Should the US Government Encourage Banks to Write Down the Principal on Underwater Mortgages?

The Economist asks:

Should the US government encourage banks to write down the principal on underwater mortgages? And if so, how?

I didn't have anything to say, but I answered anyway:

Only in ways that avoid using taxpayer cash Mark Thoma

Here are the other responses:

Yes, it's the best route to household deleveraging Viral Acharya 
Banks must mark their assets to market Laurence Kotlikoff 
The sooner banks acknowledge losses, the better Hans-Werner Sinn

[all responses]