...opponents argued that allowing judges to unilaterally adjust the terms of mortgages (or "cram down" the mortgages, as the financial services industry says) would create an alarming precedent, undermining existing principles of contract law. Eventually, they said, lenders would have to raise mortgage rates for everyone to cover losses forced on them by bankruptcy judges.
"The cram-down bill would have had a chilling effect on the economy when everyone's working hard to restore it," says Scott Talbott, senior vice president for Government Affairs at the Financial Services Roundtable, a trade group. "The bill would have moved in the opposite direction of restoring liquidity to the housing market."
Those pesky real world unintended consequences intrude again.
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