Let’s take the emotion out of strategic default

(this article originally appeared in the Sunday Business Post on the 8th of September 2013) The term ‘strategic default’ lacks a definition. Because of this, any debate that incorporates this term is, in part, pointless. Discussing something so undefined can only end in disagreement if the topic is entirely subjective. There are those who refuse to accept it exists, just as there were those who once refused to believe the world is round. Many continue to insist that, in pretty much all circumstances, borrowers are innocent.

They aren’t, just as the banks are not innocent either. As a day-to-day practitioner, I know that strategic default is real. I have seen it, dealt with it, made money on the back of advising people doing it and continue to do so. People hire guys like me to push back against banks like ours.

Some attempt must be made to determine what does and doesn’t constitute a strategic default. A failure to do so means we face a double dilemma. The first is to turn the national debate into one focused on the …

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