Does Evan Bayh think Indiana doesn't have a foreclosure problem?
I mean, seriously, does he think that Indiana is populated by mortgage industry high-rollers who aren't worried about losing their homes, instead are more concerned with ensuring that no one can ever get out of what was probably a predatory mortgage agreement from the beginning?
Because he sure is acting like it.
I don't usually post much about Indiana politics because I don't consume much local media, but here I am reading a few of the national blogs and news sites I follow and I find Evan Bayh is making a fool of himself in front of the entire country because his buddies in the finance industry might be forced to share a portion of the costs of fixing the problems spawned by their predatory lending and their own damn incentivization of high-risk loans.
The House last month passed what was called "cramdown" legislation. It would allow bankruptcy judges to renegotiate the terms of primary home mortgages, giving them authority they already have when it comes to other loans (like for vacation homes and yachts). It was already compromised in the House to protect the interests of the banking industry, and now it's up to the Senate to pass a similar version.
Except there's one so-called moderate Democrat, leading a coalition of so-called moderates, trying to gut the provision so that it's completely ineffective by making it only apply to subprime loans, most of which have already been foreclosed on. Heaven forbid someone who got a loan that was OK for them at the time but lost a job, lost pay, or lost health care benefits be allowed to keep his or her home as his or her financial realities have changed.
Business Week explains cramdown:
Often called cramdown - from bankruptcy-court jargon for judicially reduced debts generally - the concept is simple: Give judges the same power over primary-residence mortgages that they have over virtually all other debts, including mortgages on vacation homes and multi-family housing.
The difference, of course, between primary-residence mortgages and all other loans is that poorer people are more likely to have them.
Cramdown would save about 20% of homes from foreclosure. It's a good provision that the finance industry doesn't want because, as they say, it would raise the cost of lending on everyone because of the moral hazard it would present. Because dealing with the risk peasants took during the housing bubble is moral hazard, but the government bailing out high-rollers on Wall Street who took insane risks is absolutely necessary.
I mean, what are we, Marxists? Of course we have to pay off Wall Street's gambling debts. No serious person would question that. But helping anyone else really does reek of socialism, doesn't it?
Where Evan Bayh enters all this is when it comes to his role as the leader of the Senate "moderate" Democrats. Don't be fooled by the title; these folks aren't moderate at all. They're a pro-business coalition that's actively working against the interests of the American people and against Obama's platform to reform the finance industry, all to increase their power, put themselves in the spotlight, and satisfy their friends in the finance sector.
Basically, Bayh wants to be the next Joe Lieberman.
It also has something to do with what Jan Hamsher is calling Bayh's little lobbyist problem:
Indiana has a huge foreclosure problem (see map). It's estimated that giving bankruptcy judges the ability to write-down mortgages would cut the foreclosure rate by 20%, without any cost to the taxpayers. But Bayh doesn't seem to be responsive to that concern. I wonder why....
Top 5 Contributors, 2003-2008
Goldman Sachs $123,750
Eli Lilly & Co $65,722
Latham & Watkins $50,300
Orrick, Herrington & Sutcliffe $47,816
Next Generation $46,750
Top 5 Industries, 2003-2008
Lawyers/Law Firms $1,363,171
Securities & Investment $1,005,186
Real Estate $432,200
Misc Finance $255,701
Bayh's little "lobbyist problem" is considered by many to be what tanked his Vice Presidential aspirations. His wife Susan earns about $837,000 a year serving on seven corporate boards, among them Wellpoint, a health insurance company for which Bayh helped secure a $24.7 million dollar grant. She's on the board of ETrade, even as Bayh is on the Senate Finance Committee.
His fancy-pants committee seat along with his position as the only way to save any liberal legislation in the Senate (by making it conservative), actually puts him in a nice position to make bank off lobbyists and feel like a big man for all the power he's assuming.
His position on this provision is opposed by 2/3 of America, making it anything but "centrist" or "moderate."
I guess we should have seen this sort of back-stabbing of the middle and working class coming back when he was campaigning as a "fiscal conservative," but, well, here we are. And while Indiana has a conservative bend, that doesn't mean people like Bayh should be ignoring the increasingly urban/suburban nature of Indiana's population.