The House earlier this year passed their version of giving Bankruptcy judges authority to modify ( or “cram down”) homeowner loans in the housing rescue bill, but that provision has stalled in the Senate under heavy pressure from the banking industry.The provision may be stripped from the rescue bill, but attached as an amendment to that bill, and that amendment would be voted on separately from the main bill. All Republicans will vote against that amendment, and possibly some Democrats.

This is hard ball politics. The banking industry wants to know who their “friends” are in the Senate by seeing how the Senators vote on this legislation that’s key to their industry. A lot of money will ride on that vote in the context of political contributions from PACs and other “soft money” from the banking sector.

Senator Durbin’s staff has been working with large banks trying to work out compromise language for the bill, and Senator Reid’s (Majority Leader) office stated the issue possibly may come before the Senate later this week.

Stay tuned…