Obama Promising Dangerous Bankruptcy Law Changes To Win Votes on Bailout Bill

Politico ^ | October 2, 2008 | Patrick O'Connor

[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 wasn’t 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.

[Dems_R_Losers]

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. The Treasury Department will never be able to sell any of those toxic mortgage-backed securities because the risk of the underlying loans being completely wiped out in a bankruptcy cannot be quantified. They will not be able to get a credit rating and nobody will buy them.

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.

[kenavi]

You are right on the money.

[Rick_Michael]

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.

[Hillary's Folly]

Returning the bankruptcy law back to what it was 8 years ago would not be dangerous. Not everything is a right left issue.

[Hillary's Folly]

Returning the bankruptcy law back to what it was 8 years ago would not be dangerous. Not everything is a right left issue.

[originalbuckeye]

I'm still waiting for EITHER side to quote JFK- ‘ask not what your country can do for you, ask what you can do for your country’.

The Obama-Biden ticket has NO credibility here.

[Cringing Negativism Network]

Wow.

Can you say “mother of all class action lawsuits”.

700 Billion, nothing.

[Brizick]

This is Dick (head) Durbin's idea.

If Obama wins, we are so screwed.

[kenavi]

Returning the bankruptcy law back to what it was 8 years ago would not be dangerous. Not everything is a right left issue.

Fulfilling one's obligations should not be a right left issue. It is becoming one again.

What do you find objectionable about the last revision of the Federal bankruptcy code?

[Dems_R_Losers]

First mortgages have been exempt from bankruptcy since 1978. That is because they are secured loans. Bankruptcy is intended to produce an orderly discharge of unsecured debt. When you get a mortgage, you sign a note that says if you do not pay it the bank takes your house. You don't get to break that contract just because you ran up a bunch of other bills you can't pay and you think you are still entitled to stay in your house or just have a judge wave a wand and reduce your payment.

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.

[lmr]

Sorry to interject here, but I think the last revision to the bankruptcy code artificially removed some risk for credit card lenders by promising credit card companies that a portion of their unsecured debt be guaranteed where it was previously a write-off.

I think if credit card companies had to take on all the risk, they might quit giving cards out like candy to any warm body.

Take care.

[laxcoach]

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.

[GAgal]

In tonight's debate, Biden said that he and Obama wanted to give judges the ability to change the principals of loans: "Number two, with regard to bankruptcy now, Gwen, what we should be doing now -- and Barack Obama and I support it -- we should be allowing bankruptcy courts to be able to re-adjust not just the interest rate you're paying on your mortgage to be able to stay in your home, but be able to adjust the principal that you owe, the principal that you owe." Note he repeated it to make sure he got that across. That should outrage responsible voters who live within their means.

[Dems_R_Losers]

Wow, I missed that part of the debate! This is outrageous and will kill what is left of the housing and mortgage industry.

[TheThinker]

Today I realized that if the bailout fails and the economy goes south, it will be laid at the feet of McCain and Obama will win.

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?

[TheThinker]

See post #15.

[dixiechick2000]

Reparations...

[dixiechick2000]

“Reparations...”

I hope I spelled that correctly.

[dixiechick2000]

Maybe I should have said, “STEALTH reparations.” ???

[dixiechick2000]

Sorry...I posted to “All.”