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Senate cramdown bill delayed
WASHINGTON (3/17/09)—Senate Majority Leader Harry Reid (D-Nev.) announced last night that the Senate will not consider its mortgage bankruptcy bill before the Spring District Work Period begins April 6. Proponents of legislation to allow bankruptcy courts to modify—or “cramdown”-- the terms of existing mortgages were working to get their bill passed before Congress’ Spring recess, according to Ryan Donovan of the Credit Union National Association (CUNA). Donovan, CUNA’s vice president of legislation affairs, confirmed that lawmakers backing the mortgage bankruptcy bill, such as Sen. Charles Schumer (D-N.Y.), have been “reaching out” to groups like CUNA who strongly oppose the bill. “Those lawmakers are exploring what might be done to get needed support for the bill. They are considering adding separate provisions to the legislation to soften opposition to the bill in total,” Donovan said. He acknowledged that Schumer has called CUNA President/CEO Dan Mica to ascertain if adding language to lift the cap on member business lending (MBL) would be enough of a sweetener to get CUNA to remove its opposition to the cramdown language. “We let him know that the MBL issues itself is not enough to gain our support in the absence of some major changes to the cramdown provisions,” Donovan said. He said CUNA reminded the senator that the group’s opposition to cramdowns is a “principled position” based on concerns that, as written, the bill could promote “gaming” of the mortgage system. Earlier this month, Schumer announced he is designing legislation to lift the MBL cap. The New York Democrat said in a letter to colleagues that lifting the current 12.25% of assets cap would help small businesses facing a "gaping void" in credit availability. Schumer is a member of the Senate Finance Committee and the Senate Banking Committee. “Sen. Reid’s announcement affords us more time to work for modifications,” Donovan said.


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