By a 5-4 vote, a House Judiciary subcommittee has approved a controversial bankruptcy bill that would allow distressed homeowners to file for bankruptcy and get their mortgages restructured.During the mark-up of the bill, Rep. Chris Cannon, R-Utah, agreed to withdraw a key amendment that would cap the amount of principal that could be reduced in bankruptcy at 10% of the fair value of the property after Rep. Mel Watt, D-N.C., pledged to work with the congressman to perfect the language. Rep. Watt signaled that he is "sympathetic" to the intent of the amendment but is concerned that it might create a long, drawn-out process for determining the value of the property. Democrats are planning to mark up the bankruptcy bill (H.R. 3609) soon in the full Judiciary Committee and move it quickly through the House, despite opposition from the financial services industry. Sen. Richard Durbin, D-Ill., has introduced a similar bankruptcy bill in the Senate.
