A June 4 New York Times article reported, “Documents and interviews with lawmakers, lobbyists and administration officials show that the banks defeated the bankruptcy change -- the industry picturesquely calls it the 'cramdown' provision -- by claiming that it would push up interest rates and slow the housing market's recovery, even though academic studies have countered such claims.” But during the debate over a bill that would have authorized bankruptcy court judges to renegotiate primary mortgages, the Times repeatedly reported industry criticism of the provision without noting that research undermined that criticism.

• A January 8 Times article reported, “Backed by bankers and other financial groups, many Congressional Republicans and some Democrats have balked at the plan to let bankruptcy judges alter mortgage terms on primary residences, saying that would drive up mortgage costs.”

• A February 16 Times article reported, “The banking industry has vehemently opposed it, warning that investors will stop financing mortgages if they know that a judge can unilaterally change the terms at a later date.”

• A February 18 Times article reported, “The banking industry has vehemently fought that proposal for more than a year, saying it would make investors unwilling to finance future mortgage lending.”

• An April 21 Times article reported, " 'The cram-down provision, if it became law, would raise the costs of all mortgages for everyone,' said Edward L. Yingling, president and chief executive of the American Bankers Association. 'It's a fact that if you undermine the value of the collateral by allowing cram-downs, you make the loans riskier and banks will price that risk accordingly by rates going up.' ''

By contrast, a February 5 Times article reported:

The Financial Services Roundtable, an industry lobbying group, calculates that cram-downs may increase the cost of mortgages by up to 2 percentage points either through higher rates or bigger down payments. The restrictions on cram-downs ''keeps the cost of homes low, and this bill will unravel that,'' said Scott E. Talbott, its chief lobbyist.

But other experts say such estimates are inflated. Adam J. Levitin, an associate professor of law at Georgetown University who favors changing the law, said rates may only rise by 0.15 of a percentage point.

From the June 4 New York Times article:

As he often does, President Obama took the opportunity in a bill-signing ceremony last month to remind Congress “to do what we were actually sent here to do -- and that is to stand up to the special interests, and stand up for the American people.”

But Mr. Obama did not mention that the measure he was signing, the Helping Families Save Their Homes Act, was missing its centerpiece: a change in bankruptcy law he once championed that would have given judges the power to lower the amount owed on a home loan.

It had been stripped out three weeks earlier in a showdown between Senate Democrats and the nation's banks, including many that are getting big government bailouts.

As Congressional Democrats and the White House crow about multiple victories over the financial industry, including new rules for credit card issuers, banks are quietly savoring an even bigger victory of their own.

The defeat of the bankruptcy proposal is a testament to the enduring influence of banks, even as the industry struggles financially and suffers from its role in the economic crisis.

It also shows that in the coming legislative battles that will shape the future of the economy, the financial industry -- through a powerful and well-financed lobbying force -- may have a far stronger hand to play than might seem evident.

Documents and interviews with lawmakers, lobbyists and administration officials show that the banks defeated the bankruptcy change -- the industry picturesquely calls it the “cramdown” provision -- by claiming that it would push up interest rates and slow the housing market's recovery, even though academic studies have countered such claims.

The industry also steadfastly refused offers to negotiate over a weaker version. And it poured millions of dollars into lobbying: four of the industry's top trade groups spent nearly as much on lobbying in the first three months of this year as they did in all of 2001.