It is a fact that both the Clinton and Bush administrations worked to increase home ownership rates (which governmental interference also had the side-effect of accelerating the rate of home price inflation). The Byzantine manouevrings of Congressmen relevant to this issue I have only a general notion of--though Republican control for 12 of the last 14 years might lead to some inferences. The only way to increase home ownership rates in a short period of time is to persuade lenders to give loans to ever less qualified buyers. Consequently, risk built up over time and, since a real estate bubble had clearly developed (with house prices rising far faster than personal income), when prices began to decline the full shock of accumulated risks undertaken in the course of many years all hit at once. And these risks were undertaken by high risk buyers, by lenders, by investors in mortgage debt instruments, and by the federal government, which is ultimately responsible for overseeing the financial markets and for preventing, in particular, such a systemic threat as we now face. All of the above parties have suffered in some measure, even those who received bailouts.
This crisis was caused in the main by a failure of comprehension, a failure to exercise informed intelligence on the part of the federal government authorities--I mean incompetence in action at the SEC, the Treasury, the Federal Reserve, the White House, and in Congress. Note that no one has gone down for this disaster, not a single federal-level casualty to date. Shareholders have been wiped out, homeowners kicked out, workers and managers cleared out--but, the leaders and regulators, who should have had a global view of this problem, the only people in a position both to see the totality of the problem and to develop preemptive solutions to it--remain unscathed.
This is a cultural problem in America. Accountability is necessary for any institution to function effectively.
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