WASHINGTON (CNN) -- Senate Republicans on Thursday blocked efforts to give bankruptcy courts more power to stave off home foreclosures, a move the chamber's Democratic leader called "a big mistake."
"The people on Wall Street are high-fiving. They just won again," Senate Majority Leader Harry Reid, D-Nevada, said after the vote.
"The big banks just won again. The mortgage bankers won again. Oh, there are a few losers out there, like millions of consumers -- millions of people who are going into foreclosure or are about to go into foreclosure. They lost."
The banking industry and President Bush opposed the bill, which would have allowed bankruptcy judges to reduce a filer's mortgage debt to the home's current market value.
Bush's GOP allies filibustered the measure Thursday afternoon, invoking Senate rules to require 60 votes to cut off debate and bring it to the floor; Democrats came 12 votes short of that mark.
Republicans said they would agree to take up the measure if Democrats allowed them to make changes to it, including adding tax incentives to encourage home ownership.
The chamber's Republican leader, Sen. Mitch McConnell of Kentucky, said he was open to debating the bill under a "fair process for consideration" and accused Democrats of forcing the vote "to create an issue."
"Now that the box has been checked on the other side, maybe we can get serious now about trying to do something that will actually make a difference," he said.
But Reid insisted that any amendments should be relevant to the bill.
An estimated 8 million people now owe more on their mortgages than their homes are worth due to the housing market's sharp skid, said the bill's Democratic sponsor, Sen. Richard Durbin of Illinois. Watch a report on "upside-down mortgages" »
But Bush told reporters Thursday morning that letting bankruptcy judges reduce those debts "would be unfair to the millions of homeowners who make the hard choices every month to pay their mortgage on time, and it would be unfair to future home buyers."
Durbin said his bill would have affected about a third of those facing foreclosure today, and said it would have given lenders a reason to work out terms before borrowers faced losing their homes. See how many foreclosures there were in your state last year »
Democrats billed the measure as a second round of economic stimulus, after the $170 billion measure Bush and Congress agreed to earlier this month. But Sen. Judd Gregg, R-New Hampshire, said the bill was likely to be an "anti-stimulus" that would drive up interest rates and mortgage insurance.
"The practical effect of that will be that the market will react, and the mortgage crisis will go up, because the people who lend money will have to anticipate that risk," said Gregg, the ranking Republican on the Senate Budget Committee.
But Durbin said the opposition came largely from mortgage bankers -- "Those same wonderful folks who brought us the subprime crisis."
And he compared Bush's handling of the mortgage crisis to President Herbert Hoover's hands-off response to the Great Depression.
"It didn't turn the economy around, and it ended up electing a new president named Franklin Roosevelt," Durbin said. E-mail to a friend
CNN's Ted Barrett contributed to this report.
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