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Durbin: Bankruptcy Bill Should Be Part Of Stimulus

Let the lobbying for the new economic stimulus begin.

Senate Majority Whip Richard Durbin (D-Ill.) has put his political weight behind his long-sought foreclosure bill, calling on Democrats to add the plan to a big stimulus package they plan to send to Barack Obama the moment he is sworn into office.

The bill, which would allow bankruptcy courts to renegotiate the terms of mortgages for distressed homeowners, would almost certainly incite a partisan fight over the stimulus package. Republicans and the financial industry argue that the plan would force banks to tighten up lending rules or jack up interest rates. Democrats scoff at that characterization and say the bill would head off home foreclosures, which many economists say are the root cause of the financial crisis.

Durbin said that Larry Summers, who will be a top economic adviser to Obama and is leading the charge on the stimulus effort, has laid out general goals for the stimulus. And he said the bankruptcy bill would meet the administration's goals.

"I think this should be part of it ... because if we don't deal with the mortgage foreclosure issue, we are not getting to the root cause or the catalyst of the recession we are in," he said.

The bill is hardly a done-deal in the new Congress, when Democrats will hold at least 57 seats in the Senate and 60 votes are needed to pass anything substantial.

Last April, the Senate voted to kill the Durbin plan by a 58-36 vote.

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