There have been arguments from both sides that various federal and local programs, many of which pre-date GWBII's terms in office, and came into existence under both parties,had some role in the "sub-prime" housing mess.
Many fingers point to the federal statues requiring banks to lend in and to communities that were "disadvantaged", or "minority". Others point to the push via HUD, FHA, Freddie Mac and Fannie Mae to increase homeownership to the point that standards were lowered, and the various strange types of mortgages such as interest only, and so forth were designed to get persons into homes who otherwise would not qualify.
Barney Frank and others will dispute any of this, just as there are those who will cite there own numbers to justify their position. However the fact remains the federal and local governments for decades now have pushed home ownership as the ultimate part of "The American Dream".
The problem is that for over twenty or so years now, the cost of buying a home had out paced inflation, and to make things worse the average American worker simply does not earn no where near enough to save for the traditional 20% down payment, much less carry a mortgage the way many were structured.
First salvo in this war was to introduce the 30 year mortgage, which while one paid more in interest (due to the length of the loan), monthly payments were smaller because one was spreading out payments over a longer period of time verus the old 15 year mortgage.
The rest we know about, no interest, no down payment, no income check, interest only payments and so forth, were all designed to get persons who otherwise could not get into a home, into one.
All of the above worked quite well as home prices went through the roof, people could either sell, refinance, or otherwise pull the equity out of their homes to live a lifestyle they couldn't afford, mainly because much of their money was tied up in that house. However once the housing market began to nose dive, and homes were worth less, sometimes much less than what people paid, you have the mess we are in today.
When this problem clears up, as it eventually will, things are never going to be the same. Banks aren't going to allow persons to pull all the equity out of a home with "refi" or other credit based on the house. Banks also aren't going to lend money to any Tom, Dick or Harry with a pulse, on any property. With tighter credit, Americans are going to have to live off what they earn, which as previously stated, often leaves things very tight.
Finally the large smelly rat buried under the rug in the front parlour is this: many Americans counted on their homes as a huge if not major part of their retirement, if housing prices remain low, and or people remain "under water" with their mortgages, it is going to create some huge holes in people's plans.
Anyone who owned a home for more than say ten years and sold perhaps around the 1990's or so, got themselves a pretty decent return on their investment, on average. Many of our parents paid about 15K to 30K for their homes in the 1960's or 1970's and sold or could have sold for 250K to 500K or more during the height of the housing price boom. Many did take the money and ran, however for their children things are going to be very different.
L.
