Press Releases

Republicans Urge Administration to Reconsider "Cramdown"

WASHINGTON, February 24, 2009 -

- Congressman Spencer Bachus (R-AL), the top Financial Services Committee Republican, and Judiciary Committee Ranking Member Lamar Smith (R-TX) have sent a letter to Treasury Secretary Timothy Geithner raising concerns about the Obama administration's plan to allow judicial modifications of home mortgages during bankruptcy.

Ranking Members Bachus and Smith were joined in sending the letter by Housing and Community Opportunity Ranking Member Shelley Moore Capito (R-WV) and Commercial and Administrative Law Subcommittee Ranking Member Trent Franks (R-AZ).

"Cram down policies could potentially strangle our already tight and uncertain credit markets, while leaving taxpayers even more vulnerable. And worse, this action could also jeopardize successful FHA and VA programs that help millions of American families," Ranking Member Bachus said. "Financial Services Committee Republicans will continue to work to see that borrowers and lenders that made bad decisions are not bailed out at the unnecessary expense of the almost 95 percent of working families still making their mortgage payments on time."

Smith said: "The Obama administration's mortgage cram down proposal will punish the successful, tax the responsible and hold no one accountable. We got into this mess by giving home loans to individuals who couldn't afford them. Now, we're giving those same irresponsible borrowers a ‘bankruptcy bailout' by allowing them to reduce the amount of money they owe on their homes. If this approach passes, responsible homeowners will be forced to foot the bill for those who borrowed more than they could afford, creating a bad precedent and dangerous incentives for the future."


NOTE: Click here to view the letter.

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