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Jan. 21 (Bloomberg) — Consumers need a new type of bankruptcy that would better aid homeowners and be fairer for mortgage-bond investors than the existing U.S. loan-modification program, BlackRock Inc. Vice Chairman Barbara Novick said.
BlackRock, the world’s largest asset manager, proposes creating a bankruptcy option under which terms of a consumer’s mortgage can be eased, though only after other debts are eliminated, Novick said in a telephone interview. Judges would need to follow a formulaic approach, she said.
“There’s Chapter 7, Chapter 11, Chapter 13 — we need a special chapter for the Great Recession,” Novick said, referring to the various bankruptcy codes through which consumers and companies get debt discharged or reworked.
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