Remind me again, why is Reid majority leader? "If someone says boo to me, I'll cave!" "I'll surrender the (unimportant) thing that ordinary people need to make sure the (important) things that rich people need will pass."

What a useless tool.

Reid must be a dumbass.

By announcing his willingness to drop the provision, he's signaling that to the opposition they need merely raise a little fuss and he'll rollover.

I surely hope there's more to this move than meets the eye.

Caving . . . Democratic leadership . . . consider it done. (You might as well tell fish not to swim as our Democratic leadership not to cave in on something.)

One reason this happens is that if the mortgage has been securitized, it's very hard to locate all the people who now own a tiny little piece of it, let alone to get them all to sign off on renegotiating it.

I'm not sure if this is paraphrasing the NYT article, which says

The way mortgages are bundled and resold, it can be enormously time-consuming just trying to determine what company holds the loan on a property thought to be in foreclosure.

but they both sound like nonsense to me. They don't seem to have trouble finding a place to send the mortgage receipts, do they? And since when do bond holders get to vote on how assets are managed?

Reid and Pelosi will be the death of this administration and the party, if they aren't replaced and soon, as both will be judged primarily by what is accomplished this year. And the way things are going, well... I mean, seriously, you'd think Democrats still only had 51 senators, they way Reid is behaving.

I'm fortunate that my 2 senators are supporting the cram-down legislation.

I agree with Hilzoy, and would urge anybody living in a state where your senator doesn't support it: call them and let them know what your thoughs are.

If you have relatives and friends who live in a state with contrarian senators; urge them to call.

This is important and won't take that much time to accomplish.

Too bad I don't know anybody living in the state of Moron Senator Bayh. What a sorry excuse he is. And imagining that he was even 'considered' for the VP post gives me chills.

if [consumers] are not able and willing to spend, then even the best-run businesses will fail.

This is relevant not only to cramdowns but to pay scales. If you and all your corporate-exec buddies decide to give yourselves huge bonuses while reducing rank-and-file pay, eventually your companies will all go bust as no one can afford to buy what you sell.

Not that we didn't already know who (most of) Congress really works for, but this is obscene.

The one good thing about legislation authorizing cram-downs for home mortgages is that it will raise the price of mortgages and thus keep people out of the market who should not be in it. If lenders respond by only giving mortgages to folks who can put 20% down and swing a 20-year fixed rate mortgage (and damn few of those mortgages are currently in default), well, that would be an unalloyed social good.

"Besides all that, though, there's a good economic case for allowing cramdowns. We seem to be rescuing a lot of companies lately. But it's no good trying, for instance, to save GM if we don't have customers who are able and willing to buy cars."

I am in favor of cramdowns, but is it really credible to argue that if people get their mortgages crammed down in bankruptcy court, they'll then be able to run out and buy cars? There are plenty of logical reasons to support cramdowns without stretching the argument beyond the point of credibility.

I am agree with every think you said about cramdowns.

I just still feel dicked, though. Who is talking about lowering my rent on an apartment that I dont even own and whose rent could go up any year? Nobody is who. Hopefully part of this administration will be a move away from the insane incentives given to home ownership.

DBL: There are plenty of ways to keep those who can't afford mortgages out of the market without making them more costly for those who can swing a mortgage: more stringent credit checks; mandatory income/asset checks; abolition of many of the dicey subprime mortgages now mouldering on the books of the banks -- oops, I mean taxpayers; stricter regulation of the banking/brokerage industries etc.

Limiting mortgages to those who can swing 20% and qualify for 20-year mortgages isn't "social good," it's elitism. And I say that as someone with a 15-year fixed mortgage I got in 2002 at 5%. Where I live, in NYC, you'd basically be asking people to cough up $120,000 before they could buy a $600,000 house -- which, believe me, would be a pretty modest home.

Maruro,

That's the point. No one walks away from a $120,000 equity investment because of a dip in the real estate market.

Houses would be a lot cheaper in NYC (and elsewhere) if buyers had to pony up 20% equity to get a mortgage. That, too, would be an unalloyed social good.

DBL: No one I know has walked away from their homes in Brooklyn, and they all put down a heckuva lot less than 20%. And limiting mortgages to the best-off financially wouldn't drive home prices down. It would also, in most expensive urban markets like Chicago, NYC, LA, etc., pretty much guarantee that no teacher, firefighter, cop, or any other non-Wall Street type could ever buy a home, which would make these cities even less diverse and more ultrayuppified than they already are.

No one declares bankruptcy just for fun.

Really? Should get acquainted with the real world sometime.

It would also, in most expensive urban markets like Chicago, NYC, LA, etc., pretty much guarantee that no teacher, firefighter, cop, or any other non-Wall Street type could ever buy a home, which would make these cities even less diverse and more ultrayuppified than they already are.
Posted by: mauro

Like ordinary people make as much as teachers, firefighters, and cops. Is this the same city, Cheecago, Mexinois, we're talking about where we have a million illegal aliens that are given mortgage assistance through Gov. Blago's Hispanic vote buy program?

Houses would be a lot cheaper in NYC (and elsewhere) if buyers had to pony up 20% equity to get a mortgage. That, too, would be an unalloyed social good.

Not really -- in large urban areas like NYC, real estate speculators would buy the available houses and rent them out, so you would increase the number of renters and concentrate the ownership of the homes in the hands of an increasingly small number of people as they get traded back and forth by the companies that own them. Unless you think that any state is going to support making businesses pony up a 20 percent cash down payment before they're allowed a mortgage, all you're going to do is make it even more difficult for private individuals to buy a home.

That's pretty much the situation we're in here in Los Angeles -- a lot of people bought two or three houses in the 1970s when they were cheap and have been renting them out ever since. There really aren't a whole lot of properties available for purchase unless you get out to where the large developments are in places like Valencia or Lancaster.

Really? Should get acquainted with the real world sometime.

Please name at least two people of your acquaintance who declared bankruptcy because it seemed like a fun way to spend an afternoon.

Of course, there are plenty of men who declare bankruptcy and move their assets around to avoid paying child support, but I'm sure you don't support people who would do something so dishonest and criminal so he can avoid his legal and moral responsibility to support his own children, right?

Can someone explain this obsession with home ownership? Why gives a shit if people cant buy a home? I have lived in apartments all my life and have been fairly content. I havent ever been foreclosed on, all my furniture disassembles, and I have lived closer to restaurants, museums, theaters, grocery stores and universities than I ever would in a house I could afford.

Right, and I know thats my choice, and other people might choose to live in a home. Thats their choice, too. But you know where I would really like to live? On a boat. But I can´t. Do you know why? Because it is too expensive.

Can we please, as a society, stop being such a bunch of self indulgent whiny ass titty babies about home ownership?

"..And no one likes declaring bankruptcy. No one declares bankruptcy just for fun. So the problem of moral hazard is, in this case, a lot smaller than it would be otherwise.."

y'think!? Tell that to the ex-wife; she's done three Chapter 13's, and is working on number four.
(and yes, she had a subprime mortgage, from
Contrywide, no less ...)

Senator Claire McCaskill is my dem senator and usually does what Bayh does but what really irks me is:

Why would Harry Reid announce before the vote that if he doesn't get "this" then he will remove it from the bill to get "that"? So now those in opposition know he will remove what they oppose and still put the measure up after it is removed. Does stupidity or wasting time ring a bell here?

This should be a no brainer if these goobers are serious about helping people stay in their homes.

Once again we got Bayh and other dems putting the brakes on a progressive agenda. My blue dog demon senator took her contact site down...she may be sharing mail with Kit Bond's office by now since there is so little difference between him and the blue dogs.

Luther: "...Like ordinary people make as much as teachers, firefighters, and cops. Is this the same city, Cheecago, Mexinois, we're talking about where we have a million illegal aliens that are given mortgage assistance through Gov. Blago's Hispanic vote buy program?"

I lived in IL most of my life and there was no way my husband (a teacher) and I could afford to buy in my hometown or anywhere else in the northern 1/3 of the state.
And IMO, the best way to curb the migration of illegal aliens into this country is for Americans to get their kids, their siblings, friends, maybe even themselves, off the drugs that are destroying Mexico for any Mexican citizen who wants to actually live and work there.

"Allowing cramdowns is good for everyone."

False.

Cramdowns are not good for the would be buyers (especially first time buyers) who would inevitably buy the house at reduced prices.

That's not to say that cramdowns are a bad idea, but there are winners and losers in every transaction.

A fair amount of responsible people chose not to buy houses at inflated prices while their not so responsible neighbors did. They did this anticipating that once the market corrected, they would be able to afford to purchase the same house at a fair price. Now their not so responsible neighbors are going to stay in their house... leaving prices inflated, and forcing the responsible would be buyers to wait a bit longer.

I hear Monroe has some affordable houses.

If lenders respond by only giving mortgages to folks who can put 20% down and swing a 20-year fixed rate mortgage (and damn few of those mortgages are currently in default), well, that would be an unalloyed social good.

Well no, as it would utterly destroy the housing market and cause tent cities to spring up all over the country as people went homeless.

All for the sake of someone make self-righteous comments utterly disconnected from reality on a blog.

If we're talking hypotheticals where there's a pony behind every bush, then it would be an alloyed social good if everyone could just plunk down cash for their homes and not even have mortgages -- but that is a very unreasonable expectation in the face of over a decade of declining wages and skyrocketing health care and fuel and food costs.

As a consequence, the U.S. has a negative savings rate, and a statistically insignificant number of prospective buyers have 20% to put down on their house.

You may not have picked up a paper lately but the economy isn't doing so well.

Harry Reid should get together with the French President Sarkozy and the Libbyan nut Khadaffi and discuss ways to blow up and walk out or surrender before the conference begins.

It would be entertaining.

Reid: If either of the other two gets angry I'll let them have what they want!

Khaddafi: You're all tools of America!

Sarkozy: If they don't give me what I want I'll leave!

---------

If Reid doesn't get the House version through then he had better get Durbin's bill passed or face being replaced.

You definitely don't begin negotiations by saying you'll give up key provisions if the opponents don't like it.