'Cramdowns' may be squeezed out of stimulus bill

Obama, Dems remain committed to standalone legislation

A proposal to change the bankruptcy code to give judges the power to slash the principal of troubled borrowers’ mortgages isn’t likely to be included in the economic stimulus bill working its way through Congress.

During his election campaign, President Barack Obama advocated granting bankruptcy judges the power to "cram down" mortgage principal to prevent foreclosures. But the Obama administration reportedly wants changes to the bankruptcy code to be considered separately from the stimulus legislation because the issue could hold up the bill’s passage in the Senate.