Jan Pierce, S.C.

10/30/2026

"Opportunity came knocking at the door of Triways, a family owned trucking and warehouse business in Southern California that had successfully navigated the ups and downs of nearly a half-century of hauling goods.

Triways earned industry awards, employed some 60 workers and took in nearly $10 million in revenue in 2024. After struggling through a postpandemic slowdown, the company got an offer that year to serve Navy commissaries in California, Oregon, Washington and Florida.

“I wasn’t trying to grow, but the opportunity was put on the table,” said John Jauregui, the 70-year-old chief executive. It would require more truck trailers and more drivers, a significant upfront expense, he said. But it was a chance to transform the Jurupa Valley, Calif., company into a nationwide operation.

Getting the money was easy. Jauregui turned to merchant cash advances—MCAs for short—a legal, largely unregulated financing industry marketed on social media as a business lifeline: Cash in 24 hours or less. Easy applications. Past credit troubles, no problem.

Yet, as Jauregui and others have learned, the terms can be a killer. “I should have known better,” he said, looking back at the financial land mines laid by the cash advances.

MCA funders say they don’t issue loans, which are regulated by state and federal laws. That means they can set effective finance costs in the triple digits and higher. One of Triways’s cash advances had an estimated annual percentage rate of 2,190%, a disclosure document shows. Jauregui said he didn’t know how costly the financing would be.

The funders withdraw money directly from company bank accounts, daily or weekly, even if that leaves firms short of funds for payroll, inventory or other operating expenses.

Rather than a lifeline, merchant cash advances have been a deadly anchor for businesses around the U.S., said bankruptcy attorneys and advisers to financially troubled companies.

“An MCA can make sense for a small-business owner who has a leaky roof or other immediate need and can repay the money in 30 days,” said Michael Dal Lago, a bankruptcy attorney in Naples, Fla. “Don’t use an MCA as a line of credit. That’s a recipe for disaster.”

This year, MCA funders can dip into a growing pool of applicants—businesses walloped by inflation, tariffs and tighter credit. Small businesses have been “increasingly seeking liquidity through merchant cash advances (MCAs), often to cover overhead and payroll expenses,” the Federal Reserve Bank of Kansas City reported in October. MCAs “have exacerbated the difficulties faced by small businesses” because of their high costs, the report said.

Federal bankruptcy filings by small businesses—those owing no more than $3.4 million—rose 36% in the first nine months of 2026 compared with the same period last year, according to the American Bankruptcy Institute. Creditors in more than half of those cases included companies offering MCAs, according to an analysis of bankruptcy filings by The Wall Street Journal. Some of these companies offer only MCAs; others list several products on their websites.

Caryl Delano, a federal bankruptcy judge in Tampa, went further. “Virtually every small-business case we see has at least one and sometimes several or more MCA funders,” she said recently.

Unlike conventional lenders that try to work out repayment plans to keep companies afloat, MCA funders “don’t care whether the business makes it or not,” said Richard Cook, a Wilmington, N.C., bankruptcy attorney.

While it seems counterintuitive for an industry to put a financial stranglehold on its own clients, the high charges set by MCA funders mean they need only 30% to 40% of their contracts to pay off in full to be profitable, said Shane Heskin, a New York attorney representing Triways.

The goal is to “cut off your cash flow so you have no choice but to borrow, rob and steal to pay them off, whether it’s take out a home-equity loan, sell property,” he said, “selling assets, taking out another MCA.”

Steve Denis, executive director of the Small Business Finance Association, which estimated the MCA market at roughly $20 billion, represents members offering various financing products, including MCAs. Alternatives to traditional financing are important for businesses turned away by other lenders and need timely access to cash, he said.

Denis said group members were “committed to making sure that businesses are successful and survive using the financing tools our members offer.” He acknowledged the presence of “predatory companies that are just trying to get their money and don’t care if the business ultimately survives.” The trade group, he said, was working to eliminate abusive practices and “prevent bad actors from continuing to operate.”

Jauregui said his company had a conventional line of credit but couldn’t get additional bank financing when he took the first MCA in the fall of 2023. He planned to quickly repay the six-figure obligation. Instead, Jauregui took more advances, first to smooth over financial bumps while he waited for a tax refund check, and then to fund the new Navy job.

As the payments grew more onerous, he sought more cash advances to keep his company running, more than 30 in roughly 2½ years. New MCA offers arrived nearly every day. “It’s addictive because it’s easy to get,” Jauregui said. It solves the problem right away. “Then, at the back end, it gets worse.”

As MCA funders drained Triways’s bank accounts, Jauregui and his wife, Jackie Jauregui, juggled bills, worked harder and hoped the business would grow fast enough to turn the corner. The couple agonized about leaving employees empty-handed.

“Mrs. Jackie the check did not go through,” a Triways customer service representative texted in August. “Zelle is preferred because I don’t want to risk another check bouncing.”

Squeeze play

Banks have pulled back on small-business lending since the financial crisis two decades ago. With smaller U.S. companies on the ropes, MCA funders are filling the void.

Last year, 12% of small businesses seeking financing applied for a merchant cash advance compared with 9% in 2024, according to a survey by the regional Federal Reserve Banks of businesses with at least one employee.

“These are the glory days,” said Sean Murray, chief editor of deBanked,in an April 2026 interview about the state of the MCA industry for the trade publication’s website. “What is the state of the industry? This is the time to be in it.”

The Small Business Administration announced last year it wouldn’t refinance MCAs anymore. “Borrowers who resort to these—I almost said extortionist—borrowers who resort to going to these types of arrangements for cash” have a high fail rate, SBA Administrator Kelly Loeffler said in a presentation last year to SBA lenders.

In practice, MCA funders often squeeze as much cash as possible from struggling businesses before the firms are granted bankruptcy protection or shut their doors for good. MCA clients accept the increasingly difficult repayment conditions, in many cases, trying to salvage their life’s work and save the jobs of their employees, according to business owners who have taken out MCAs and bankruptcy attorneys.

In July 2024, Jauregui was still waiting for his tax refund for businesses that suffered from Covid-19 shutdowns. Checks from the federal program were delayed by months for hundreds of thousands of firms, including Triways. Jauregui said a broker persuaded him to take a new cash advance to help pay off his existing MCA obligations. Triways ended up worse off: It still owed money on the other MCAs, as well as on its new one.

That fall, Triways began deliveries for the Navy. Yet the daily withdrawals by MCA funders left little cash for expenses and the added costs of the new business. Triways started missing rent payments in December.

While waiting for the promised tax refund check, Jauregui turned to MCAs again and again. When the tax refund checks finally arrived in April 2025, Jauregui used all the money to pay down his company’s MCA obligations. He still owed $300,000 to $400,000. Back rent piled up, totaling roughly $1 million by June.

In September 2025, revenue from a big customer fell by roughly half for eight months. Triways took out four MCAs that obligated the company to pay an estimated total of $771,500 in exchange for roughly $470,000. About $64,000 of that went to pay off an earlier MCA.

Jauregui met with a bankruptcy attorney for advice that fall. In an October letter to the landlord, a small-business lender and four MCA funders, the lawyer said Triways owed the MCAs more than $700,000, and its net operating income was about $120,000 after rent. The lawyer proposed a repayment plan, saying MCA funders might collect only a third of what was owed if Triways ceased operations.

The lawyer advised Jauregui to file for bankruptcy liquidation if the MCA funders wouldn’t agree to reduced payments. Jauregui wasn’t ready. “I thought I could still pull it through,” he said. Weeks later, Triways’s bank closed its accounts.

On a single day in November 2025, Jauregui took out two MCAs. One deal obligated Triways to pay an estimated $674,550 in exchange for $427,500, according to financing documents. Most of the funds went to pay off three earlier MCAs and a small-business loan. Triways kept $5,815.60 for operating expenses. Triways took out another MCA 10 days later.

Triways took out another four MCAs over eight days in January 2026 and additional MCAs in February and March, most for less than $50,000. “That’s how desperate I was to make the payroll,” he said. In February this year, Triways’s landlord filed eviction papers.

Jauregui closed some company bank accounts in March, trying to keep what little cash he had left from withdrawals by MCA funders. He quickly learned the move afforded no protection.

‘Everyone loses’

When businesses fall behind, MCA funders often employ Uniform Commercial Code lien notices, asking customers owing money to a business in default to pay funders instead. The liens can also capture funds directly from credit-card processors and payment platforms such as DoorDash and Stripe.

Feast Kitchens, a small Triways customer, was told to “kindly place a hold on any funds” owed Triways and direct them to the law firm to hold on behalf of Horizon Capital NY, according to a notice reviewed by the Journal. Triways owed Horizon roughly $280,000.

A second lien notice, from a different attorney, said Triways owed Square Funding Cali roughly $379,000. A lawyer for Square Funding Cali declined to comment. Square Funding Cali isn’t related to Block, which operates the Square payment platform, he said.

Lawmakers in a dozen states have passed laws on merchant cash advances. California, Vermont and New York require disclosures on estimated annual percentage rates. The California law requires MCA brokers and funders to be licensed as finance providers.

Some bankruptcy judges have concluded the transactions are loans. Last year, New York Attorney General Letitia James secured a $1 billion settlement with Yellowstone Capital over allegations that it issued MCAs that were, in fact, illegal high-interest loans in disguise. Yellowstone neither admitted nor denied guilt in the settlement.

In April this year, Triways filed for Chapter 11 bankruptcy reorganization. In court filings, Triways cited MCA payments of $250,000 a month and the financial strain created by the UCC filings to its customers. The trucking company said it had $2.1 million in assets and nearly $6.8 million in liabilities, including more than $1.2 million owed to MCA funders.

A federal bankruptcy judge dismissed the case in June after the bankruptcy trustee reported that the company had missed payroll after the bankruptcy filing and didn’t have workers’ compensation insurance, a violation of California state law, court records show.

In August, Jauregui’s wife emailed Horizon asking to release its lien of roughly $280,000 and re-establish a monthly payment plan. “This request is not an attempt to avoid our obligations. It is exactly the opposite,” she wrote. “If the company’s final source of revenue is eliminated, everyone loses.”

“Can we refrain from sending these lengthy emails and just discuss the economics,” a Horizon lawyer wrote. “Horizon needs a number that Triways will turn over and is willing to pay weekly.” A lawyer representing Horizon declined to comment, citing pending litigation.

Triways ceased operations in September. “I tried to keep the business alive for as long as I could,” Jauregui said.

Since last week, two MCA funders have asked a New York state court to enter default judgments of more than $585,000 against Triways. A third funder asked the court to confirm a roughly $415,000 arbitration award.

In the span of around two hours Wednesday, Jauregui received a half dozen different funding offers via text. “You may qualify for up to 200k,” one said."

Merchant cash advances deliver quick funding, but some carry effective finance costs as high as 2,000%.

10/29/2026

"A generation of baby boomers, aging into retirement, are starting to sell their machine shops, plumbing companies and dentistry practices to private equity firms."

Investors in big cities are quietly consuming small businesses all over the country.

10/12/2026

"Lenders have often been wary of offering mortgages in struggling neighborhoods where income levels and property values are low. The approval process for a traditional mortgage evaluates how likely the borrower as an individual is to pay back the loan, looking at credit score, debt-to-income ratio and assets.

In the new model, a private lender approves the loan based on the property’s value and potential rental income rather than the income of the borrower. Often, proof of personal income isn’t even a requirement."

The loan—based on potential rental income, not the borrower’s wealth—is helping real-estate investors buy and renovate homes.

08/07/2026

“If two engineers can reproduce your entire product in a matter of a few weeks, then you deserve to be killed,” he said.

Generative AI is steamrollering the once booming industry known as software-as-a-service. “You have to burn the ships and start from the ground up.”

07/05/2026

Five people open up about their finances and how they spend their time.

06/26/2026

"If the mythos of the American dream is to work hard and get ahead, it’s being eclipsed for some by the dream of not having to work at all...

On social media, passive-income obsessives test out eccentric schemes and compare notes. Some seekers make real money and win back time. But many ideas thrown around online are duds or, worse, scams. In recent years, the Federal Trade Commission has taken enforcement action against several operations that it said bilked consumers out of millions of dollars with the lure of effortless money."

Driven by a growing feeling that 9-to-5 jobs are a dead end, people are turning to social media to test out eccentric moneymaking schemes.

05/26/2026

"The complaint Donald Sauve submitted in Minnesota last year was a familiar type in the nation’s federal courts.

In legal parlance, Mr. Sauve filed “pro se,” Latin for “for oneself,” meaning he had no lawyer as he sued his ex-wife, her lawyer and a state judge who had rejected one of his earlier legal challenges as “frivolous.”

In a handwritten scrawl, he previously filed a suit asking for $275,000 in damages, claiming he had been unlawfully deprived of his home. It took less than a month for Judge Jerry W. Blackwell to dismiss the case for lack of jurisdiction.

Three months later, Mr. Sauve was back. This time he had help.

Using ChatGPT and Claude, Mr. Sauve filed a new complaint in federal court. This time, it was a neatly typed document accompanied by 50 additional filings including a “case law synthesis” of legal research he said backed up his claim. In an interview, Mr. Sauve said A.I. had provided “the only path forward” for his case.

“Knowledge is power,” he said.

Federal judges and legal experts said they are increasingly seeing filings like Mr. Sauve’s flooding court dockets and clogging an already overburdened system as A.I. supercharges pro se litigation — even as it opens up the legal system to people who might not otherwise be able to afford to bring a case.

The eventual outcome for Mr. Sauve was the same. In September, two months after he filed, Judge Patrick J. Schiltz, chief of Minnesota’s Federal District Court, dismissed his suit again, this time in a 14-page opinion that found he had failed to clearly state a claim.

But first, each one of Mr. Sauve’s filings had to be read, captioned by the clerk and entered on the public docket.

Judge Schiltz entered an order that any further filings would be “shredded without any additional notice.”

“A litigant cannot dump hundreds of pages of documents on a court and expect the court to sift through them to find facts or arguments that might support claims against a defendant,” Judge Schiltz wrote, as he dismissed the case.

In interviews, judges and experts said that the use of A.I. by pro se litigants also offers potential upsides. “A.I. presents great promise for enhancing access to justice for those without the resources to retain counsel or to represent themselves effectively,” wrote Judge Michael Y. Scudder of the U.S. Court of Appeals for the Seventh Circuit this year, when ruling on a pro se case.

And some federal judges are also discussing ways that A.I. could be used responsibly to help with workflow in their own chambers, noting that it’s possible that A.I. could someday be used to help clerks to read and assess a larger number of filings.

In the meantime, however, many judges emphasized the seriousness of the immediate workload problem created by A.I.-enabled pro se filings. Judge Schiltz, who declined to discuss any particular case, characterized the overall problem as “an existential threat to the federal courts.”

The arrival of A.I. has caused the number, length and complexity of pro se filings to “increase dramatically,” he said. “There’s just no end in sight, and no satisfactory solution in sight either.”

‘Something Has to Give’

Each year, federal district courts handle roughly 300,000 new civil lawsuits; another 42,000 new cases are filed in the courts of appeal. One third of that combined caseload comes from pro se litigants, according to data compiled by the Administrative Office of the U.S. Courts, which helps oversee the federal court system.

Many of them are prisoners using law libraries to assert their civil rights or otherwise challenge prison conditions. Others are ordinary people who either can’t afford a lawyer or believe themselves to be their own best advocate. Between 1998 and 2017, pro se plaintiffs lost 96 percent of the cases they brought.

But judges, lawyers and academics say the volume of filings by pro se litigants has risen dramatically alongside A.I.’s widespread adoption. The proportion of pro se cases filed by non-prisoners increased from 11 percent of all civil cases five years ago to 16.8 percent in 2025, according to a new study by two doctoral candidates that has not yet been peer reviewed.

The study found that much of the increase comes from the use of A.I. by pro se plaintiffs. The number of pro se complaints flagged as likely containing A.I.-generated text rose from virtually zero in 2019 to more than 18 percent in 2026, the study found.

“Judges still only have 24 hours in a day,” said Anand V. Shah of the Massachusetts Institute of Technology and one of the study’s authors. “Something has to give at some point.”

For litigants, the power of generative A.I. lies in its ability to turn a few short prompts from a user into lengthy documents with headers, citations and other earmarks of a legitimate legal brief.

Steven Donohue, a staff attorney for the United States District Court for the District of Minnesota in charge of reviewing pro se filings, said he observed a roughly 50 percent uptick in filings from non-prisoners starting around March 2025.

All sorts of pro se cases have been on the rise, Mr. Donohue said, including lawsuits alleging false arrest, malicious prosecution and messy domestic disputes involving divorce. In some instances, the cases involved “the bread and butter of state court,” now filed in federal court with the help of A.I.-inspired applications of federal law.

“Every eviction action could turn into a Fair Housing Act violation,” he said.

With careful human oversight, the output of A.I. can sometimes rival the work of a legal professional, at least for simple matters like drawing up a lease. But in more complex cases, as well as matters that might not be appropriate for a lawsuit, A.I.’s well-established tendency to sometimes flatter and fabricate can cause it to churn out pages of quasi-legal boilerplate that lacks legal merit.

Judges “look for truth,” said Judge Joshua D. Wolson of the Eastern District of Pennsylvania at a judicial conference in May, speaking to the broader implications of A.I. “When the ability to make things that look like truth but aren’t — the cost goes down, the quality goes up — that’s a real challenge for us as courts.”

Anthropic, the company that owns Claude, did not respond to a request for comment. A spokeswoman for OpenAI, the company that owns ChatGPT, declined to comment. Their product’s terms of use state that users own and bear the responsibility for its output, which should not be used as “a substitute for professional advice.”

(The New York Times sued OpenAI and Microsoft in 2023, claiming copyright infringement of news content related to A.I. systems. The two companies have denied those claims.)

Fighting Alone

Despite the drawbacks, judges and advocates said A.I. could be democratizing for the legal system — opening the courts to people who might otherwise not be able to afford lawyers.

“Used appropriately, it could be an incredibly powerful tool for someone who believes themselves to have been wronged and has a good faith belief in entitlement to redress,” Mr. Donohue said.

Decades before A.I., pro se filings have led to monumental changes in the law. In 1963, a handwritten petition to the Supreme Court by Clarence Earl Gideon, a 52-year-old convict in a Florida state prison, established a constitutional right to counsel for felony cases in state courts.

Sateesh Nori, a legal aid lawyer in New York for 20 years, said he embraced A.I. two years ago after concluding that legal aid resources in New York were failing to meet the city’s needs.

Despite a landmark law in 2017 that guaranteed free legal representation to low-income tenants facing eviction, Mr. Nori noted city data showing that as many as 50 percent still go to court without representation.

“The real problem is: how come these people don’t have another way, other than using A.I.,” he said.

Experts said there is little the courts can do to stem pro se filings even if they wanted to. People have a right, after all, to file lawsuits if they believe they have a claim. Peter Kaplan, a spokesman for the Administrative Office of the U.S. Courts, said his office was “aware of this issue” and “is gathering information” on its effects on the legal system.

In recent months, some courts have starting issuing standing orders warning prospective pro se filers that using generative A.I. could expose them to penalties.

When judges have run into filings with problematic hallmarks of A.I., such as citations to case law that look real but are in fact fictional, many have been lenient to filers who are not lawyers. But some have flashed exasperation, dismissed cases and even issued substantial fines.

In March, Judge Virginia Kendall, a federal judge in Illinois, fined a litigant $1,500 after concluding she had twice submitted a “fake case,” littered with hallucinated citations in violation of court rules.

“This wastes both the parties’ and the Court’s time attempting to locate nonexistent cases and unpack made up factual assertions,” she wrote.

States have also started to explore legislation that would make A.I. companies liable if their chatbots were found to have handed out legal advice in place of a lawyer or other licensed professional but such measures have not yet been adopted.

For some aggrieved litigants, pushback is unlikely to convince them to give up their A.I.-empowered legal arsenal. Mr. Sauve, the pro se filer from Minnesota, said he continues to pursue efforts to regain his old home. He lost possession it following a messy divorce, which included a finding from a judge that he abused his ex-wife and one of his children. He denies that allegation.

“They call me ‘frivolous.’ That appears to be a way that the court is protecting itself,” he said.

“OpenAI told me this, and I think Claude will confirm it as well,” he said of his belief that the law is on his side. “I did a lot of research into this whole situation.”

Mr. Sauve is 69 years old and currently living out of his car in Mora, Minn. He continues to pursue various forms of legal redress from a supermarket coffee shop.

With the help of A.I., he plans to soon make more “SCOTUS-grade filings,” he said, bringing new lawsuits to the state supreme court, a federal appeals court and a county court as well."

For years, courts have welcomed cases brought by self-represented litigants. Now those plaintiffs have A.I., and their filings are consuming more and more bandwidth.

04/27/2026

"Rising defaults in private credit are rattling investors, while apparent fraud by some borrowers has fueled worries about lax underwriting. Investors are rushing to get their money out of funds to avoid getting stuck with big losses. Politicians are calling for—what else?—more regulation.

But private-credit problems pale in comparison to the less-reported risks in federal student loans and mortgages, which could ripple through the economy. The Biden team’s version of extend-and-pretend concealed the cracks for a time, but defaults are rapidly rising on government-backed loans. Taxpayers will inevitably be left holding the bag.

Start with student debt. Only 30% of the federal government’s $1.7 trillion student-loan portfolio is currently being repaid. Most borrowers are delinquent or their payments have been temporarily suspended while the Trump administration works to fix servicing problems caused by the Biden team’s quasi-forgiveness “SAVE” plan, which the courts blocked.

During the Biden payment pause, many borrowers upgraded their lifestyles and racked up more debt to pay for vacations, homes and cars. And why not? Joe Biden promised their loans would be forgiven.

“During the payment pause, borrowers repeatedly heard public signals suggesting student loan balances might be permanently reduced or eliminated,” the left-leaning Urban Institute notes in a recent report. “Against that backdrop, some households may have felt reasonably equipped to take on auto loans, enter the housing market, or expand their use of other credit products.”

The payment pause increased access to credit by temporarily improving credit scores of delinquent borrowers—on average by 103 points, according to one study. Low interest rates, pandemic government transfer payments and forbearance schemes at the same time made additional debt more manageable—at least for a time.

Credit scores also benefited from other government policies. In 2022, Fannie Mae instituted a “positive rent” initiative for landlords to report on-time rent payments—but not late or missed payments—to credit bureaus. Imagine if only A’s went toward a student’s final grade. Under political pressure, credit bureaus removed a large share of medical debt from borrower reports.

All of this made student-loan borrowers overextended, while also making them appear less risky to lenders. Among delinquent student borrowers, “38 percent now have an auto loan, up from 30 percent before the pandemic,” the Urban Institute notes. “The share with a mortgage has nearly doubled, rising from 8 percent in 2019 to 15 percent in 2025.”

But more borrowers have fallen delinquent on student and other debt since the payment pause ended in October 2024. “Student loan delinquency is increasingly intertwined with distress across other credit markets,” the report says. Expect delinquencies to rise more when administrative forbearance ends in July for some eight million borrowers.

Meanwhile, delinquencies are mounting on Federal Housing Administration mortgages. The government backed loans to overextended and risky home buyers whose incomes have been squeezed by inflation. The share of FHA borrowers in 2024 with debt-to-income ratios exceeding 43%—generally considered risky—rose to 64%, up from 55% in 2019 and 36% in 2007.

Many FHA borrowers bought homes during the student-loan payment pause, which temporarily increased their financial liquidity. The $500 a month they weren’t paying on their student loans could go for a mortgage payment. Not savvy personal financing, but colleges don’t teach that.

About 1 in 7 FHA loans originated between 2022 and 2025 defaulted within a year. As defaults mounted, the Biden team paid mortgage servicers to waive or reduce monthly payments of delinquent borrowers by 25% for up to three years. Missed or waived payments were added to the mortgage, which would have to be repaid when the loan matures.

So if a homeowner missed a $3,000 mortgage payment for six months, a servicer would add the $18,000 in missed payments, plus $27,000 in payment reductions, to his loan. If home prices continued to increase, or mortgage rates dropped significantly, the Biden FHA figured borrowers could make up the forborne payments when they sold or refinanced.

That assumption proved wrong. Mortgage rates have remained high, and home prices in many markets in the South are falling amid crimped demand. The Biden FHA repeatedly waived payments for delinquent borrowers, only for them to default again. Increasing numbers have fallen underwater because they haven’t built equity.

Some 55% of borrowers who received mortgage relief in 2024 fell behind again on payments within one year, according to an FHA report in December. “FHA is currently approaching a 60 percent redefault rate, which is unsustainable,” the report noted. Some 46% of borrowers in default as of last September had previously defaulted at least three times.

One-sixth of borrowers who took out FHA mortgages in 2024 currently owe more than their home is worth. The Trump administration last fall restricted mortgage workouts to once every two years so foreclosures don’t keep getting kicked down the road. As a result, foreclosures have shot up, which could push down home values in some markets, pushing more borrowers underwater.

If the economy slows, defaults on poorly underwritten government loans could spike. Unlike private-credit investors, taxpayers won’t be able to escape before the dirt hits the fan."

Federally backed student loans and mortgages are seeing increased defaults. Taxpayers are on the hook.