The banker lobbyists have already made inroads in watering down the bankruptcy legislation that would give bankruptcy courts the power to modify toxic mortgages; but what they really want to do is kill the bankruptcy legislation.
An article in the NYTimes lays out the banker lobbyists’ strategy in black and white:

The banking industry has also succeeded in working closely with Republicans to water down and then block a measure that would give bankruptcy judges greater authority to modify mortgages, including reducing principal payments. Senate Republican leaders say they have the support of all 41 of their members – enough to kill the provision by making it impossible to get the 60 votes necessary to cut off debate.
It was never the intention of the banker lobbyists to simply revise a “bad” bankruptcy bill, they wanted to kill any chance of homeowners modifying toxic mortgages during bankruptcy. This is what we call a bad faith action. The mortgage companies are on the one hand telling homeowners facing foreclosure that they will “voluntarily” modify toxic mortgages (many homeowners wait for months for voluntary modifications and eventually succumb foreclosure in the process) and on the other hand working overtime to kill any legislation that would allow an impartial third-party, the bankruptcy court, to modify mortgages that it deems toxic. But the fight is not over.
Senate Democrats, hoping to resolve the impasse, have opened negotiations in recent days, but not with their Republican counterparts. Instead, in an effort to divide the industry, the Democrats, led by Richard J. Durbin of Illinois, Charles E. Schumer of New York and Christopher J. Dodd of Connecticut, have been in talks with Bank of America, JPMorgan Chase and Wells Fargo, along with a group of credit unions. The lawmakers’ hope is that those institutions would exert pressure on Republican lawmakers and reluctant Democratic moderates.
This is called democracy. Now it’s your turn to get involved. Contact you representatives and let them know that you support this bankruptcy bill. If you bank with any of the financial institutions supporting this bankruptcy legislation, send them a letter thanking them for standing behind this bill. Please do not delay in taking these actions, because even if you’re not facing foreclosure now, you could be next.