Yesterday, I posted information about the bankruptcy reform proposals under consideration in the Congress. This morning, on the front page of Yahoo!, there's a story entitled "How Banks are Worsening the Foreclosure Crisis."

It's interesting reading, to say the least.

The banking industry thought that the housing market would turn around, and the foreclosure mess would work itself out. Under normal economic circumstances, this could have happened. Of course, had the banking industry pulled its head out of the sand to look at what was propping up the economy, they would have realized that the housing bubble had burst and their assumptions were invalid.

So, what are lenders doing to take on the growing problem?

They're denying that it exists.

Mortgage lenders claim that they've "modified" uhndreds of thousands of loans...I'm surprised they can keep a straight face while making such absurd statements. They also claim that there is no real problem - in their world, "irresponsible borrowers" are solely to blame for the current, but nonexistent, unpleasantness in the housing market. And yet, this same industry asks for handouts in the hundreds of billions, at taxpayer expense.

The lending industry is also going to Washington this week to lobby Congress to kill, or at least seriously curtail, the proposed bankruptcy reforms I posted about yesterday.

Here's the thing: if there's no problem, what are these guys afraid of? Having their loans treated the same as a yacht loan?

The bottom line is this: for whatever reason, there appear to be many people within the lending industry who are out of touch with objective reality. Even their own lobbyists acknowledge that lenders should have addressed the foreclosure crisis two years ago by making meaningful adjustments to bad home loans.

Now, instead of addressing the problem, banks are trying to buy their way out of a remedy that will give some real leverage and relief to regular people. If the prospect of this upsets you, I urge you to contact your Congressional Representative, and your Senators, and let them know what you think about caving in to the lending industry. Hopefully, the politicians will side with the people over the well-heeled special interests.