Homeowner advocates assail bailout proposal

updated 5:39 p.m. ET Sept. 23, 2008

WASHINGTON - Homeowner advocates weighed in Tuesday on the Wall Street bailout bill, pressing Congress to include bankruptcy court relief for people unable to keep up with their mortgage payments.

The Bush administration opposes it, citing the need for simplicity and speedy action on the legislation to avert further financial meltdown. The administration and industry lobbyists oppose the provision by congressional Democrats to allow judges to rewrite bankrupt homeowners' mortgages to ease the financial burden.

Millions of homeowners face foreclosure while President Bush and Treasury Secretary Henry Paulson "are demanding a clean bill, one that bails out Wall Street alone. There's nothing clean about that," said Nancy Zirkin, executive vice president of the Leadership Conference on Civil Rights.

"There is no way we can restore property values until people can maintain their mortgages," AARP lobbyist Dean Sagar told a conference call with reporters.

The U.S. Chamber of Commerce said the bailout bill must not become a vehicle to advance "pet interests. ... All of those issues can, should and must be addressed — but not now."

The homeowner advocates' argument for protection came as a group representing plaintiffs' attorneys called for investor protection.

Economy in Turmoil Jobless rate rises to 26-year high Out-of-work with no place to land, the legions of America's unemployed are growing. The nation's unemployment rate rose to 9.5 percent in June, a 26-year high. Factory orders rise more than expected in May Calif., other states face tough budget choices Pending home sales climb in May Manufacturing report boosts economic hope

Carol Gilden, president of the National Association of Shareholder and Consumer Attorneys, said that in addition to the bailout bill, Congress should take action in the longer term because the Supreme Court has seriously weakened investors' rights to sue.

In January, the justices ruled against investors who go to court against businesses that help manipulate stock prices of publicly traded companies.

A week later, the court dealt a loss to Enron Corp. investors' efforts to recover $40 billion from Wall Street banks in the 2001 collapse of the Texas energy company. The justices refused to hear the Enron investors' case, in light of the decision against investors the previous week.

"We've been on the front lines fighting corporate fraud for years and our clients have been victims in this too," Gilden said in an interview. "We want to be assured that the bailout plan does not negatively affect shareholder suits against those who have committed fraud."

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