Lobbyists seek change to language

Lobbying on the rescue plan for Wall Street intensified Monday as the package moved to Congress, giving advocates another avenue to alter the language in ways favorable to their clients.

Up to now, the actions to stem the financial calamity on Wall Street have been carried out by the Treasury Department and the Federal Reserve, with little involvement from Capitol Hill.

But the $700 billion plan to purchase bad debt from financial institutions and unclog credit markets requires Congress to act. The Bush administration urged lawmakers to pass a clean bill, but now there are more viewpoints that have to be considered.

Some Democrats already indicated the package may not pass until next week — news that sent stock prices tumbling and stressed some business lobbyists.

“If we don’t move quickly, we could be in the soup,” said Bruce Josten, the chief lobbyist of the U.S. Chamber of Commerce.

Complicating lobbyists’ efforts was the difficulty of keeping track of all the various counterproposals to the administration’s bill.

One financial services lobbyist said his group was keeping a flow chart to try to keep track of who on Capitol Hill was pushing what.

“It ebbs and flows,” the lobbyist said. “It literally changes by the hour.”

Added Josten: “I think every 10 minutes, something changes here. I think they are wrapped up in it. It’s hard to tell what’s in, what’s out.”

One congressional reaction that emerged  — Senate Banking Committee Chairman Chris Dodd’s (D-Conn.) response to the rescue package — wasn’t favorable to many of K Street’s banking clients, who oppose one provision in particular: giving bankruptcy judges the power to lower mortgages for distressed homeowners.

“We are vigorously opposing that,” said Steve Verdier, a lobbyist for the Independent Community Bankers Association (ICBA). “If that happens, then the mortgage rates for other consumers are going to go up.”

ICBA sent out a new “issue alert” to its members on Monday in response to the Dodd proposal, and encouraged members to send a new letter to Capitol Hill even if they already signed a grassroots message on the ICBA website.

“‘Hit ’em harder’ is our message,” Verdier said.

The American Bankers Association joined in the criticism of the so-called “cram-down” provision.

“Authorizing write-downs of mortgages by bankruptcy judges will increase the risks of mortgage lending at a time when the market is already struggling” the ABA said in a letter it sent to Capitol Hill on Monday.

{mospagebreak}Consumer and labor groups, meanwhile, welcomed additional homeowner protections in Dodd’s bill that were not included in the Treasury Department’s proposal.

“We cannot support, and urge you to oppose, legislation that fails to help the millions of families in danger of losing their homes, while spending hundreds of billions of dollars of taxpayer money to bail out those who caused the problem,” groups like the NAACP, National Fair Housing Alliance, and the Service Employees International Union wrote lawmakers on Monday.

Under the bankruptcy protection provision in Dodd’s bill, bankruptcy judges could lower the value of the loan to help homeowners meet their payments.

{mosads}Banking lobbyists said once Treasury takes control of securities it will have the power to change the terms of the underlying mortgages. But that shifts the financial costs of reducing the price of the loans to the taxpayer rather than the shareholders in the bank that made the bad loans in the first place.

In addition to the added bankruptcy protection, labor groups pressed Congress to include a second stimulus package as part of the bailout bill.

“Any taxpayer bailout of Wall Street must be balanced with economic relief for ordinary Americans dealing with the economic consequences of Wall Street’s outrageous conduct and the government’s own inaction,” AFL-CIO President John Sweeney told congressional Democrats in a letter.

Bill Samuel, the labor union’s director of government affairs, argues that everyday Americans need help now with job losses, mounting home foreclosures and cuts in state government services.

“We have to make sure workers do not lose twice,” said Samuel. “This bill has to do with those problems as well as addressing the credit crisis.”

Samuel also expects to lobby for an independent board, subject to transparency and public oversight, which would monitor the payouts to Wall Street firms to be included in the final package.

Kevin Bogardus and Ian Swanson contributed to this article.