Durbin Opposes Future Bank Industry Bailouts

Posted April 29, 2009 at 7:20pm

A visibly frustrated Senate Majority Whip Dick Durbin (D-Ill.) announced Wednesday evening his intention to oppose future government bailouts of the banking industry, citing what he said is their reluctance to help struggling homeowners stay in their homes.“This Senator wants to put the banking interests on notice. I am not going to be a party to shoveling billions more in taxpayers’ dollars your way if you won’t lift a finger to help these people who are facing foreclosure across America today,— Durbin said on the chamber floor.After working with banking groups for more than a year on his measure to allow bankruptcy judges to renegotiate the terms of primary home mortgages, Durbin accused the industry of negotiating in bad faith. That proposal is slated to come to the floor for a vote Thursday afternoon, and it’s expected to fall short of even a bare majority, much less the 60 votes needed to overcome a filibuster.“We have sat down with the American Banking Association, with the community bankers, with major banks in America,— Durbin said. “Only one banking interest, Citigroup, has been supportive of this. Virtually every other banking operation has refused to meet with us, refused to negotiate with us, refused to come up with any kind of compromise.—Durbin singled out the ABA: “They have basically said that they don’t believe they have any obligation to these people facing foreclosure.—Durbin has said he believes his bill would not only give some homeowners a recourse they currently can’t use in bankruptcy court, but also it might spur the banking industry to rewrite down the terms of mortgages before homeowners find themselves in such dire straits.He started out with a larger bill that would allow most homeowners to use the bankruptcy option but scaled it down to apply only to mortgages that were taken out before the first of the year. Additionally, homeowners would have to first get rejected by the bank for refinancing before taking their case to a bankruptcy judge.Durbin said on the floor that as many as 1.7 million homeowners would benefit from his measure.The Whip supported the Wall Street bailout bill last year that gave the government the authority to loan up to $700 billion to banks and other financial firms that were on the brink of collapse.