Chuck Grassley: “I am the author of that Chapter 12 bankruptcy provision. I am going to address it very soon. So if you would listen, I…”

“I am the author of that Chapter 12 bankruptcy provision. I am going to address it very soon. So if you would listen, I think I will answer your questions. I appreciate what you are saying and, in fact, I anticipated that, and I hope I am ready for it. I am sure it is going to be difficult to satisfy the Senator from Illinois, though. The amendment of Senator Durbin will not only increase interest rates on mortgages and make home ownership more expensive for everyone, many experts tell us this proposal will also have an adverse impact on financial markets because of difficulties and uncertainty in valuing the mortgages that back up securities. In addition, innocent investors would be hurt. So the Durbin amendment would cause other adverse impacts beyond higher costs of home loans. Proponents of this amendment, particularly the cramdown provisions, argue that primary residences should be crammed down in bankruptcy just as second homes, family farms, and boats are. But there are good reasons why primary homes are treated differently from these other things. First, interest rates and downpayments for vacation homes are significantly higher than for primary homes. If we are to start treating primary homes the same as vacation homes, I am told that then interest rates are certain to rise to the same level of second homes where cramdown is permitted.”