How does the Foreclosure Mess affect Ventura County?

There a couple of good articles today covering the ongoing foreclosure crisis.

Foreclosure mess will take years to clean up
Treasury links foreclosure ills to lower house prices

It seems clear that Chapter 13 bankruptcy must be modified to allow homeowners to adjust their mortgages down to current value.  Would we rather have this mess affect the banks' and investors' bottom line or continue to see housing prices fall?