It would appear that the position the banks appear to be taking at this point is the deferral one that we were discussing earlier, potentially the deferral of interest. It's not the deferral of payments for individual mortgages. There does also seem to be a push to lower interest rates on credit cards from the 18% range to maybe the 10% range.
I think those parts may help some people. I think most people won't be particularly helped by that, in large part because deferring a mortgage payment, if you can't make the payment as it is, doesn't help you. It puts off the problem. Even if the interest rates are lower or the interest being charged has been deferred, the underlying principal payments, in many cases, haven't been deferred, or even if they are deferred, you don't have six months' worth of those payments sitting in a bank account somewhere that you can take out and then pay in September.
My concern is that the banks hold a lot of this debt, and you can say that the banks should be forced to forgive a certain amount of mortgages or that people should get a pass to not pay back their capital on mortgage payments. However, this isn't purely about the banks. We can say renters shouldn't have to pay their landlords, but their landlords may well have mortgages. Then we can say that the landlords shouldn't have to pay the banks their mortgages, but the banks themselves have their own costs.
There is a process for dealing with this type of insolvency. It's called renegotiation of debt. That's not necessarily the bank's fault per se. I'm sure that down the line we'll see a large uptick in bankruptcies or forced renegotiation of debt, whether for mortgages, rent payments or small businesses that can't operate and are forced to close. At that point, it may be necessary to use the stick of the federal government against the banks. It's not clear to me, at this point, exactly what that stick would be in terms of renegotiation. It might be a fund that would help bankrupted businesses renegotiate, with the federal government taking on some risk in that process.
I really think we need to be looking further than just deferring several mortgage payments or deferring some interest. We need to be looking at the fact that folks won't be able to make these payments back, and they'll likely have to renegotiate that debt over a longer period of different payments, or something along those lines.