Recall that the government seemed to be in favor of allowing very intrusive "cramdowns," which would have allowed bankruptcy judges to lower interest rates on loans, change payment periods, even the principal amount. Banks fought hard against such measures, even after Citi was forced by the government to publicly support the idea.

No one really thought it was all of sudden in favor of it. The Obama Administration seems to have taken the lobbying to heart. Its initial bank aid plan did not include such measures, which would really mess with bank earnings. But he continues to hold it out as a last resort, reports Barron's Online.   

For more:
- here's the article

Related Articles:
Citi to support novel attempt at mortgage relief
Mortgage modification a tricky issue for banks, lawmakers