While President Obama's signing last month of the "Helping Families Save Their Homes Act" was considered a victory for many troubled American homeowners, the banking industry also had reason to celebrate: Before its passage, a provision of the bill opposed by the industry was removed.
The original bill included a provision that would have allowed a bankruptcy judge to adjust the value of a mortgage to reflect the current value of the home. Proponents of the measure argue that it is the cleanest, easiest way to strike at the heart of the problem many homeowners now face - a home that has lost value and is worth less than their mortgage.
"Despite the difficult economic times and calls for greater regulation of the banking system, financial institutions continue to wield undue and unchecked influence over federal policy," said Common Cause President Bob Edgar. "Until we change the way we pay for congressional campaigns, average homeowners will be helpless when up against the power of the banking industry and its millions of dollars spent on campaign contributions and lobbying.
A Common Cause analysis of campaign finance data shows that members of the US Senate who voted to remove the provision received significantly more campaign contributions from the banking industry than those who voted in favor of the provision. Mortgage bankers and brokers, commercial banks and finance and credit companies donated an average of $77,150 to Republicans during the last election, all of whom voted to remove the bankruptcy provision.
Among Democrats, the 12 Democrats who voted to remove the provision received an average of $81,256 during the 2008 election, 70 percent more than the $58,894 Democrats who voted for the provision received from these industries.
"Even after all that has come to light about the irresponsible lending practices of these companies, it still looks like they can head off meaningful reform by showering members of Congress with campaign contributions," Edgar said. "This dynamic will be increasingly important as Congress and the administration move forward with their attempt to overhaul the broken system of financial regulation that helped lead to the current economic crisis."
Office: Common Cause National
Issues: Money in Politics
Tags: Exposing Corporate Power
Common Cause is a nonpartisan grassroots organization dedicated to upholding the core values of American democracy. We work to create open, honest, and accountable government that serves the public interest; promote equal rights, opportunity, and representation for all; and empower all people to make their voices heard in the political process.