One year into the sub-prime mortgage crisis that is rocking the economy, Congress has finally bestirred itself to consider legislation to help people out.

Barney Frank, Chris Dodd, and Dick Durbin have been supplying some leadership on the issue, but the power of the financial lobbyists is so great that nothing has become law yet.

And the proposal, by Durbin, that would have helped people the most just got shot down.

That proposal, initially supported by Harry Reid, would have allowed bankruptcy judges to renegotiate the mortgages of debtors in their court.

As an indication of just how class biased the current bankruptcy law is, check this out: Judges can modify your mortgage only if you are wealthy enough to own a second home of it is an investor property. But they can’t do it for a loan on your primary residence.

Reid, with his usual spinelessness, opted to strip the bankruptcy revision from the compromise bill, so Durbin had to offer it up as an amendment, which doomed it late Thursday. It failed, 58-36, with 10 Democrats and one Independent siding with the Republicans and the banking industry.

They were:

Mark Pryor from Arkansas

Blanche Lincoln from Arkansas

Tom Carper of Delaware

Mary Landrieu of Louisiana

Claire McCaskill of Missouri

Max Baucus of Montana

Jon Tester of Montana

Ben Nelson of Nebraska

Tim Johnson of South Dakota

Robert Byrd of West Virginia

And, of course, Joe Lieberman of Connecticut.

“The provision I offered was narrowly tailored and provided real help to more than half a million American homeowners facing foreclosure,” Durbin said. “Unfortunately, my amendment was strenuously opposed by the banking lobby and their powerful friends in the Bush Administration and in the Senate.”

Consumer groups were also unhappy.

“We’re disappointed with the way things are moving because the single most important provision is not part of the bill, and that’s judicial modification through bankruptcy,” says Allen Fishbein of the Consumer Federation of America. This provision would save 570,000 people from foreclosure. “They’re not dealing with the central issue of how to keep people in their homes.”

Meanwhile, one regressive proposal may just fly. And that’s to give people a $7,000 tax credit if they buy a foreclosed home.

So the vultures who swoop down and grab the home from some poor schlub who took out a sub-prime mortgage could get $7,000 from the government, but that poor schlub couldn’t get seven grand from the government to keep out of foreclosure.

Fishbein calls the tax credit for purchasers of foreclosed homes a “windfall for realtors.”

It’s also a subsidy to the well-to-do who can afford to go buy a home right now.

Fishbein says the compromise bill addresses “peripheral issues.” By neglecting the “bankruptcy fix,” he says, it won’t help the people who need it the most.

What a shame that when Congress gets around to taking a swing at the housing crisis, it whiffs.

“If the federal government is going to ride to the rescue of investment banks on Wall Street, it should also provide some relief to those who are about to lose their homes on Main Street,” Senator Durbin said. “Our goal ought to be preventing foreclosures, not just propping up home builders and big lenders.”

The class bias in the housing market is once more encased in law.