Senate Dems Stick To Controversial Bankruptcy Change

Senate Majority Leader Harry Reid (D-Nev.) signaled Wednesday that Democrats will not back down on their commitment to a controversial bankruptcy provision of their “housing stimulus” package, even if it means the defeat of the measure.

The White House issued a veto threat against the legislation yesterday, singling out the bankruptcy piece as one of the main reasons for administration opposition. A large coalition of mortgage lenders and other market players lobbying against the measure has made clear they won’t support a bill containing any version of the bankruptcy change.

“I have no expectation of reaching any kind of agreement with the White House,” Reid said at a press conference, when asked about efforts to win support from President Bush. “So we’re going to do what we think is best for the country. If we get 67 votes, that’s great.” That’s the number of votes the Senate needs to override a presidential veto.

The contentious measure, sponsored by Majority Whip Richard J. Durbin (D-Ill.), would change the bankruptcy code to allow judges to modify primary residential mortgage loans for certain homeowners. Proponents say it could provide a last-chance way for some 600,000 families to keep their homes. Critics, including lenders, say the uncertainty triggered by even a temporary change would force up mortgage costs for everyone.
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