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.

Lawmakers grill Paulson on bailout plan   Auto execs ask Congress for $25 billion lifeline CEOs urge $500B stimulus from Obama Late rebound drives Wall Street higher Wholesale prices plunge by a record amount Homebuilder sentiment plunges to new low 10 tips: How to prepare for a layoff Latest bailout payment: $33.56 billion to banks

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."

Also in msnbc.com business Ads of the Weird: Losing your head to painkiller The New Yorker: Starving for a policy change Your Career: Scary noncompete agreements Answer Desk: Yep, kids, it’s your debt   Video: Report says U.S. in recession since spring

MORE FROM STOCKS & ECONOMY

Stocks & economy Section Front

Lawmakers grill Paulson on bailout plan   CEOs urge $500B stimulus from Obama Wholesale prices plunge by a record amount   Late rebound drives Wall Street higher Economy sailing into rougher waters HP’s solid outlook sends shares soaring   Home Depot earnings dive 31 percent Bush may let Obama decide part of bailout Industrial output rebounds in October ‘Rules of the road’ set for oil shale drilling Stocks & economy Section Front   Add Stocks & economy headlines to your news reader: