[W]e already have this great system for writing down and managing burdensome debt, and it’s this marvelous thing called our bankruptcy laws. [. . .] We could easily pass a streamlined, modified version of bankruptcy just for this crisis. [. . .] We can make this fair on the backend. [. . .] It can have clawback mechanisms to address potential future appreciation.
[. . .]Why doesn’t this happen?
It doesn't happen because it requires banks to recognize huge losses. The reality is that given the choices made by the Obama Administration, the most effective way to get past our balance sheet recession is for underwater homeowners to walk away from their houses. More . . .
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