Arlen Specter: “The conclusive response to the argument by the Senator from Illinois is that my bill allows the court to reduce the…”

“The conclusive response to the argument by the Senator from Illinois is that my bill allows the court to reduce the principal on a mortgage--a so-called cram down--if the bank agrees and if it is indicated by the facts. What the Senator from Illinois failed to note is that my bill gives full leeway to bankruptcy courts to adjust interest rates--which the Senator from Illinois has already acknowledged is the real problem. Under current law, the court does not have the power to reduce the principal on a mortgage. So I added the provision that if the lender were in agreement, and if it makes sense in many cases this option will cost less than foreclosing--then extend the authority to court to make that adjustment.”