Skip to comments.Obama Promising Dangerous Bankruptcy Law Changes To Win Votes on Bailout Bill
Posted on 10/02/2008 9:46:27 PM PDT by Dems_R_Losers
Barack Obama called Maryland Rep. Elijah Cummings on Tuesday with a promise: As president, he would revisit bankruptcy laws to give judges more leeway to prevent foreclosures.
Obama didn't need to lay out a quid pro quo because the message was clear.
Cummings, who voted against the financial-markets bailout on Monday, told Obama he was open to changing his vote but wasnt there yet.
"I have to look beyond [the bailout] to a rainbow called Obama," he said. "When you bring in the Obama factor, that's very very important."
As the final high stakes vote on the bailout bill approaches Friday, Cummings is not alone among lawmakers who have found solid reasons to reconsider their vote. Whether it's the "Obama factor," or the fact that billions in new tax incentives have been added to the bailout bill, it's becoming clear that opposition is wilting to the $700 billion financial rescue plan just in time for a second House vote on Friday.
(Excerpt) Read more at politico.com ...
Not only that, but Obama's pals at ACORN will have a million people in court within a week, demanding that the mortgages be wiped out completely because they were "predatory." Imagine how hard it will be to get a mortgage once that starts happening.
You are right on the money.
Bad idea, Obama. Foreclosure rates are fairly lowly. 1-2% of all mortgages.
This problem is with Mortgage backed securities and their faulty instruments. The vast quantity of these subprime mortgages is not good, either...but Obama and EVEN McCain really needs to understand this clearly and address that problem.
Returning the bankruptcy law back to what it was 8 years ago would not be dangerous. Not everything is a right left issue.
Returning the bankruptcy law back to what it was 8 years ago would not be dangerous. Not everything is a right left issue.
The Obama-Biden ticket has NO credibility here.
Can you say “mother of all class action lawsuits”.
700 Billion, nothing.
This change will instantly devalue every mortgage on the books of every bank in the country, and will instantly increase the interest rate on every new mortgage going forward. Just what we need right now! I sure hope the McCain campaign will pick up on this. Obama is promising a change that even Nancy Pelosi backed off on in the bailout bill.
What company would ever lend money if the principal or interest rate can change arbitrarily? Who would ever invest in companies that make those loans.
It makes no sense. The only lender in the country would be the government itself. It would need to become the mortgage provider for every American.
The only way this idea is logical is if they are talking about the gov’t owned mortgages. However, even then it is fiscally ridiculous.
Wow, I missed that part of the debate! This is outrageous and will kill what is left of the housing and mortgage industry.
This is because McCain had a hand in crafting this and he is looked to as the experienced statesman.
Voters will hold him accountable because he is supposed to know what he is doing.
Then, needed reforms will take much longer as the housing market collapses again and as Obama's minions continue to make a killing. That 700 billion is the price that has to be paid to keep Obama out of the WH.
Is it worth it? I think so.
An Obama presidency will enact reforms that will cripple the economy to the point where America will become overwhelmed and overtaken by competing countries all around the globe.
Clinton gave us 9/11 because of his buffoonery. What do you think Obama will bring us?
How much will he compromise national security and how much has he already?
See post #15.
I hope I spelled that correctly.
Maybe I should have said, “STEALTH reparations.” ???
Sorry...I posted to “All.”
I heard Biden say that, and my jaw dropped.
Am I the only one who didn’t know they were considering this? Astonishing.
Here’s an article from Huffington Post (sorry for the source) saying he was against bankruptcy reform. He’s flip flopping or trying something shady by changing his position.
I heard Biden say that the judge could not only adjust the interest rate of the mortgage - but the PRINCIPAL as well. Let me put on my “It’s a Wonderful Life” hat for a moment. Aren’t banks the repositories of people’s money, invested by the banks in things like mortgages to bring the interest paid back to the depositor? Splain it to me Lucy, but wouldn’t principal foregiveness be taking the depositor’s/investor’s money and giving it to the borrower? At least through a foreclosure the investor would have possession of collateral that could be sold to recover the principal.
A rainbow called Obama... I am amazed, how does a person go from a nobody community organizer to the most connected man on earth in just a few years. Is Obambi the anti-Christ?
He sold his soul to something evil, that is for sure.
It’s been mentioned on other posts during the past three days. Because of the volumn of postings it was easy to overlook.
At least you know now what the Dems are intending to do to the mortgage industry.
I'm to the point where I'd almost pay the extra taxes one time for reparations if they'd just STFU about it once and for all, and go to jail and pay a fine double the reparations if they ever mentioned the word again.
Banks will want 50% up front.
Isn’t this going against the Constitution? This is NOT the task of judges.
Our leaders are living in a strange fantasy world
Here in Maryland they have a program they call ‘affordable housing’ where they buy lower income people houses in your neighborhood with your tax money. They call it ‘affordable housing’ because the voters support that, but its paid for by property and income taxes, making our lives less affordable, almost 10K in state and local income and property taxes per year. Dimwit democrat Obama voters here cant figure it out.
McCain: "Senator Obama you are for cram downs on peoples first mortgages, correct? See folks here is where reasonable intelligent folks like Senator Obama let their ideology get in the way of critical thinking and common sense. Folks what bank would want to get into a contract where the terms could be renegotiated later based on the whim of one of the parties. Would you in your life agree to a car loan where the financing company could by going in front of a judge legally double your payment because the dealer was under duress? No, makes no common sense right? Like my running mate Sarah Palin said, we are telling you the the truth here not lollipops and sunshine to buy votes. By pandering and telling you what you want to hear no matter how illogical Senator Obama has demonstrated his liberal views and how his lack of understanding how the the economy fundementally works is dangerous for America"
Obama: Umm, well um, umm..millions of homeowners ..are, um...struggling...um, um..
I assume you wrote this and he never said it. His support for this bill makes him agree with Obama that contracts mean nothing. I heard him and Palin say it was ‘greed’ and both parties are to blame, and he’s not even a republicans but a reformer, and Oh house republicans, vote forthe bailout bill and lose your seats so maybe I can be president:
Why Republicans supporting democrat’s investor bailout bill is political suicide link
I couldn't imagine them having this kind of power.
For those here who don't know what that means....
The bill allows the feds to say; "You owe $300k at 8%? Well, we will make it $100k at 5%."
iow....here, have a free house; the US taxpayers will cover you.
Biden repeated it last night as a plank in the obama platform.
Gov Palin should have jumped on that with both feet when Biden brought it up. Obama not only wants to allow bankruptcy judges to change the interest rate, he wants to give them the power to change the amount owed. And then he claimed that it would somehow benefit the lender!
Furthermore it mandates that holders of secondary mortgages (and home equity loans) will have to accept any amount that the feds decide to give as full payment.
Yea his support for this bailout is puzzling. But I think he was against the cram down and ACORN stuff. But you get no points with me on that. McCain is like the prodical son, you love him but man he does stuff to just pi*s you off.
The Senate 'rescue' bill contains provisions for the feds to reduce the interest and the principal on delinquent mortgages. It also says that holders of secondary mortgages (and home equity loans) must accept whatever the feds decide to give as full payment.
McCain signed it. It is virtually a done deal.
She couldn't. That same provision is already in the 'rescue' bill that her boss endorsed.
If McCain loses election, his unwillingness to turn this issue back on rats will be a primary cause. Suppose he opposed the bailout because of pork and deficit spending?, Suppose he asked Obama why he supports bailing out investors that make risky decisions and make money during the boom and expect taxpayers to pay during the bust? Suppose he asked if Obama NOW supports trickle down? Suppose he asked Obama why an invester bailout helps the economy when he is claiming trickle up on his website(I link to it) , claiming tax increases and tax rebates =welfare checks will revive the economy? Suppose he made Obama debate the bailout bill? NO , McCain caved, voted for the bill and HID like a coward during the senate debate where Obama attacked republicans for trickle down . Pathetic, makes me sick.
Why Republicans supporting democrats investor bailout bill is political suicide link
"Reduction in the interest rate
Reduction of Loan Principal
Other similar modifications" (of loans)
McCain signed it. Bush will sign it. We will end up buying homes for deadbeats.
What I want to know is what Biden meant last night when he said something about “adjusting principle.” Do they actually plan to tell banks they can’t recoup all the money they’ve loaned? Scary stuff.
In the rescue bill, the government is given the authority to negotiate modifications of the loans with the servicer on behalf of the borrower. Servicers are already doing this directly and voluntarily with millions of distressed homeowners (check out www.hopenow.org for details). A voluntary loan modfication, even a reduction in principal, can be a good deal for the servicer if the alternative is a foreclosure and a sale at 10 cents on the dollar. Many of the mortgages underlying the securites that Treasury will buy under the bailout are in default and will need to be modified to get those borrowers paying, so that investors will want to buy the securities and they can be accurately priced.
The difference between this and a bankruptcy proceeding is huge. First of all, bankruptcy is adversarial and once the borrower files the servicer cannot contact them directly, they must go through their attorney and the court for everything. This is very tedious and expensive for the servicer. Second, the judge has almost unlimited authority to decide what is best for the creditor and the debtor. Judges have no understanding of mortgages. Lawyers will be bringing in lowball appraisals to demand huge cramdowns of principal, they will claim "predatory lending" and ask for the mortgage to be rescinded altogether, they will demand that "teaser rates" on ARM loans be made permanent, etc.
This will be a nightmare, and could lead to over a million new bankruptcy filings within days. Anyone who is on the edge of being able to afford their mortgage or is already in default would be crazy to not file bankruptcy immediately.
I will openly admit I have no patience to read the bill other than excerpts.
So, I ask those of you have have. Are these adjustments ONLY to gov’t owned loans? Or are they for loans owned by financial institutions?
I ask because if they are on gov’t owned loans, it makes a little more sense. In this case the gov’t rightfully has the ability to change the terms to benefit the lendee.
OTH, if this affects notes owned by financial institutions, the idea of a secured loan is null and void.
“We will end up buying homes for deadbeats. “
We were doing THAT already ... in the Housing bailout bill of a few months back.
“This is unbelievable. If you think the mortgage situation is a mess now, wait until every mortgage in America can be rewritten arbitrarily by a bankruptcy judge”
This was a dangerous provision that is NOT in the current bill, but WAS in the Dodd Democrat version floated last week.
Effectively, this is a sign of what the Democrats WOULD do if they had keys to all power.
It’s sickening beyond belief. That would screw investors and responsible homseowners alike on behalf of the irresponsible.
I guess that is what “bailout” means: Screw the productive and help the irresponsible.
Thanks for that important clarification. Everyone should read #45.
The nightmare bankruptcy-rewrite-cramdown provision scenario is not in the current bailout bill, but could well become law if Obama is President.