Are you having a problem paying your mortgage payment?  The government is here to help.  But just how will they help the average home owner that is having problems with his mortgage?

In a vote that demonstrates the veto power exercised by Wall Street on US government policy, the Senate on Thursday rejected a measure that would have allowed bankruptcy judges to modify the terms of mortgages to help distressed homeowners avoid foreclosure. The legislation would have enabled bankruptcy courts to lower the outstanding principal as well as interest rates on some home loans.

The provision, put forward as an amendment to a broader housing bill backed by the Obama administration, was defeated in a 45 to 51 vote, with 12 Democrats joining all of the Republican senators in voting “no.” According to Democratic leaders in the Senate, the provision would have enabled 1.7 million homeowners to remain in their homes. This is only a small fraction of the estimated 8 million Americans who will be forced out of their homes by the banks over the next several years.

The opposition of the banks secured “no” votes from Democrats Max Baucus and Jon Tester of Montana, Michael Bennett of Colorado, Robert Byrd of West Virginia, Thomas Carper of Delaware, Byron Dorgan of North Dakota, Tim Johnson of South Dakota, Mary Landrieu of Louisiana, Blanche Lincoln of Arizona, Ben Nelson of Nebraska, Mark Pryor of Arkansas and Arlen Specter of Pennsylvania.

Obama had declared his support for what is known in Washington circles as the “cramdown” provision when he announced his “Homeowner Affordability and Stability Plan” in February. That plan, presented as a boon to homeowners hit by declining home values, the loss of their jobs, and adjustable mortgage rates that had shot up, was, in fact, tailored to serve the interests of the banks, mortgage servicers and big investors.The banks remained opposed and shifted their efforts to kill the measure to the Senate. At that point, the Obama administration caved in and tacitly dropped its support for the provision.

Stripped of the mortgage cramdown “stick,” all that remains in Obama’s “Homeowner Affordability and Stability Plan,” which the Senate is expected to pass next week, are a series of “carrots” for the banks.

One provision inserted into the bill at the bidding of the banks will reduce a proposed premium owed by the banks to the Federal Deposit Insurance Corporation, in return for hundreds of billions of dollars in FDIC guarantees on the banks’ bond issuances, by more than 50 percent. This will save the banks an estimated $7.7 billion.

A second provision will make permanent the temporary increase in bank deposits guaranteed by the FDIC to $250,000 from $100,000.

The bill also includes a safe harbor provision for mortgage servicers—firms that manage loans for investors and lenders—from lawsuits related to loan modifications. This provision, in fact, will provide legal protection for banks that have engaged in lending practices that skirt or violate the law.

I was afraid that the bill in its original form would have a problem in the Senate.  Appears that the banks still have their juice in Washington.  The homeowner in trouble will remain in trouble and only those with prefect credit will be the only ones receiving help.