Whether you blame Wall Street, Washington or some combination of the two, the simple fact is that government and business sold millions of people an American Dream that could not survive a sour economy, with nightmarish results for them and for the country.
The big lesson here is equally straightforward: Central planning does not work. There is no “right” level of homeownership, and it’s folly to pursue one, much less to pretend that boosting homeownership represents a risk-free way for government to achieve various social goals without directly paying for them.
Yet that is precisely what Clinton and Bush did, arguing that homeownership would be a path to wealth for individual families, particularly minorities long denied a piece of the American rock, as well as a kind of bonding agent for the neighborhoods and local communities upon which a strong democracy supposedly rests.
In truth, the low-down-payment loans many people were encouraged to take during the boom were not much different from leases, in economic terms. They were wealth-building tools only in the speculative sense that, yes, you could convert a tiny equity stake into massive gains — if housing prices never ceased rising.