Pleading with his colleagues to support an amendment that would allow bankruptcy judges to rework mortgages, Senator Dick Durbin (D-Illinois) today admonished his colleagues on the Senate floor: “I hope the homeowners across America have more friends here than the American Bankers Association.”
Apparently not. Despite Durbin’s pleas and support from the Obama administration, the Senate this afternoon defeated an amendment affectionately known by opponents as the “cramdown” amendment. A coalition of every Republican and twelve Democrats voted against the measure. Even Arlen Specter, apparently forgetting that earlier this week he jumped ship from the Republican Conference and proclaimed himself “a loyal Democrat,” voted against the amendment.
So why did so many Democrats vote with the Republicans, undermining the start of Obama’s second one hundred days? Durbin’s comment about the American Banking Association got me wondering: Are these Democrats so beholden to the financial services industry that they’d be willing to buck the president? So I ginned up a little logit model of today’s Senate cramdown vote, estimating the impact of senators’ campaign contributions from the financial services industry, the severity of the foreclosure crisis in their home state, whether they will stand for re-election in 2010, and Obama’s electoral support in their state in the 2008 election.
Sure enough, senators are willing to mortgage their votes for a little friendship from the ABA. The more reliant a senator on contributions from the financial sector, the greater the likelihood that s/he voted against cramdown; facing the electorate in 2010 also seemed to drive senators into the arms of the ABA—likely fearing opponents’ charge that cramdown would increase interest rates. And did the severity of the foreclosure crisis matter to senators? Not so much. Once the bankers get their arms around a senator, it’s hard to pry him loose—no matter the demand for mortgage relief at home. If we look only at Democrats, the story is slightly different. True, reliance on contributions from the financial sector is a strong predictor of Democrats’ cramdown votes, but so too is the state of the housing sector. Democratic senators from the hardest hit states (think Nevada, California, Florida) flocked to cramdown; Democrats from states less hard hit (think the Dakotas and Montana) resisted.
Legislative scholars in the 1980s and 1990s debated long and hard the connection between campaign contributions and legislators’ votes. (See Jack Wright’s summing up of the debates here.) Most likely, the causal arrow runs from votes to campaign contributions, as contributors seek to reward legislators loyal to their cause rather than to more crassly buy their votes. Whatever the direction of the arrow, today’s vote leaves no doubt that the ABA has plenty of friends to celebrate with in the Senate. They must be quite pleased with the buying power of their party favors.