Will Senator Arlen Specter's Party Switch Affect the Senate Vote on the Bankruptcy Mortgage Cramdown Legislation?

By Andrew Toth-Fejel, Bankruptcy Litigation Support for Attorneys, Andy@BLSforAttorneys.com


With a Senate floor vote anticipated today on the bankruptcy cramdown amendment, and seemingly everything riding on whether it has the support to garner the filibuster-proof 60 votes, does Sen. Arlen Specter's defection from the Republican party improve its chances? There's a small possibility that it does . . . but probably not, at least not today.

Arlen Specter's Position
Sen. Specter has long been in the middle of the cramdown debate as the potential deal-maker for a long time, as he is now. So there are many clues about his position.

Way back in October 2007, Sen. Specter and Sen. Dick Durbin, the sponsor and steadfast advocate of the current Senate bill, introduced separate bankruptcy cramdown bills and were in direct talks to try to forge a bi-partisan compromise. Specter's bill gave mortgage lenders the right to reject any to changes to the loan terms, giving some indication of how relatively modest his own ideas were on cramdown, at least at that time. Indeed, he expressly argued against allowing bankruptcy judges to modify mortgages without lender approval, asserting that lenders would not be willing to lend if "we meddle with the principal sums." He clearly indicated that he was at the very least very cautious about the cramdown concept.

So how much has Specter's perspective shifted as the foreclosure situation has tremendously worsened in the year and a half since then? As reported in a previous Bulletin here, "Republican [Sen.] Arlen Specter of Pennsylvania has long been a potential supporter, but apparently of only a narrower version, so Democratic Sen. Evan Bayh of Indiana and he are working on a proposal limiting cramdown only to subprime mortgages." There are no indications that the version to be voted on today will be so limited, and if not this seems to indicate that Specter will not be voting in favor of it.

Specter's Role in the Negotiations
According to a very recent story in BusinessWeek.com:

Early on in Senate negotiations over the bill, Specter was one of a handful of moderate Republicans taking part. Since then, the talks have shrunk to several key Democrats. But a Senate staffer close to the talks says the Republicans—or former Republican, in Specter's case—remain key to actually getting to the 60 votes supporters will need.

This same Senate staffer's comment: ""He's the kind of guy where you never know."

Specter's Change in Party Affecting His Prior Positions
According to the same BusinessWeek.com article: " The measure's supporters hope Specter will have to worry less about the GOP base when considering the topic, but that's not a given. "

According to Specter himself, as he concluded in his statement announcing his party change:

My change in party affiliation does not mean that I will be a party-line voter any more for the Democrats that I have been for the Republicans. . . . I will not be an automatic 60th vote for cloture.
. . . .
Whatever my party affiliation, I will continue to be guided by President Kennedy’s statement that sometimes Party asks too much. When it does, I will continue my independent voting and follow my conscience on what I think is best for Pennsylvania and America.

Although he was speaking here in platitudes, Specter has a well-deserved reputation as an independent thinker. So his change in party affiliation does not seem likely to affect his vote on this bill. Indeed, he may well use this early opportunity to assert his independence from his new party.

Remaining Unknowns
First, even up to the last hours before today's anticipated vote, there is talk of a possible new compromise, one which conceivably could entice Specter's vote. How much that talk is mere posturing is difficult to discern. Indications are that any last-moment breakthrough are a very long shot.

Second, there has been some indication that if today's floor vote is unsuccessful, the measure will still not be dead. With Specter's party switch, there are 57 Democrats in the Senate, and two independents who caucus with them. With the Minnesota election between Al Franken and Norm Coleman still in litigation, the Democrats are now effectively one vote short of the critical 60-vote for cloture. The Minnesota Supreme Court has recently agreed to hear Coleman's election appeal on June 1, meaning that the election there could be decided, according to political observers, as early as mid-June. This extra margin may become critical if the cramdown bill, in whatever amended form, re-emerged after Franken's anticipated arrival.
Finally, and perhaps most importantly, if home foreclosures continue at the present pace, stalling the economic recovery and even further devastating major regions of the country, political pressure will continue to build to address this more assertively.

A new Bulletin on this website will provide an update of this legislation as soon as there is new information to report. PLEASE EMAIL ME at Andy@BLSforAttorneys.com IF YOU WOULD LIKE TO BE EMAILED A LINK TO IT AS SOON AS IT IS UPLOADED onto this website.

by Andrew Toth-Fejel
Bankruptcy Litigation Support for Attorneys
Andy@BLSforAttorneys.com

PLEASE NOTE that the writer is not licensed to practice law in any state. This means that he is not legally permitted to give any legal advice or perform any legal services. Any non-attorney reading this must consult an attorney about ANYTHING contained here. Nothing in this website is intended to be nor should be read as being legal advice to anyone.

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