Wise move: Senate Rejects Mortgage 'Cramdowns' by Judges

From The New York Times:

President Barack Obama lost his first big legislative fight Thursday when the Senate failed to pass a measure that would allow bankruptcy-court judges to reduce the value of some mortgages.

Small banks and credit unions had opposed letting judges reduce a mortgage to reflect a home's market value -- known as a "cramdown" -- despite weeks of wooing by Democrats. Some opponents said they wanted to signal to Mr. Obama their dwindling tolerance for what they described as continued government intervention in private business, particularly businesses that didn't precipitate the nation's mortgage crisis. The measure failed a vote that would have moved it forward by 45-51.

Big banks, including Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. were early supporters of a Senate compromise [read big recipients of TARP funds who were somewhat pressured to take this position even though it was not in their best interest]even as big-bank lobbying groups opposed it. Community bankers and two major credit-union groups also declined to support the measure, saying it would give too much power to judges.