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Hi
The problem will all of these sorts of schemes is twofold:
1. It encourages (or at least doesn’t discourage) delinquent behavior of both banks and debtors.
2. The fairness issue – those that have been sensible are not helped.
The only reason to ignore these issues and continue is if there is a clear and substantial economic benefit to doing so (something that might indirectly benefit the majority through either higher house prices or improved emplyment prospects for example). I think you make the valid point that it is not clear that this benefit exists.
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