Blue Dogs and Bailouts
Source: Pelosi Focusing Bailout Plan on Exec. Pay, Bankruptcy
According to a senior House staffer, Speaker Nancy Pelosi is likely to insist that any Wall Street bailout bill contain two specific items from the Democrats’ wish-list: limits on executive compensation, and a measure to protect homeowners by allowing mortgages to be renegotiated in bankruptcy proceedings.
Things may not go smoothly on those fronts, however. House Republicans have signaled their firm opposition to executive pay limits. And the Blue Dogs, a faction of fiscally conservative Democrats, may be “uncomfortable” with changing bankruptcy laws, said the staffer.
Really! That’s just fascinating! Let’s do the time warp again, shall we?
In 2005 the Blue Dogs were totally fine with changing the bankruptcy laws. In fact, the Bankruptcy Reform Bill of 2005, passed with the overwhelming support of Blue Dogs (32 ayes, 4 nays), is at least partially responsible for the mortgage meltdown, according to Bloomberg:
Washington Mutual Inc. got what it wanted in 2005: A revised bankruptcy code that no longer lets people walk away from credit card bills.
The largest U.S. savings and loan didn’t count on a housing recession. The new bankruptcy laws are helping drive foreclosures to a record as homeowners default on mortgages and struggle to pay credit card debts that might have been wiped out under the old code, said Jay Westbrook, a professor of business law at the University of Texas Law School in Austin and a former adviser to the International Monetary Fund and the World Bank.
“Be careful what you wish for,” Westbrook said. “They wanted to make sure that people kept paying their credit cards, and what they’re getting is more foreclosures.”
So it’s funny to see the Blue Dogs say they’re “uncomfortable” with changing the laws surrounding bankruptcy. They had no such discomfort 3 years ago: in fact they jammed it down America’s collective throat. There was no constituency for this legislation other than lobbyists for the banking and credit industry and the CEOs they represent.
Do you think the Blue Dogs’ new squeamishness about “changing bankruptcy laws” has anything to do with the fact that changing the laws to protect homeowners and consumers might have the effect of reining in some of the Blue Dogs’ biggest funders? Just askin’…
September 23rd, 2008 at 11:28 am
[...] Brendan wrote an interesting post today onHere’s a quick excerptSo it’s bfunny/b to see the Blue bDogs/b say they’re “uncomfortable” with changing the laws surrounding bankruptcy. They had no such discomfort 3 years ago: in fact they jammed it down America’s collective throat. There was no constituency b…/b [...]
September 23rd, 2008 at 1:04 pm
[...] Lizardson wrote an interesting post today onHere’s a quick excerptIn 2005 the Blue Dogs were totally fine with changing the bankruptcy laws. In fact, the Bankruptcy Reform Bill of 2005, passed with the overwhelming support of Blue Dogs (32 ayes, 4 nays), is at least partially responsible for the … [...]