Victimizing the Victims

As I wrote last month, it seemed as if the Executive Branch of our government had decided to place on the back burner (if not ignore) the plight of the victims of predatory lending practices in the wake of the credit crisis:

As I pointed out at the end of last week, the concrete actions we have observed (which the media have dutifully reported) have been blatantly concerned more with the "suffering" of financial institutions than with any "individual homeowners." If those homeowners are to take any comfort at all, it will come from actions by the Congress and only if the President does not apply his veto power to those actions!

Well it now seems clear that those homeowners will receive little comfort from the Senate, which means that the House of Representatives is their "last best hope." This was made painfully clear in the analysis that Stephen Labaton and David M. Herszenhorn prepared for The New York Times regarding the Senate vote on the Foreclosure Prevention Act. The title of this bill, which may have been assigned by primary author Christopher Dodd, would give the impression that it was concerned with means to protect those most seriously victimized by greedy lenders against the foreclosure of their homes. However, according to the Times report, Dodd himself "said the measure did not live up to its name and that he wanted changes." What happened, of course, is that the lobbyists had a field day while the bill was being debated:

To press their case on Capitol Hill, 15 of the biggest residential construction companies, including KB Homes and Toll Brothers, formed a coalition and hired a lobbying firm, the C2 Group, apart from the larger National Association of Home Builders.

Tom Crawford, a founder of the C2 Group, met with staff members of the Senate Finance Committee, several of whose members had already begun expressing concern about the effect of the slowing economy on home builders and other businesses.

The home builders were hardly the only industry that lawmakers heard from as the Senate housing legislation took shape and it became clear that the bill would provide more in the way of tax breaks aimed at stimulating the economy than direct assistance for distressed homeowners.

The cause of the automobile manufacturers was taken up by Senator George Voinovich, Republican of Ohio, and Senator Debbie Stabenow, Democrat of Michigan, who pushed to allow them access to up to $40 million each in alternative minimum tax credits.

This is why Dodd called it exactly right in stating that the bill that was passed "did not live up to its name;" those originally intended to benefit from the legislation had been lost on the cutting room floor.

If there is any good news, it is that they have not yet been lost on the floor of the House of Representatives:

These [House] Democrats said that the Ways and Means chairman, Representative Charles B. Rangel, Democrat of New York, and other leaders, including Nancy Pelosi, the House speaker, would oppose the provision as benefiting builders at a time when Congress should be helping homeowners.

“This ship largely sailed when Congressional Republicans left it out of the stimulus package,” said one House Democratic aide, who spoke on condition of anonymity so as not to interfere with negotiations.

Unlike the Senate bill, which includes a tax credit of up to $7,500 for purchasers of foreclosed properties, Mr. Rangel’s bill provides a credit for all first-time home buyers — a move that drew strong support from the National Association of Realtors.

“This is a meaningful incentive that should draw into the market many purchasers who, to date, have remained on the sidelines,” the president of the group, Richard F. Gaylord, wrote. “We believe this credit can convert ‘lookers’ into first-time home buyers.”

Other industry groups were also eager to sign on as supporters of Mr. Rangel’s bill, even as many of them hope to push him to endorse a more expansive menu of tax breaks that will benefit them.

Among them were the National Association of Home Builders, the Mortgage Bankers Association, the Securities Industry and Financial Markets Association, the Council of Federal Home Loan Banks and the American Hospital Association.

So victimized homeowners may yet be able to come in from the cold, but none of us should hold our breath. Even if the House passes a radically different version of the bill, that will only mean that a new version will have to be wrestled out in committee; and we have no way of predicting the direction that the resulting compromise will take. Then there will be the inevitable threat of veto from the White House, so things are pretty bleak.

Meanwhile, all those victims (not to mention the rest of us) would probably like to know where our next President is likely to stand on this mess. Fortunately, we can all examine the tally. All twelve "Nay" votes were cast by Republicans; so this came down to a strong gesture of party unity on the Democratic side. However, none of the three remaining viable candidates for the Presidency participated in the vote; and their "Not Voting" status was shared only with Elizabeth Dole. In other words none of the candidates has gone on record over a piece of legislation that begin with good intentions and turned into a potential Road to Hell. It is bad enough that Dodd himself capitulated to vote "Yea;" it is worse that neither Barack Obama nor Hillary Clinton would make an accountable declaration of how those hurt the most by the credit crisis were most abandoned by the first major gesture the Senate has made.