Richard Durbin in Saving Capitalism, by Robert Reich

On Budget & Economy: 2008: Allow homeowners in foreclosure to use bankruptcy

When the financial crisis hit, Dick Durbin tried to allow distressed homeowners to use bankruptcy. That would give them a powerful bargaining chip for preventing the banks & others servicing their loans from foreclosing on their homes. If the creditors didn't agree, their cases would go to a bankruptcy judge, who presumably would reduce the amount to be repaid rather than automatically force people out of their homes.

The bill passed the House, but when in late April 2009 Durbin offered his amendment in the Senate, the financial industry flexed its muscles to prevent its passage, arguing that it would greatly increase the cost of home loans. (No convincing evidence showed this to be the case.) The bill garnered only 45 Senate votes, even though Democrats were in the majority. Partly as a result, distressed homeowners had no bargaining power. More than five million of them lost their homes, and by 2014 another two million were near foreclosure. So much, for shared sacrifice.

Source: Saving Capitalism, by Robert Reich, p. 63 May 3, 2016

The above quotations are from Saving Capitalism For the Many, Not the Few by Robert B. Reich. Click here for other excerpts from Saving Capitalism For the Many, Not the Few by Robert B. Reich. Click here for other excerpts by Richard Durbin. Click here for a profile of Richard Durbin.
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