

An Inevitable Slide for Americans’ Standard of Living  - cwan
http://www.nytimes.com/2010/10/08/business/08views.html?src=busln

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kls
_Default is no quick fix either, since it impedes access to new credit and
carries a degree of social stigma._

I don't think many people are concerned about the credit ramification now as
well with upwards of 25% of homes for sale in foreclosure, permanently
removing these individuals from access to credit would be a difficult
proposition, many of these individuals where caught up in the fall out and had
no choice in the matter. When backed by a steady job, many of them where
reliably debtors, excluding this group from future lending would make it
difficult for the lending institution to achieve growth.

I would not be surprised to see a strong credit reporting amnesty movement
start to form. Given that the banks where partially culpable for this
situation and as the dust settles people will become irritated with the debtor
walking away with all of the burden of responsibility.

As far as the stigma goes, after the bail out there was a perceivable shift in
the attitude of the homeowner. A feeling of being left behind and to fend for
themselves took over. After the bail out strategic defaults no longer carry
the stigma they once did.

Further, there has become a growing attitude of "good for you" among people
who admit that they did so. Many homeowners feel that they are on their own
and actively support the ones who make the move to fend for themselves. With
the chain of events I cannot fault them for their logic. The banks where
rescued with swift and sweeping actions by the government, years latter
homeowners are still trying to patch together the pieces of their financial
ruin. Now bankruptcy and foreclose are looked at for what they are, the
ramifications for breach of contract and even then the deck has been stack
against the consumer.

I would like to see more attention and outrage focused on the fact that the
bankruptcy legislation was changed and made far more restrictive on the eve
before the crisis. They saw it coming and further stacked the deck in favor of
the banks and lending institutions at the cost of the general public.

To illude to a stigma on the homeowner after the actions of the government and
the institutions is disingenuous at best.

