Who is responsible for the Housing Crisis that lead to the banking crisis (or vice versa)? This graph shows me it was a massive group effort. What do you think?

Source: Cafe Hayek

Look at the time span 1993-94.  SOMETHING happened to cause the vertical trajectory of homeownership.  This might be a rare example of "correlation IS causation".  Wall Street greed? Politicians gone wild for votes?  Entitled Baby-Boomers? The Federal Reserve catering to ALL these constituencies? 

I kinda think it was a group effort.  If you are a Occupier then you think it was 100% Wall Street. If you are a Tea-Partier you think it was 100% Federal Government.  As always, the relative truth lies somewhere in between. 

However, policy (political and Federal Reserve) DID play a role, both explicitly and, perhaps more influencially, implicitly.

Below are a couple of statements from the Clinton and Bush era Presidencies that illustrates this point. As I said, a group effort...

From President Clinton (1994):

""Our nation’s greatest promise has always been the chance to build a better life. For millions of America’s working families throughout our history, owning a home has come to symbolize the realization of the American Dream. Yet sadly, in the 1980s, it became much harder for many young families to buy their first home, and our national homeownership rate declined for the first time in forty-six years. Our Administration is determined to reverse this trend, and we are committed to ensuring that working families can once again discover the joys of owning a home.

This past year, I directed HUD Secretary Henry G. Cisneros to work with leaders in the housing industry, with nonprofit organizations, and with leaders at every level of government to develop a plan to boost homeownership in America to an all-time high by the end of this century. The National Homeownership Strategy: Partners in the American Dream outlines a substantive, detailed plan to reach this goal. This report identifies specific actions that the federal government, its partners in state and local government, the private, nonprofit community, and private industry will take to lower barriers that prevent American families from becoming homeowners. Working together, we can add as many as eight million new families to America’s homeownership rolls by the year 2000.

From President Bush (2007):

""The Administration supports legislation to modernize and reform the National Housing Act (NHA) and to ensure that the Federal Housing Administration (FHA) continues to play a key role in serving low-and moderate-income homebuyers. The President has called on Congress to expeditiously pass the Administration's FHA Modernization bill to assist more homeowners during this period of stress in the mortgage markets. H.R. 1852, as reported by the House Financial Services Committee, includes provisions that are essential to maintaining FHA's core mission of expanding homeownership opportunities for borrowers who are underserved, or not served, by the existing conventional mortgage marketplace....""