Senate Democratic leaders want to pass a bankruptcy cram-down bill in the next three weeks, but it could get bottled up in the Senate Banking Committee, which has no jurisdiction over the bankruptcy code.
"We're trying to get it adopted in the next couple of weeks," Banking Committee chairman Christopher Dodd, D-Conn., told the Consumer Federation of America.
The House-passed bankruptcy bill (H.R. 1106) was referred to his committee because it includes provisions to strengthen the federal deposit insurance system and enhance the effectiveness of a Federal Housing Administration (FHA) program to restructure underwater mortgages.
Even opponents of allowing bankruptcy judges to reduce the principal amount of a mortgage say Dodd has been placed in a difficult spot because his committee cannot amend the bankruptcy provisions in H.R. 1106.
"If anything, it slows up the process," one financial industry lobbyist said.
The Senate may leave for its spring recess on April 6 with the bankruptcy bill still in limbo, he added.
Meanwhile, consumer groups remain optimistic the Senate will pass a bankruptcy loan modification bill but there are concerns that Democratic senators are not united on the issue and their leaders lack a clear strategy for passing a bill.