"Will $400bn worth of homes go into foreclosure? Of course not. Defaults are good for nobody. Things will and are getting restructured."

I understand he's not talking about the consumer end of the equation, but as a consumer, I don't understand how he thinks this will happen.

This is curious in light of other articles in the press. Specifically, this week's Business Week headline article (see "Prisoners of Debt") and yesterday's New York Times article. ("dubious fees"--membership required).

Let's see-- the bankruptcy laws have been significantly rewritte, banks are making a cottage industry out of foreclosure fees and aren't crediting payments, and the credit bureaus aren't updating their reports. So how is this going to be restructured?

Here's a thought-- the finance industry has benefitted greatly from Federal deregulation. If it does not get its house in shape (and all of it, not just part of it) it is at risk of a severe backlash. I don't know what form that will take, but the longer it is delayed, the uglier it will be.