A piece of legislation supported by President Barack Obama failed in the Senate yesterday. The measure, which would have allowed judges to reduce the value of some mortgages in bankruptcy proceedings, failed 45-51. The WSJ called it Obama’s first big legislative defeat. The bill had previously passed in the House.
The bill would have allowed a bankruptcy judge to reduce a mortgage to reflect a home’s market value — known as a “cramdown.” Banks such as Bank of America, Wells Fargo, and Citigroup, had supported the legislation, even as community bankers and two major credit-union groups opposed it.