J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization

It was "Mr. Black Goes To Washington" this past week, Mr. Black going not as a Congressperson, but as a lobbyist for a day as part of the Capitol Hill Meeting or "Lobby Day" sponsored by the National Association of Consumer Bankruptcy Attorneys (NACBA). It's always interesting, I've been to these twice before. You go to meet with your Representative or Senator (almost always you meet with their staff), and explain why or why not a particular bill concerning bankruptcy should or should not become law.

This time we were telling them why the "Helping Families Save Their Homes in Bankruptcy Act of 2009" should become law. The bill (H.R. 200 and S. 61) permits bankruptcy judges to modify the terms of mortgages for people in chapter 13 bankruptcy, to make it affordable so that people won't lose their homes to foreclosure. It is estimated by the credit industry itself, that this bill would save 20% of the homes that are likely to be foreclosed upon in the coming 3-4 years. When there are 46,000 homes per week being foreclosed upon, that is quite a few! Anyway, our Congressional representatives from Texas (at least the ones that I met with) seemed to be more concerned about the banks, than the people that live in their state.

During one meeting with legal counsel for Sen. John Cornyn, eight of us bankruptcy lawyers were talking to him around a big conference table. We talked to him for over an hour, and answered every objection and addressed every concern. Then he came up with a real kicker: (paraphrasing) "If we change the law like you say, the securitized trusts (that hold most of these subprime loans) will have to take the bankruptcy losses pro-rata over all the tranches; this will cause the banks to have to increase their capital reserves." Whew, what a mouthful.

Spoken like a true banker.. he was really saying that Texans like you and me are not Sen. Cornyn's constituents; his constituents are all the big banks- the very ones that came out with these predatory, toxic loans that have wrecked the economy. It turns out that this last objection, that the bill would cause banks to have to increase their reserves, is of dubious validity. So, there you have it. We are still hoping that the "Helping Families Save Their Homes in Bankruptcy Act of 2009" becomes law this year, and as soon as possible. President Obama is for it. If it doesn't become law, it will be because of Congressmen like this one, that spends all his time worrying about banks instead of people. And we are talking about 46,000 families per week are losing their homes. It's time to start worrying about people, not banks.

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