Durbin Introduces Bill to Help Families Keep Their Homes, Strengthen Taxpayer Protections

Press Release

U.S. Senator Dick Durbin (D-IL) introduced legislation today to address two areas not adequately covered in the $700 billion financial recovery legislation passed by Congress earlier this fall. According to Durbin, the Emergency Economic Stabilization Act did not do enough to help families facing foreclosure and has inadequate safeguards on taxpayer dollars.

"Virtually every economist agrees that the financial crisis will not diminish, and the economy will not begin to recover, until we address the root cause of the problem: the failed mortgage market," Durbin said. "We also have an obligation to make sure that taxpayer money is spent responsibly and that the American people see a return on this investment. My bill would address both of these important issues."

Durbin's bill, the Homeowner Assistance and Taxpayer Protection Act, provides real hope to families who fear that they will lose their homes by:

Requiring the Department of the Treasury, the Federal Reserve, the FDIC and FHFA to restructure all loans where these regulators now own or have a controlling interest in the loans, rather than simply encouraging them to do so as the Emergency Economic Stabilization Act currently does;
Requiring servicers to restructure all loans that qualify for the Hope for Homeowners program, rather than simply encouraging them to do so as current law requires; and
Allowing bankruptcy judges to modify mortgages on primary residences. Durbin has previously introduced the provision as stand-alone legislation and has long argued it is important to spur nationwide systematic mortgage restructurings.

The financial rescue bill also failed to put in place enough taxpayer protections. Congress meant for banks to use the money provided by the Treasury to lend to qualified borrowers, rather than enriching their shareholders and executives. Recent reports indicating that AIG will lavish more than a half billion dollars on its employees at the same time that it receives an even larger $152 billion taxpayer bailout than originally announced speaks loudly to this problem.

Durbin's bill would add additional taxpayer protections by:

Baring banks participating in the Capital Purchase Program, authorized by the Emergency Economic Stabilization Act, from increasing common share dividends as long as the government owns preferred shares; and by
Requiring participating banks to reduce the next year's dividends in an amount equal to the compensation paid to the top five executives in excess of $500,000.

"In many ways, today's legislation is a marker for future action. The debate on how to help stabilize the financial sector will continue into the 111th Congress, and I intend to continue to fight for homeowners and taxpayers," Durbin said.

In addition to the legislation, Durbin announced today that he would chair a Senate Judiciary Committee hearing Wednesday on the role bankruptcy courts can play in easing the ongoing and worsening housing crisis. The hearing will focus on Durbin's Helping Families Save Their Homes in Bankruptcy Act - a bill that could help hundreds of thousands of at-risk homeowners keep their homes by altering the terms of their mortgages in bankruptcy.

http://durbin.senate.gov/showRelease.cfm?releaseId=305067

Source