So the US Senate has rejected a change in bankruptcy law that would let judges in bankruptcy cases force changes in the terms of mortgages. As reported in the Times:

The mortgage provision garnered only 45 votes in the Senate, falling well short of the 60 votes necessary to break a threatened filibuster to a measure sponsored by Senator Richard Durbin, Democrat of Illinois, that would give bankruptcy judges greater flexibility to modify mortgages. In recent weeks, major banks and bank trade associations worked closely with Senate Republicans to stop the measure. Twelve Democrats joined all the Republicans in voting against it.

Which is unfair because bankruptcy judges can order changes in any other loan, including mortgages on vacation homes in Aspen, car loans of the mega hummer or loans on the private jet. Why should we exempt the mortgage on someones primary residence.

Which is also a serious economic problem because a great many of the mortgages that are now being foreclosed cannot be renegotiated in any other way. The loans have been sliced and diced and pieces of them have been sold to many different bondholders. All of the bondholders have to agree to a change.

Just finding out who owns a mortgage is a major challenge. Getting them all together is like scheduling oral exams in graduate school. Some bondholders, the ones who get first crack at the income generated by the mortgages, don't care if there are a few foreclosures because they still get their money. Finally the loan servicing companies get their fees no matter what.

In other words this provision would have helped a lot of ordinary people stay in their homes and make payments that were in line with current interest rates and the current value of their homes. Because it failed there will be more foreclosures and more economic distress.

This sounds pretty populist to Wonks Anonymous. In fact he considers Obama's lukewarm support of the measure to be pretty embarrassing. The participation of twelve "moderate" Democrats in this is shameful.

If Republicans really wanted to connect with the Wal-Mart Moms - or whatever they are calling them nowadays - they couldn't find a better issue to stand on. Republicans should force the Senate to reconsider and hold Obama's feet to the coals. They might lose a few friends in the banking industry but they could gain support of the American people.

Oh. I didn't read the article so carefully. It seems that all of the Senate Republicans voted with the moderate Democrats to kill the measure.

We need a real opposition party.