As I reflect on my travels to over 20 cities in 2011, I am struck by a conversation I’d like to share with you. Upon arriving late one evening in Las Vegas to speak at a credit union conference, I asked the cab driver, “How’s business?” I heard a profoundly sad story. His face is seared in my brain as a reflection of the impact of the contracting and deleveraging in our country that began in 2008. Eight years ago, he moved to Las Vegas and purchased a home for $180,000. A global financial institution provided him with a line of credit, and he proceeded to build a new deck and buy large new cars every year as his home value increased to $400,000. Today, his home is valued at $120,000. He is 67 years old, hopeless, with no possibility of retirement and stuck driving a cab to pay off his mortgage obligations. 

I am sorry to say that this contracting and deleveraging will probably last at least another two to five years. Once the normal standards of lending were discarded, everyone felt entitled to own a home and live beyond their means. The system broke down. For stabilization to take place, the regulatory system will continue to play a major role in attempting to correct this financial systemic breakdown.

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