They <i>do</i> live up to their agreement.<p>The non-recourse loan agreement spells: the loan is secured by the property the loan it taken against, and if the borrower defaults the property is repossessed by the bank.<p>The recourse-loan agreement spells: the loan is secured by the property the loan it taken against and all borrower's assets (except secured protected assets such as 410k or IRA). If the borrower defaults the property and assets are repossessed by the bank via bankruptcy proceedings.<p>The Paulson's quote is exactly an attempt to guilt people into taking more responsibility than their contract requires. Something GS would never do.