In this week’s New Repub­lic, Joshua Rosner raises a good ques­tion vis-à-vis the mort­gage crisis: “Did so many people need to own homes in the first place?” He writes,

The dream of home own­er­ship has long been part of the Amer­i­can expe­ri­ence, but, as the fed­eral gov­ern­ment steps in to arti­fi­cially sup­port bor­row­ers and lenders with tax cred­its that encour­age more spend­ing or with public spend­ing that keeps over-​indebted bor­row­ers in unaf­ford­able homes, we ought to con­sider whether it’s time to wake up from that dream.

Indeed, we ought to con­sider what role the fed­eral gov­ern­ment has played in cre­at­ing this mess. By stim­u­lat­ing home own­er­ship while fail­ing to account for the rea­sons home own­er­ship is valu­able to soci­ety, Wash­ing­ton has simply sought to buy our votes with our own debt.

One thing Rosner doesn’t do in the arti­cle is to look at why the gov­ern­ment was so inter­ested in pro­mot­ing home own­er­ship. I have to believe that a large part of that answer has to do with Wall Street’s appetite for mort­gage debt. As Michael Lewis nar­rated in Liar’s Poker, the boom in mort­gage lend­ing in the 1980s was almost single-​handedly engi­neered by Salomon Brothers’ Lewis Ranieri, but it prob­a­bly never would have taken off were it not for a tax break that Con­gress passed on Sept. 30, 1981, which sav­ings and loans could take advan­tage of only by sell­ing their mort­gages. As Lewis writes, “It amounted to a mas­sive sub­sidy to Wall Street from Con­gress. Long live moth­er­hood and home ownership!”

But there’s another, odder reason why cer­tain people in the gov­ern­ment might have been eager to pro­mote home own­er­ship. The key evi­dence for this comes from Alan Greenspan’s memoir, The Age of Turbulence:

I believed then, as now, that the ben­e­fits of broad­ened home own­er­ship are worth the risk. Pro­tec­tion of prop­erty rights, so crit­i­cal to a market econ­omy, requires a crit­i­cal mass of owners to sus­tain polit­i­cal support.

For a dis­cus­sion of just how bizarre this rea­son­ing is, see my analy­sis here.