Obama had said the bill was important to saving the economy and promised to push for its passage. But facing stiff opposition from banks, he did little to lean on lawmakers who worried it might spike interest rates. Instead, he focused his efforts on less divisive legislation that would reduce high fees charged by credit cards.
Democratic leaders bitterly lamented that they were powerless, as 11 Democrats and the latest addition to the Democrats, Sen. Arlen Specter of Pennsylvania, joined Republicans to scuttle the bill. The 45 votes in favor of the bill fell far short of the 60 that would have been needed for passage.
"The banks that are too big to fail are saying that 8 million Americans facing foreclosure are too little to count in this economy," said Senate Majority Whip Dick Durbin, who championed the bill.
Obama long has backed the proposal to give debt-ridden individuals the option of turning to bankruptcy to save their homes. He cited that support last fall as he privately lobbied skeptical Democrats to back the $700 billion Wall Street bailout. And once he was president, he had promised, he would push for its passage.
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