Congressional Leaders may drop the “Cram-Down” provision if it threatens the passage of the overall banking bill.  Recently, at a Christian Science Monitor Breakfast, Senate Majority Leader Harry Reid stated, “If we can’t get the votes for that, and I am hopeful we can – I am semiconfident we can – then what I’ll do is take that off [the bill] and do the other banking provisions”.  Currently the legislation is facing stiff opposition in the Senate from Republicans and moderate Democrats who are pushing for a watered down version of the cram-down provision.  Senate Republicans and moderate Democrats led by Senator Evan Bayh and Senator Arlen Specter are pushing a version of the cram-down provision that applies only to homeowners with subprime loans.  There reasoning is that the subprime problem has done enough damage to the banking industry.

The cram-down provision in Obama’s plan is designed to encourage lenders to modify at-risk mortgages so that they are more affordable to struggling homeowers.  The plan gives lenders who voluntarily modify loans a cash bonus of $1,000 for each loan modified.  For now lenders will have to hold their breath a little longer as the Senate futher debates the specifics of the cram-down provision.