Why Obama's Mortgage Plan is Not a Flotation Device

Pacta sunt servanda is Latin for promises must be kept. In the debate over what to do about America’s mortgage mess, the pacta sunt servanda crowd is the one saying that if you owe it, you must pay it. All of it—no matter if you bought at the peak of the market, borrowed way too much, and are now living in a home that’s so far underwater it has a periscope. The opposite view is that over-indebtedness is hampering the economic recovery and that it’s in the public’s interest for lenders to absorb more of the pain for making dumb loans. (I guess you could call that the illegitimi non carborundum camp.)

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