The Bush Dogs: Conservative, Corporate, AND Stupid

The core of all the economic anxieties in the country, whether on Wall Street or on Main Street, is the mortgage crisis. You can look at increased foreclosures, difficulties in obtaining credit, the spillover into decreased consumer spending, but it all comes back to the bursting of the housing bubble. (Thanks, Alan Greenspan!) This is really impacting those exurban, aspirational-class areas that voted Republican in 2004.

Democrats are interested in doing something about this before 2 million families are out on the street and deprived of their life savings, but the Bush Dogs in their caucus are resisting.

The reason the subprime mortgage meltdown is so problematic is because homeowners can't renegotiate mortgages for primary residences in bankruptcy court. If you declare bankruptcy, you still can't get out from under your mortgage debt, which essentially enslaves people whose home value has dropped lower than their debt amount.

The good news is that Brad Miller, Linda T. Sánchez, Barney Frank, and Mel Watt have a bill in Congress that empowers bankruptcy courts to restructure mortgages for primary residences. You can find out more here and here. It's a very sane and reasonable approach that lets people declare bankruptcy and get our from under horrific levels of debt.

The interesting news is that 16 fellow Democrats are opposing this bill because it will impact the Bankruptcy Bill provisions they passed in 2005. Who are these lovely people? If you guessed 'Blue Dogs', you'd be right.

Not only is this completely counter to the interests of their constituents, who are suffering from this mortgage crisis, it's counter to the interests of banks, who are suffering from the draconian elements of the Bankruptcy bill.

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.''

If you keep offloading more and more risk onto working Americans, before long they're going to crack. I think the Bush Dogs are voting their assumptions that anything that helps consumers will obviously hurt their real constituencies, the corporate interests. But actually, the banks are getting KILLED by all the foreclosures, leading to billions of dollars in writedowns. These guys are such slaves to corporate power that they don't even know what would help their masters.