Trying to Negotiate with a Bank

In today's New York Times, the editorial board wrote a great piece about the failure of the US Senate and the Obama Administration to pass legislation allowing federal bankruptcy judges from modifying first mortgages on single family residences, the so-called cram down provisions.  Banks and the financial industry lobbied long and hard to ensure these provisions were not passed.  These are the same banks who have received our taxpayer dollars.

And like every industry who dislike regulation, the same old line came out: cram down provisions will increase the costs of home loans (or land use regulation will eliminate affordable housing, or the Clean Air Act will increase the cost of automobiles...you get the drift).  The reality is not allowing federal bankruptcy judges (not a wild-eyed bunch, I can assure you) to modify a small number of home loans will increase the cost of mortgages because the toxic assets of bank ledgers is causing the cost of credit to increase.

But a much more significant point is that without the threat of bankruptcy and a possible "forced" loan modification, there is no, none, zip, leverage for a distressed home owner in negotiating with a bank.  Think about what is happening right now with GM and Chrysler, the threats of bankruptcy brought unions and creditors to the table.  

So, why is it Democrats and the Obama Administration allow for cram-downs with every one else but regular Americans?