. Read more on Citigroup’s endorsement of the plan HERE. The mortgage restructuring proposal needed 60 votes to pass so it didn’t even come close to passing. Several Democrats, including the newest Democrat, Sen. Arlen Specter of PA, opposed cramdown.***
Durbin said on the Senate floor that in negotiations, the banking industry argued that restructuring primary home loans — secondary home loans and luxury loans for items like yachts can already be restructured by a bankruptcy judge — would create a moral hazard in this country.
“Senator, you don’t understand the moral hazard here,” Durbin paraphrased the banking argument. “People have to be held responsible for their wrongdoing. If you make a mistake, darn it, you’ve got to pay the price. that’s what America is all about.”
“Really, Mr. Banker on wall street? that’s what America is all about?” he railed.
“What price did wall street pay for their miserable decisions, creating rotten portfolios, destroying the credit of America and its businesses?” Durbin said of the $700 billion Wall Street bailout Congress passed, and Durbin supported in the waning days of the Bush administration. “Oh, (the bankers) paid a pretty heavy price. Hundreds of billions of dollars in taxpayers’ money sent to them to bail them out and put them back in business, even to fund executive bonuses for those guilty of mismanagement. Moral hazard, huh? How can they argue that with a straight face? They do.”