Consumers are mad as hell and they’re not going to take it anymore.
Every day, the bank calls–demanding to know why the consumer hasn’t paid his credit card bills. Every time the consumer skips a payment (to persuade the bank to cut the interest rate), the bank responds by jacking up the interest rate. And so on.
Now consumers are finally responding by doing what banks do when they can’t pay their debts: just walking away.
David Streitfeld, NYT: Those on the front lines of the debt industry say there is a small but increasingly noticeable group of strapped consumers who… are deciding they will simply stop paying. After loading up on debt eagerly provided by the card companies during the boom times, these people now find themselves trapped in an endless cycle where they are charged interest on interest and fees upon fees while the lenders get government bailouts…
Collectors are noticing a shift not only in ability but in willingness to pay. “With all the bailouts the government is giving everyone, no one has any personal accountability about their own debts,” said Roger Knauf, who runs a trade group of debt-buying firms…
That people would intentionally default on loans they never should have gotten in the first place took lenders by surprise. “I’m astonished that people would walk away from their homes,” Bank of America chief executive Kenneth Lewis said in late 2007.
Nineteen months later, walking away from mortgages is widespread if impossible to quantify, and no cause for embarrassment. Rather the opposite: it shows savviness. “I’ll walk away before I take a loss,” a Dallas financier recently boasted to Barron’s magazine about his efforts to sell his $6 million vacation estate.
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