Holding Up the Housing Recovery

Today's New York Times has an excellent editorial on bankruptcy reform (and Republican obstructionism):

We welcomed President Obama’s plan, unveiled in March, to head off foreclosures and keep more Americans in their homes, but we feared that it wouldn’t be enough. We were particularly concerned that without a reform of the bankruptcy code, lenders wouldn’t do enough to voluntarily modify troubled loans.

Seven weeks later, bankruptcy reform legislation is stalled in the Senate because of Republican opposition. Meanwhile, foreclosure filings — including notices of default, auctions and repossessions — rose again in the first three months of this year.

...Republican senators need to understand that a vote against this reform is a vote against economic recovery. As foreclosures add to the glut of unsold homes, house prices will continue to fall. That will lead to more foreclosures — declining equity is a risk factor for default — and more defaults and foreclosures will hamper the banks’ recovery and further constrain credit. And so on.