PR Push Against Strategic Defaulters Underway (Is There a Debtors’ Prison in Your Future?)

[girl gone mad]

PR Push Against Strategic Defaulters Underway (Is There a Debtors’ Prison in Your Future?)
http://www.nakedcapitalism.com/2010/06/pr-push-against-strategic-defaulters-underway-is-there-a-debtors-prison-in-your-future.html

A good Washington DC contacts told me that a public relations/media push to demonize those who decide to walk away from mortgages they can still afford to pay (aka “strategic defaulters”) is underway. Expect to see a good bit of moral fervor as those who choose to cut their losses are attacked as immoral, irresponsible, and abusive.

There is a wee problem with the “blame the ruthless borrower” narrative. Banks who acted in a similarly ruthless manner have trained their customers to behave the same way. This shift in prevailing attitudes is the logical and inevitable result of financial firm, taking an increasingly predatory posture toward their customers. Borrowers are responding in kind, by taking a cold-blooded and legalistic look at their agreements with lenders.

So now they are going to try to stuff the genie back in the bottle by castigating borrowers who treat their obligations as “just business”, the way banks do. But the problem with this little narrative is that the bank haven’t simply been pig-headed about adherence to their often pig-headed contracts (and before you argue otherwise, go read your full credit card agreement, which at Bank of America runs to 30 pages, or a home equity line of credit agreement, and then we can talk). It’s that even with doing everything possible to skew the playing field in their favor, they still had to be rescue en masse. Having been deadbeats and strategic defaulters of the first order, they continue to manifest their characteristic unmitigated gall via (through proxies and ads) hectoring the public about honorable behavior.

Now it is true that this is in fact a very destructive trend. A calculating, contract-driven mindset eats away at the foundations of commerce. When I was young, it was possible to deal with most clients on a handshake (I’d still write the arrangements up, but it was mainly a device for confirming that we had heard each other correctly). Now pretty much every one I know has very carefully crafted agreements precisely because if things stray outside the bounds initially contemplated, it is much less likely that the party on the other side of the table will try to reach a middle of the ground resolution. It is now the norm that parties to a contract will try to exploit ambiguous or unforeseen situations to their advantage

http://www.nakedcapitalism.com/2010/06/pr-push-against-strategic-defaulters-underway-is-there-a-debtors-prison-in-your-future.html">more. . .

[socialist_n_TN]

1. Well that would make the "mortgage strike" option

a little more iffy.