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Citigroup Capitulating on Cramdown Legislation
Citigroup Inc. is reportedly working with key U.S. Senators to hammer out a compromise on legislation that would allow judges to modify terms of mortgages in bankruptcies.
The lending industry has been firmly opposed to this approach, saying that cramdowns would raise borrowing costs for everyone. But because of the extended financial crisis, there has been increased pressure on lenders to get behind this program.
"All tools to address the worsening foreclosure crisis are on the table," said Edward Yingling, president and chief executive of the American Bankers Association, the banking industry's main trade and lobbying group.
The National Association of Home Builders, which also has opposed cramdowns, said in an interview with the Wall Street Journal that it too was reversing its position.
Legislation to allow bankruptcy restructuring of individual mortgages was introduced Tuesday in both the House and Senate. Sen. Dick Durbin, an Illinois Democrat and close associate of President-elect Barack Obama, introduced the Senate bill.
Ahorre January 8, 2009 03:50 PM