"A Deal's A Deal"...Unless A Millionaire Made A Deal, and Then It's Not a Deal

Montana Sen. Jon Tester (D) is opposing [1] legislation that would let bankruptcy judges force banks to renegotiate the terms of predatory home loans so as to prevent homeowners from being thrown out on the street. Here is his rationale:

Sen. Jon Tester (D-Mont.), a key vote on the banking committee, dealt a blow to the bill Wednesday, telling the Huffington Post that he is "opposed to cramdown." He went on: "I just think a deal's a deal. I have a lot of empathy for folks who tend to get led astray, but I just think it's going to create some problems - pretty obvious, actually. I don't have to list them. I'm generally opposed. I don't think it works well."

This sounds so simple - it sounds like "Western commonsense" or "prairie straight talk" or whatever cliched bromide Washington lawmakers are using now.

Of course, those bromides are most often used to cloak brazen sellouts - and the debate over cramdown is no exception. I say that because, while government tells us "a deal's a deal" for working-class folks and therefore they shouldn't be able to get any help from bankruptcy courts, that same government is more than happy to scrap these "deals" if a millionaire's vacation home is on the line.

Yes, bankruptcy judges are given cramdown authority [2] when it comes to second homes and investment properties (which, of course, most regular people don't have - but which many millionaires do). That's right, if you are a millionaire and declare bankruptcy, a judge is empowered to force the bank that holds your beach house's mortgage to renegotiate the terms of that mortgage on terms that lets you keep the house (and, BTW, I don't see Jon Tester sponsoring a bill to repeal cramdown for millionaires).

All this new legislation does is extend that cramdown authority to regular folks - all it does is let judges force such renegotiation for regular folks' primary residence.

But evidently, ending the double standard whereby the rich get a privilege that the rest of us don't get is unacceptable to Washington lawmakers. The rich get compassion, the rest of us get tough love in the from of "a deal's a deal" rhetoric.

So much for "equal protection under the law."