November 10, 2007

One of my links in the previous post was to a Matt Stoller commentary entitled "Bush Dogs Move to Block Mortgage Reform." "Bush Dog," for those of you not hip to "netroots" lingo, is a term used by bloggers to describe the so-called "Blue Dog" Democrats whose opposition to the policies of the Bush Administration has been rather tepid, to say the least. However problematic I find the position of these conservative Democrats to be on its merits, Stoller's headline is misleading, at least based on the contents of the letter.

As I noted before, there are three provisions to the bill currently before the Judiciary Committee. The bill will permit the bankruptcy court to readjust home loans based on the actual value of the home, not on the total payoff balance of the outstanding mortgages, so that all loans which are above the current appraised value of the home are treated as "unsecured" debts, which can be forgiven in a Chapter 13 plan. It will also allow the payoff of the secured debt on homes to exceed five years, and it will waive the requirement that Chapter 13 filers who are seeking to save their home receive pre-petition credit counseling.

The first two provisions clearly involve a reform of the mortgage system as it has existed for hundreds of years, to reflect the modern reality of ARM's as well as to treat home mortgages the same way the bankruptcy courts treat second homes, investment and rental properties, commercial developments and family farms. The third provision, concerning credit counseling, is the only one that would overturn a portion of the controversial 2005 law (known as BACPA, or by the less elegant name my fellow practitioners have given it, BARF). I happen to believe that the requirement should be dumped altogether; I have yet to see a single instance, either in my practice or in the practice of a fellow attorney, where a credit counseling session led a prospective debtor away from filing bankruptcy. Obviously, a credit counseling service depends on the referrals from consumer attorneys to survive, and a service that actually proposed something that kept a debtor from using our services would cease to receive business from our end.

But opposition to ending that requirement is clearly not the same thing as "blocking" mortgage reform, since it isn't not a mortgage issue; it's a convenience issue for filers. Many people who file Chapter 13's do so at the last minute, so having to speak with a credit counselor before filing can be very difficult. But the courts are divided as to whether the failure to take a class before filing necessitates a dismissal, and even if the case is dismissed, a debtor can turn around and file a second time without too much trouble.

If the "Bush Dogs" are sincere that their only reason for opposition is to not tinker with the BARF Act so soon after passage, then I don't see this letter as problematic in the slightest. Certainly, there's no need to hold up the provisions that constitute real mortgage reform just to get rid of the silly debt counseling requirement.

November 09, 2007

Reason will not lead to Solution: When last we left the thorny subject of the current real estate implosion and its relation to bankruptcy law, the House of Representatives was considering legislation that would relax the current draconian restrictions on homeowners in filing Chapter 13 bankruptcies to stave off the Repo Man. The bill passed through sub-committee last month, and two weeks ago the Chief Economist for Moody's Corp. testified before the Judiciary Committee that one provision of the bill, which would permit the courts to modify the terms of a home mortgage, would save up to a half-million homes from being lost in foreclosure over the next year and a half.

This is such a sensible reform that I can hardly believe it has any chance of passing through Congress, let alone getting signed by the President. It would reamortize the secured amount of a home loan at the appraised value of the home, permitting homeowners to treat oversecured mortgages as unsecured, the same way owners of vacation homes and rental properties, of commercial real property, and family farmers can under the current law. It would also permit repayment plans that exceed the current five-year limit, and end the worthless requirement that debtors seek credit counseling as a precondition to filing a bankruptcy.

To those reforms I would add three others: raising the debt limit on Chapter 13 filings; eliminating the barrier that prevents homeowners from receiving discharges in Chapter 13 when they have filed a Chapter 7 within the last four years; and ending the presumption of abuse element. The current limits (just over a million dollars in secured debt, and just under $337,000 for unsecured debt) are particularly arbitrary for middle class homeowners, many of whom made the mistake of borrowing against the artificial rise in the value of their homes just before they needed hospitalization, or had a high judgment imposed against them or their business. The elimination of the 4-year barrier on Chapter 13 filings should be self-evident in this economy; many of the people who filed bankruptcies on the eve of YBK in October, 2005 also own homes, and not allowing them to save their homes would be unfair. And the presumption of abuse element, always the most controversial aspect of the 2005 law, forces many homeowners who simply wish to walk away from their property, into Chapter 13 (or its very expensive cousin, Chapter 11), benefiting no one, least of all the banks that are prevented from foreclosing by the automatic stay.*

But as I said, its chances for passage are dim, at least until after the 2008 election. Few Republicans in either house of Congress back the measure, and even if it gets out of the House, the likelihood that the Democrats could invoke cloture in the Senate, or even get a majority to support such reforms, is bleak. And by the time another session of Congress decides to act, the devastation to the economy that will no doubt be caused by the upcoming landslide of foreclosure sales will have already occurred.

*Its stated purpose, to discourage filings by middle and upper class debtors, has failed miserably; in the Central District of California, less than one percent of all affected cases get dismissed, in spite of all the time and paperwork the statute imposes.

UPDATE: Thanx to the good folks at Winds of Change for cross-posting this.

November 08, 2007

YBK [Fin]: Wow, who saw this coming? Oh, wait....

November 07, 2007

Virginia Republicans, who had flogged the immigration issue as their wedge to maintain control of the state legislature, went down to a decisive defeat this evening, following the same trend as states like Colorado and Arizona in 2006. Mr. Kaus hasn't commented yet, but I'm certain that eventually we're going to see this anti-immigrant backlash he's been predicting manifest itself at the polls somewhere. Utah, anyone?

November 06, 2007

Assrocket Wins !!!!
Mickey Kaus interrupts his daily potshots at the Democratic contenders for the White House (apparently, he's now offended that an Edwards campaign commercial mentions his wife's struggle with cancer) to celebrate what he sees as a turning point in the debate about immigration:

It seems like only months ago we were told the immigration issue was splitting Republicans. Now it's E.J. Dionne wringing his hands about the
worry among Democrats that Republicans are ready to use impatience with illegal immigration to win back voters dissatisfied with the status quo.
What's changed? Well, President Bush--the main politician doing the GOP-splitting--is leaving the scene. The Republican electorate seems to have decisively turned against his illegal-immigrant semi-amnesty. Result: No more split! But the powerful GOP anti-legalization sentiment was obviously latent even in 2006. The MSM just chose not to notice.

Anti-legalization sentiment has also been manifestly latent among Democratic voters--including, but not limited to, unskilled workers whose wages have been suppressed by immigrant competition. What's odd, then, is that the Dems now aren't split. They're only terrified! The Dem presidential candidates who might appeal to anti-legalization opinion--and thereby split the party--all seem paralyzed by their desire not to offend Latinos.

Hmm. The last successful Democratic presidential candidate defied his party's dogma on a central issue (welfare) at the risk, it was thought, of offending key interest groups (blacks, liberals). Is there no current candidate willing to do the same on immigration? You'd think someone in the 2008 field would make the move, just for strategic reasons. ... John Edwards may be edging there: On ABC's This Week he came out against N.Y. Gov. Spitzer's illegal-immigrant driver's-license plan. But he only did it sotto voce, after prompting, and after emphasizing his support for "comprehensive" reform (i.e. legalization). ...


P.S.: Dionne eventually dismisses anti-illegal-immigration sentiment with a classic paleolib device:
Yet at a moment when the electorate is very angry, it's not surprising that some voters are channeling their discontent through the immigration issue. It's happened before in our history.
Of course, pre-Clinton Democrats also dismissed voter anger on the welfare issue as displaced discontent about economic stagnation (when they weren't dismissing it as plain old racism). Welfare recipients were "scapegoats," we were told. Then it turned out that the voters who were angry at welfare were angry at welfare. It's just possible, as Michael Barone suggests, that the voters who are angry at illegal immigration are angry at illegal immigration.
Clearly, Dionne is overreacting to another bogus Penn-Carville poll; as political analysts, they failed to predict the sweep that captured both houses of Congress last year (Carville famously tried to get Howard Dean fired after Election Night), and they are among the last denizens of the camp that believes the Democrats' achilles heel is their weak showing in the South (the majority position now being that the party's poor standing in the South is a manifestation of the party doing very well everywhere else). The fact is, polls on this issue are all over the place.

And no matter how far the future GOP nominee attempts to distance himself from the President, any voter anger at border control will rest on the fact that the Republican Party controls the Executive branch. Insofar as the Republican candidate who has the most momentum right now (ie., McCain) is the one most identified with immigration reform, and the candidate whose campaign is cratering (Thompson) is the only major contender who has most explicitly adopted the "deport the illegals" position, it is hardly a sure thing the party will be able to effectively use immigrant-bashing as a wedge issue next fall anyway. But even if the party nominates someone who speaks the Minutemen's language, it will be impossible to ignore the fact that George Bush is still President. They're stuck with him as the face of the party, and his is the record they have to run on. In spite of (or, perhaps, because of) the immigration issue, Congressional Democrats have one of their all-time biggest partisan edges over the GOP, according to yet another James Carville poll.

So if Republicans want to make immigrant-bashing work for them as a political issue, they will probably have to wait until 2010 (lord knows, it didn't help them much in 2006). And who knows, with a Democrat in the White House and large majorities in Congress, they might actually be able to make it work in their favor, assuming President Clinton signs into a law a real reform package in her first two years.

Concerning the second half of Kaus' post, I can only say that I know he's a shrewder observer of history than that passage would make it seem. To compare today's immigration issue with yesterday's welfare reform, one needs to first understand that the there were two different phases to the anti-welfare campaign. In the first phase, from 1966-1982, it was clearly appropriate for liberals to identify "voter anger on the welfare issue as displaced discontent about economic stagnation (when they weren't dismissing it as plain old racism)," because that's how the welfare issue was framed at the non-elite level: as lazy Negro Welfare Queens driving Cadillacs and buying malt liquor with food stamps. It was a way to appeal to anti-minority sentiment without sounding like James Eastland or Richard Russell.

But underneath the code, there was a sound policy rationale for reforming the welfare system, something that neolibs like Bill Clinton and Mickey Kaus understood. In order for that side to get a fair hearing, the bigots needed to be discredited first. It is for that reason that Ronald Reagan, whose political career rose on his ability to exploit white backlash, never made any serious attempt to end welfare once he reached the Presidency, while Bill Clinton, who barely raised the issue in 1992, not only could sign into law such a measure, but could increase the party's share of the African-American vote in the process.

And the same thing is true with immigration. Of course, there are people out there who hold sincere beliefs about how illegal immigration may or may not cause a 3% decline in wages among unskilled workers, or about how a lax system of border enforcement is leading to a corrosive decline in respect for our laws, or the impact it has on deterring terrorists from entering the country.

But that's not where the noise comes from on this issue. It comes from people like VDare and the Minutemen, from people who see Latino immigrants, legal and illegal, as a brown wave that threatens to initiate a reconquista of the West. Allowing people who use the word "illegal" as a noun to drive this debate is like letting American policy in the Middle East be shaped by men who use "Jew" as a verb. On an issue like this, the motivation for enacting a law has to be considered as important as the substance of the policy itself.

November 05, 2007

What he says:
Since Judge Mukasey’s situation is not unlike that facing Elliot Richardson when he was appointed Attorney General during Watergate, why should not the Senate Judiciary Committee similarly make it a quid pro quo for his confirmation that he appoint a special prosecutor to investigate war crimes? Richardson was only confirmed when he agreed to appoint a special prosecutor, which, of course, he did. And when Nixon fired that prosecutor, Archibald Cox, it lead to his impeachment.

Before the Democrats on the Senate Judiciary Committee completely cave-in to Bush, at minimum they should demand that Judge Mukasey appoint a special prosecutor to investigate if war crimes have been committed. If Mukasey refuses he should be rejected. This, indeed, should be a pre-condition to anyone filling the post of Attorney General under Bush.

If the Democrats in the Senate refuse to demand any such requirement, it will be act that should send chills down the spine of every thinking American.
--John Dean
Sometimes it just pays to know when to quit. Towards the end of an otherwise unremarkable critique of last week's media-mauling of the former First Lady, Digby emits this shriek:
Grab the Maalox kids because I can feel it in my gut. The bad breath and the sleepy eyes and the bedhead are all around us. Come 2009, if a Democrat wins the presidency, the Village press will finally wake up from its 8 year somnambulent drool and rediscover its "conscience" and its "professionalism." The Republicans will only have to breathe their character assassination lightly into the ether --- the Village gossips will do the rest. And if this new president resists in any way, a primal scream will build until he or she is forced to appoint a special counsel to investigate the "cover up" and grovel repeatedly in forced acts of contrition in response to manufactured GOP hissy fits and media hysteria. We're going forward into the past (and judging from the haircut nonsense we've already seen, it isn't confined to Clinton.)

Reforming politics isn't enough. Reforming the media is just as important. The current administration is so power mad, morally bankrupt and inept that their natural heir is a barking madman. (And some excellent reporting has been done to expose them.) But the Village kewl kidz and the queen bees who set the political agenda and dominate the coverage have never found any of that interesting or worthwhile. They care about their silly little shorthand parlor games that they think reveal politicians' "character." And their judgment of character is about as useful to the average voter as Brittney and K-Fed's.

They are a huge problem and I can't see how this country can pull out of this spiral until this is dealt with.
"Dealt with?" What did you have in mind, madam, waterboarding Maureen Dowd? Sending David Broder to Gitmo? Having a free press means taking the superficial with the substantive, the accurate with the inaccurate, and sometimes, even political figures we like are subject to scrutiny. Even unfair (and dishonest) scrutiny. It's called the First Amendment.

A veiled threat about "dealing with" heretical journalists has more than the whiff of fascism about it. If the Digby's of the world see elections as the first step towards the Great Day of Reckoning with the Evil Forces who have been in our way, perhaps they deserve to be marginalized. The hard work and heavy lifting involved in actually getting progressive policies enacted for the first time in forty years will require courting and compromising with said Evil Forces, due to the rather cumbersome structure of our government, and rhetoric about "reforming the media" is simply not high on our agenda.

November 04, 2007

An inspiring story in the New York Times, about a Daniel Ellsburg for our age.