The huge bailout was creating a feeding frenzy among the various interest groups, all lobbying for a piece of the unprecedented program and threatening to turn the bailout package into a so-called Christmas Tree bill, one adorned with many decorations for private interest groups. Despite protests from some lawmakers, the proposal was being expanded to include refinancings for troubled mortgages, municipal entities with distressed debt, insurance companies and more assistance for the banks. Other groups, such as the auto finance companies and credit card lenders, were also angling to get included in the package. One proposal would allow the government, which now owns Fannie Mae and Freddie Mac, to restructure any distressed mortgages owned by those two companies a majority of single family mortgages in the country.
Some lawmakers were also trying to get a provision rejected earlier this year to allow homeowners to take their mortgages into bankruptcy court to have them restructured. Credit unions are opposed to this. The banks were lobbying to get preferred stock they hold in Fannie or Freddie guaranteed by the government, which has agreed to guarantee Fannie and Freddie debt they hold. The American Bankers Association said as many as 2,000 banks hold significant amounts of Fannie or Freddie preferred, which would be rendered worthless under the current conservatorship of the two.
The credit union lobby was focusing on getting equal treatment under the plan. (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com/ http://www.sourcemedia.com/
