http://www.politico.com/news/stories/0409/21962.html
Senate Majority Whip Dick Durbin blames the powerful banking lobby for Thursday's defeat of legislation he championed empowering bankruptcy judges to modify some troubled mortgages.
But some Democrats suggest he look to 1600 Pennsylvania Avenue as well.
Democratic supporters of the measure say that President Barack Obama invested far less political capital in the controversial bankruptcy measure than he did credit card legislation, another campaign priority over which Democrats are going head-to-head against big financial interests.
"I cannot tell that President Obama has used [his] powers on this issue," said Rep Brad Miller (D-N.C.), who worked with Durbin on the bill that failed overcome a 60-vote filibuster hurdle Thursday. .
Another supporter, Senate Banking Committee Chairman Chris Dodd (D-Conn.), said the Obama administration always showed "some ambivalence" about the bankruptcy legislation. "The administration said they were for it," he said. "I wouldn't expect much more, probably. Credit cards is a larger issue. It's a lot more pieces."
As the bankruptcy bill founders, the credit card legislation is on a glide path to becoming law — possibly as early as next week.
As a candidate, Obama advocated the bankruptcy change, widely known as "cramdown" because it would allow brankruptcy judges to force lenders to accept reductions in the interest rates and principle amounts of home loans. But after Inauguration Day, the new administration sounded cautionary notes on the bill, with top officials emphasizing the need for "tailored" and "targeted" legislation.
"We are supportive of carefully designed changes" to bankruptcy law, Treasury Secretary Timothy Geithner said in response to a question at a recent hearing. "It's a difficult balance to get right, as you know."
Beyond such tepid endorsements, the administration was largely absent as the debate moved to the Senate. Durbin said he kept in touch with administration officials as he worked on his bill. But there were no high-profile meetings at the White House or the Treasury, no arm-twisting calls for votes from the president or other intervention when months of Senate negotiations stalled.
In contrast, the White House has thrown the full force of its persuasive powers behind winning passage of credit card legislation.
First, top Obama economic adviser Lawrence Summers took to the Sunday shows to declare the president was joining congressional Democrats' push to crack down on "credit card abuses," pitching the move as a way to look out for average Americans while rebuilding the nation's financial system.
Then last week Obama had 14 top credit card executives over to the White House for a stern talking-to, an event that was widely covered by the press. "The days of any time, any reason rate hikes and late-fee traps have to end," Obama told reporters after the meeting.
That was followed by another meeting this week among Geithner, Rep. Carolyn Maloney (D-N.Y.), the sponsor of the House credit card bill, consumer groups, civil rights activists and outraged credit card customers to tout the legislation's benefits.
The White House also got involved in the legislation itself, recommending several amendments that were considered on the House floor Thursday.
"[Obama] has given us great momentum and leadership," said Maloney. "When you have the president of the United States, when you have the secretary of the treasury along with the Federal Reserve standing up and saying that these practices are unfair, deceptive and anticompetitive, that's a pretty strong statement."
But while she praised the administration for its help on credit cards, she wondered "where's been the meetings at the White House" on the cramdown bill.
Banking lobbyists suggested that the administration simply decided to devote greater resources to the more winnable fight.
The White House ratcheted up its public push for credit card reform after bills had already passed committees in both the House and the Senate. Dodd is currently working with Alabama Sen. Richard Shelby, the highest-ranking Republican member on the banking committee, to iron out the details of a compromise credit card bill that is likely to be introduced next week.
Passing bankruptcy cramdown legislation was always much more of a long-shot. Although a bill passed in the House, few expected it to survive the Senate.
Credit card companies are also a far easier political target then mortgage lenders. Even as many homeowners struggle to stay in their homes, the public still wants to take out mortgages and own homes. Helping homeowners who got in over their heads has proved to be a hot button issue. In February, CNBC reporter Rick Santelli sparked days of outrage after he criticized the administration's plan to bail out troubled homeowners.
Credit card companies, who are widely reviled by consumers, have a more serious reputation problem. Delinquencies are up 60 percent since 2005, according to the Federal Reserve, a fact that's made consumers acutely aware of rate hikes, double-cycle billing and due date gimmicks. On Thursday, Majority Leader Harry Reid noted that 90 percent of voters want Congress to act on credit cards.
"Credit cards as a whipping boy is such an easy sell right now," said one banking lobbyist. "On the other hand, even through some [homeowners] are underwater, people still need and want mortgages."
The credit card bill also picks a far smaller fight with industry. Although banks and card companies oppose some amendments included in the House credit card bill, most of the legislation simply codifies rules already being put in place by the Federal Reserve.
The cramdown bill, however, is fiercely opposed by mortgage lenders, credit unions and bankers large and small.
Durbin contends that the banking lobby just proved too strong, however frustrated the disgraced industry's continued influence makes him.
"The president supports this proposal, and he's made that position clear," Durbin said when asked by POLITICO if the White House could have done more. "I'll be honest with you: When the American Bankers Association and the Independent Community Bankers Association walked away from the table, I don't think any president's going to bring them back."
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