A special bankruptcy law could help borrowers while letting housing markets clear, says Novick. But any resolution of the housing crisis needs to respect the rights of everyone–investors, borrowers, lenders, and taxpayers. Foreclosure moratoriums, failed mortgage modifications, and principal forgiveness programs delay resolution. Worse, they create more losses for investors, homeowners, and taxpayers, yet fail to keep delinquent borrowers in their homes.
Novick is vice chairman of BlackRock, a global investment management firm based in New York City.