Legal Commentary

AP: BushCo To Accept Dem Plan

By Big Tent Democrat

According to this AP story, the deal about to be struck between the Bush Administration and Congress will essentially be the Dodd/Dem plan:

President Bush is bringing presidential candidates Barack Obama and John McCain into negotiations on a $700 billion rescue of Wall Street as Democrats and Republicans near agreement on a bailout plan with more protections for taxpayers and new help for distressed homeowners.

. . . They're still wrangling over major elements, including how to phase in the eye-popping cost — a measure demanded by Democrats and some Republicans who want stronger congressional control over the bailout — without spooking markets. A plan to let the government take an ownership stake in troubled companies as part of the rescue, rather than just buying bad debt, also was under intense negotiation . . . With the administration's original proposal considered dead in Congress, House leaders said they were making progress toward revised legislation that could be approved.

(Emphasis supplied.) Good stuff, but one sticking point that I think creates an opportunity:

Democrats are pushing to allow bankruptcy judges to rewrite mortgages to ease the burden on consumers who are facing foreclosure — a nonstarter for Republicans. Democrats acknowledge privately that the provision will almost certainly be dropped in the interest of a bipartisan deal. Obama told reporters it's "probably something that we shouldn't try to do in this piece of legislation."

. . . Democratic demands that Congress be given greater authority over the bailout and that the government be required to help homeowners renegotiate their mortgages so they have lower monthly payments already have been accepted in principle. Under the bailout bill, which will let the government buy huge amounts of toxic mortgage-related assets, "we're now the biggest mortgage holder in town, and we can do serious foreclosure avoidance," Frank said.

(Emphasis supplied.) I think Frank is right. The bankruptcy provision is a nice bargaining chip to allow the Congress to do that which they are looking to the bankruptcy courts to do. Which leads me to my favorite subject - HOLC. It is my hope and I exhort Senator Clinton and other Democrats to insist on a HOLC mechanism, even in principle in this bill, if without actually legislative authorization. This bill must recognize that a HOLC solution is part of this package.

I will gladly exchange HOLC for the bankruptcy change that has been proposed. Let's do this Democratic deal.

By Big Tent Democrat, speaking for me only

Full post as published by TalkLeft on September 25, 2008 (boomark / email).