President 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.
The defeat of the bill, which was a central part of Obama's plan to help homeowners, came as the House voted 357-70 in favor of a measure that would cap the fees credit-card companies can charge. The credit-card measure now goes to the Senate, where it is likely to pass.
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 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.
Wall Street Journal