Was the policy of easy credit for home ownership worth it?

Even as of April this year, according to Census Bureau numbers, home ownership--the American Dream--was falling below a rate of 67 percent, down from a high of 68 percent a year earlier.

It stood at 64 percent in 1995 when loan policy emphasis in the Clinton Administration was radically liberalized. With often no-money down and few questions asked, home ownership increased, along with supposed home values. But the modest improvement rested on an illusion, a bubble. The crisis did not originate in the Bush Administration.

So, to get what turned out to be a net three percent bump in home ownership since 1995 the entire financial system has been put at risk. If you insist, put some of the blame on irresponsible banks that took advantage of the new incentives. Also blame the tactics of slicing and dicing mortgages so that nobody specific was held accountable, though now we see that that was because everybody--the public, through the government and through a declining economy--is being held to account.

Regardless, home ownership is likely to sag further this year and next. The poor who were supposed to benefit will be worse off in a deteriorating economy, while middle class stockholders already are watching their retirement evaporate.

It is a sad story for go-go regions like Southern California, Las Vegas and South Florida, but at least those areas seem likely to recover. In the past decade most families in California have been priced out of any home ownership, regardless of mortgage conditions. So falling prices may help many of them in the long run.

But, as the Canadian television has been showing, it is a different story in places like Detroit and Cleveland where boarded up houses in marginal neighborhoods are signs of speeding decline. It is a particularly bitter story for citizens in such places who have kept up their house payments and now watch their values plummet because of imprudent neighbors--or, one should say, former neighbors--and the public policies that encouraged imprudence.

Why is that on Canadian television, you ask? Because Canada doesn't have our no-down payment mentality and laws, so fewer houses are in danger of foreclosure there. Even though Canada's economy is greatly affected by ours, their pain in this downturn is likely to be less. Understandably, they are fascinated with the contrast.

So, again, will someone ask whether Washington's policy of easy money for housing was worth the resulting consequences? If the answer is "no" (or maybe, "NO!"), then maybe it also is time to think about real reform. Few in Washington want to admit that too-easy credit was and is a false bargain and should be reigned in.