Senate kills bankruptcy measure

The Senate Thursday killed a key bankruptcy provision that had stalled work on a bipartisan housing bill, clearing the way for the legislation's passage.

The 58-36 vote to table the amendment allowed senators to move on to less contentious amendments to the housing measure forged Wednesday by Sens. Christopher Dodd (D-Conn.) and Richard Shelby (R-Ala.).

{mosads}All 36 ‘no’ votes were Democrats, except for Independent Bernard Sanders of Vermont and the motion to table the amendment was made by Majority Whip Dick Durbin, who sponsored the amendment. That raised the possibility that Democrats could use the vote to paint the GOP as obstructionists during the country’s worsening housing crisis.

Durbin argued passionately for the amendment for seven hours before moving to table it, noting that Republicans only showed up on the Senate floor to discuss the bill at the rate of one per hour.

“This really tries my patience,” he said. “At this point in time, we don’t have the appetite in the Senate to face this.”

Durbin’s amendment would allow judges to revise the terms of mortgages on primary residences. It is opposed by the banking lobby and most Republicans. Minority Leader Mitch McConnell (R-Ky.), for example, said earlier Thursday that he would have insisted on a 60-vote threshold for the amendment’s adoption. That all but doomed the bill’s chances in a Senate split 51-49.

Opponents of the bankruptcy provision say it would force interest rates higher.

Durbin already limited the proposal to existing mortgages, and said the provision is the single most valuable piece of the overall housing bill.

But banking lobbyists cheered the tabling vote. Francis Creighton, vice president for legislative affairs at the Mortgage Bankers Association, predicted it will be difficult for the Senate to resurrect the idea.

"This has been at the very top of our members' priority list,” Creighton said, adding that the change would have been a "terrible thing for the housing market, our customers and, yes, our members."

Jessica Holzer contributed to this story.