RichardfromHB

A measure to allow judges to reduce ('cram down') principal amounts of mortgages for troubled borrowers cleared a key hurdle Tuesday when it was approved by a U.S. House panel. Most lenders oppose the move, saying it will increase the cost of borrowing.

You are proceeding from a false premise. For years, bankruptcy has been used gleefully by corps to renegotiate their commercial loans and to break their union contracts. Elites can modify their yacht loans, vacation home loans, and their rental property loans in bankruptcy court; just not their first residence. Applying the same rules to home loans presents no hint of socialism or any greater moral hazard than enjoyed by upper income individuals. If our Swap problem has origins in defaulting mortgages, it would seem that preventing additional defaults would tend to stem the problem.