Oregonrain

Citi: Off the Banking Reservation

I think "users" comments are very good. Keep in mind that mortgages are virtually the only debt that cannot be reduced in a BK action at this point. Nice going ABA lobby.

The issue here is that most independent observers believe that the only way to really move on is to start the painful process of writing down toxic assets. Some of this has been done but not nearly enough.

If we are to avoid a "zombie real estate market" for the next 20 years or so this has to happen. This will allow people working with homeowners (so called loan mod companies) to have a "hammer" to wield when negotiating work outs. Other than that the banks will just tend to "kick the can down the road" by offering the same crap (that is the technical term) they did the first time round. (easy first year payments with a ballon).

The major issue is that it will very likely become necessary for the courts to appoint "special masters" or others to take on the case load. At this time there are just not enough BK judges to process the wave that will come.

But, with all that said...it is something that has to be done with the Feds back stopping the banks that have some legs after this is all over and letting the most irresponsible fail...and wipe out the equity and debt positions of the people who took on the private sector risks.