The Homes Chuck Schumer Didn’t Save

DDay and Zach Carter both reported yesterday on the NY Fed’s conclusion that the 2005 Bankruptcy Bill had pushed an extra 200,000 people into foreclosure. Here’s Zach:

Economists at the New York Federal Reserve have concluded that a controversial 2005 law backed by banks and credit card companies pushed more than 200,000 people into foreclosure and exacerbated the subprime mortgage crisis.


In a paper released Tuesday, New York Fed researchers Donald P. Morgan, Benjamin Iverson and Matthew Botsch determined that the law sparked about 116,000 additional subprime mortgage foreclosures a year after going into effect.What’s more, they note, these foreclosures pushed home prices down, which may have lead to additional foreclosures. When the value of a home drops below what a borrower owes on the mortgage, it becomes nearly impossible to get out of the loan by selling the house or refinancing, making foreclosure more likely if they become unable to afford the monthly payment.

“By making it harder for borrowers to avoid paying credit card debt, [the 2005 bankruptcy law] made it more difficult for them to pay their mortgages, so foreclosure rates rose,” the economists wrote.

Which I guess means it’s time again to recall what Chuck Schumer responded to me on January 28, 2008, when I pointed out that the bankruptcy bill was going to exacerbate the financial crisis that was about to hit. Schumer, Byron Dorgan, and Sherrod Brown all agreed the law was a problem. (Schumer and Dorgan voted against the bill, though Debbie Stabenow, pictured in my post, voted for it.) But, Schumer said, we couldn’t just fix the obvious problems with it in 2008 because (you guessed it) we needed a bigger majority.

Senator Schumer explained that he didn’t want to pick around the edges, he wanted to make a real fix, and we’re not going to be able to do that until we get a bigger majority.

That was, of course, in 2008. That November, the Democrats would win solid majorities in both houses, as big a majority as you’re ever going to get. Yet the Democrats never found time to get around to fixing the Bankruptcy bill.

  1. MadDog says:

    Chuckles is the teflon standard for politicians. The past doesn’t exist and the future is pole dancing for campaign dollars.

  2. MadDog says:

    Briefly OT – a Time paean to John O. Brennan:

    In the Shadows With Counterterrorism Czar John Brennan, Obama’s Secret Weapon

    …Brennan “was disappointed” not to get the CIA post, says one friend. And yet by most accounts he is more powerful today, in the White House, than he would have been at CIA headquarters in Virginia…

    As I’ve said before, Brennan is the real head of the Intelligence Community, and he’s protected from Congressional interrogation and oversight by dint of his White House residence.

  3. nextstopchicago says:

    Off Topic:

    There’s been a lot of talk about whether the intelligence community foresaw any of what has happened in Egypt, and in particular, EW and others have said that too often they rely on shadowy contacts of questionable authenticity and assurances from partnering intelligence agencies in foreign countries. Rather than making more basic assessments based on public information – newspapers, blogs, twitter, etc.

    All of which is no doubt true. But today’s effort by the CIA to show they’ve changed is pretty hilarious. The Times and Post have both changed their headlines from “Mubarak likely to resign” to “Panetta says Mubarak likely to resign.” Thanks, Leon!

    Now, great snoop work consists of reading the Guardian live-blog and then telling the NY Times what you’ve read!

  4. JohnLopresti says:

    A bankruptcy judge in a suburban county in northern CA was in the newspaper the other day declaring bankruptcies have doubled from the historic baseline since 2007. However, it is a county notorious for housing sprawl close to the rim of the metropolis. Wealthier counties situated closer to the urban hub continue much healthier economics; and comparatively impoverished counties in further remote regions outside commute range have seen an increase in bankrupcy rate but not as vitiating as in the surburbanite row housing zone.

    Yet, Republican strategies in congress during the time of Senator Schumer*s stated angst, definitely were obstructionist. In a field distinct from bankruptcy per se, consider Scotus* chief Justice Roberts* December 2010 state of the courts report; his rhetoric takes a severe approach to Republican obstruction of processes to confirm judges in congress and keep the bench at a realistically well populated level. White House counsel Bauer even enunciated similar complaints last month, concerning Republican strategies in the upper chamber of congress with respect to judgeship confirmations. Do nothing Republicans; senator Schumer got that right.

  5. somethingblue says:

    Yet the Democrats never found time to get around to fixing the Bankruptcy bill.

    Heavens. If I didn’t know better, I’d almost think they were liars whose only real priority is to help corporations screw ordinary people more effectively and profitably.

  6. BMcGarth says:

    Folks,please the Democratic party leadership don’t give a damn about ordinary Americans.

    And come election time,they are going to try & scare ya…If you don’t vote “the GOP will get in power”,well at this point so efffing what,how much more do ya have to lose for chrissakes! this can’t get any better unless you & I vote Green,stay home,make the sacrifice for once.We may not win this battle but we are going to lay the foundation of having politicians think about ordinary Americans before Corporations & the Super wealthy.

    This will not get any better re-electing the same folks who cause you to lose your home ,cut funding for your kids Public School or are trying to cut your social security & medicare benefits.Wake up people.

    Look the GOP are not the only ones who sink us into this shit pile,many Democrats were right there helping ’em to fuck up our lives too,despite what you may hear on the Corporate Progressive cable news station,MSNBC.

    If they ain’t tellin’ ya’ that Democrats are just as responsible for the deep shit we are in,you shouldn’t even be rewarding their shows with your viewership.

    Go watch RT and get some real effing news.

  7. Watt4Bob says:

    Thanks for bringing up the impact of the Bankruptcy ‘fix’ on foreclosures.

    I have to say I’m disapointed that your post has been up since early this morning, and has only 7 replies while the posts concerning Egypts revolution have hundreds.

    It appears we will all be sitting on the curb before we decide that something has to be done.

    While we’re chatting around the fire in the hobo jungle behind the WalMart, will we still be telling each other that marching doesn’t work any more?

    • Stephen says:

      I imagine the powers that be are quite taken by the show of support for the Egyptian protesters and their cause. The oligarchy is nervous and they should be.