Senator Clinton: Let’s Keep People In Their Homes

Senator Hillary Clinton:

This is not just a financial crisis; it’s an economic crisis. Therefore, the solutions we pursue cannot simply stabilize the markets. We must also deal with the interconnected economic challenges that set the stage for this crisis — and reverse the failed policies that allowed a potential crisis to become a real one.

Senator Clinton makes tremendous sense in the WSJ op-ed, but like many misses one crucial point. Saving those that are already underwater assumes there is nobody more creditworthy (and more patient) willing to step in once asset prices normalize. Most would rather have struggling homeowners think they are getting a fresh start, when all the process accomplishes is maintaining a semblance of bubble times and the perception of wealth.

It exacerbates illiquidity and decreases economic mobility.