Calls for US taxpayers to bear housing costs - FT.com
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US Federal Reserve policymakers are increasingly urging fiscal authorities to consider reducing distressed borrowers’ loan balances, a politically fraught position for a central bank that has long sought to distance itself from fiscal policy.
Principal reduction should have been done three years ago, but I think the banks should just write it down rather than have the taxpayers take the hit. The financial parasites who crashed the economy, and who then were bailed out by the taxpayers and the Fed, have had a free ride to date. The economy will never recover until the middle class gets some relief from the burden of debt--mortgages, student loans, credit cards--that is the substitute for lost wages. The article says this would be politically unpopular, but I am not so sure about that.