NYT on Housing: "Things Didn't Have to Get this Bad"

Housing values continue to fall, there is a glut of unsold homes on the market and nearly a third of U.S. homeowers are underwater. For these reasons, the New York Times concludes,

"It is increasingly clear that the Obama administration's anti-foreclosure effort...isn't doing nearly enough...The administration decided not to press lenders to grant principal reductions in the flawed belief that simply making payments more affordable would be enough to forestall foreclosures. It hasn't. The administration also didn't fight for the bankruptcy fix when it was before Congress last year despite President Obama's campaign promise to do so. The economy is hard pressed to function, let alone thrive, when house prices are falling."

Instead of focusing on interest relief, the editorial concludes that the federal housing strategy should emphasize principal reduction.