Basement Finishing
In the late 1990"s fabric or vinyl wallpaper installed over fiberglass insulation was introduced as a solution for basement walls. This type of basement wall has been referred to as “soft or removable” walls. The major shortcomings to this wall are its use of Fiberglass Insulation. While fiberglass insulation works fine for above-ground areas, it will allow mold to grow in high-moisture areas like basements. Also, fiberglass insulation should be enclosed in walls or installed in non habitable spaces like attics and crawl spaces. Most systems available today do not enclose the fiberglass and thus allow the fiberglass fibers to filter into the living space.

Other drawbacks to must of these systems is the limited décor, visible seams and the lack of structure (how do you hang a picture?). As did wood panel in the 1960’s, so will fabric or vinyl covered walls become obsolete to do style changes.
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Late 1990's Through Present Times Fabric Walls or Vinyl Walls
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Read More About FiberGlass Insulation used in basements
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Insulating basement walls with fiberglass batts or fiberglass blankets. The Building Science Consortium has concluded that these two approaches are unsuitable for use by the home building industry due to serious problems associated with mold, decay and odors.
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What you should know about how to insulate basement walls.
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