The outrage over the Wall Street and automakers bail-out has been gradually cooling over the past weeks and though it is still a touchy subject for any politician to address the underlying cause may be even more delicate. After all, the economic melt down was largely driven by problems in housing and credit which are segments of our economy that each and every one of us has participated in and are perhaps absolutely engulfed by.

While predatory lending, a lack of proper oversight and regulations were all contributing factors, a diminishing American trait, accountability, has also played a part in what has been referred to as the sub-prime mortgage meltdown. A belief that government, regulations and laws should protect us from making poor financial decisions rather than our own common sense is something Americans need to start considering. The mistakes of today haven’t just affected us and our neighbors but will affect generations to come; Wall Street wasn’t the only one taking unnecessary risks.

Stephen Hamer, President and broker of a regional real estate office in Sheboygan, Wisconsin, has been in the business for 34 years. He comments that people never need convincing when considering the purchase of a home and many relied too heavily on others instead of taking stock of their own financial situation, “All they want to know is how much will it cost and when can I get in. Buying a home can be a complicated process, especially if you haven’t done it before so many of the buyers took the position that if the banker says it’s okay and the appraiser says it’s okay and the inspector says it’s okay, I guess we should do it. Many of these people did not do their own homework but totally relied on others.”

In the time preceding the mortgage meltdown, other elements were at work. Americans were spending more at the sacrifice of their savings and assuming a heavier debt burden thanks to low interest rates and easy credit conditions. According to current and historical statistics from the Federal Reserve, household debt grew from $705 billion (or 60 percent of disposable personal income) at the end of 1974, to $14.5 trillion (and 134 percent of disposable income) by the middle of 2008. Americans owed more than they were able to pay.

Added to the mix was the promise of easy money in the housing market, housing prices increased by 124 percent from 1997 to 2006 according to The Economist in their article entitled, CSI: Credit Crunch, from October 2007. With the cost of houses going up many consumers were able to finance otherwise difficult mortgages, thanks to teaser rates and unconventional loans, in the belief they would be able to refinance to better terms as the value of their house appreciated. Some homeowners believed they would easily be able to flip their houses for a profit within a matter of a couple years.

Dennis Haasl, a financial advisor in Sheboygan, Wisconsin, has worked in banking for 23 years and has been a financial advisor and planner for nine. “Investing goes with the economy and people seem to chase previous returns a lot. When things are going well consumers will throw cash at anything with very little discretion; that was the way they started looking at home ownership. It seemed like a perfect investment and you couldn’t lose money which, historically, isn’t always the case with homes. There have been other housing slumps.”

Increasing home ownership had been a goal for many presidents going back to the Roosevelt administration. In an effort to increase home ownership, Wikipedia.org notes the passage of a particular bill in 1982 introduced one of the major players in the mortgage meltdown:

“…Congress passed the Alternative Mortgage Transactions Parity Act (AMTPA), which allowed non-federally chartered housing creditors to write adjustable-rate mortgages. Among the new mortgage loan types created and gaining in popularity in the early 1980s were adjustable-rate, option adjustable-rate, balloon-payment and interest-only mortgages.”

Easy credit terms convinced those who were previously considered not creditworthy to accept these exotic mortgage options, the most notable being the adjustable rate mortgage, or ARM. In a publication by Mortgage Bankers Association in December of 2007 it indicated that although ARMs only made up 6.8 percent of mortgages in the United States they accounted for 43 percent of foreclosures.

Hamer noticed a change in consumer habits in recent years in the wake of easy credit terms which ultimately fed into the final meltdown in the mortgage industry, “There was an attitude that we all deserve to be happy and have the things we want and we deserve them right now. The basic principles of saving, spending prudently and investing for the future were thrown aside. The idea that keeping up with the Jones' was more important than only spending what you could reasonably afford.”

Haasl also notes that although sloppy government regulations allowed these loans to be made, consumers blindly went along with it, “When you go to school you hear about laissez-faire, let the buyer beware. Your financial well being is your personal responsibility, not the governments or the lenders or guy down the street, it’s yours. If people had taken responsibility for themselves no one could have force fed them anything this bad.”

Of course there are plenty of other issues that added fuel to the fire such as speculative borrowing in residential real estate (homes purchased as an investment rather than a primary residence) and investments in mortgage backed securities which receive their value from housing prices and mortgage payments. When the housing bubble began to burst the plummeting value of these investments, for which many financial institutions didn’t have enough funds in reserve to cover, crippled the ability for them to lend money, compounding problems even further.

I asked both Mr. Haasl and Mr. Hamer if they believed more regulation and government oversight could have prevented the housing and credit crunch and the bail out of Wall Street. Both gentleman, experienced in market ups and downs, were skeptical that it would have made any difference.

“I don’t know if it is regulation or some type of accountability, but it does come down to common sense. If it’s too good to be true, it’s probably too good to be true,” says Hamer.

“I highly doubt it,” says Haasl, “The biggest problem is the government and they’re the ones overseeing the illogical processes that they put into place. Now they find themselves in a rather interesting situation of having to fix the problems they created. Unfortunately the only people being hurt are both the people who have put themselves in this silly position and the rest of us who have to pay the bill.”

American’s aren’t all too optimistic about the time it will take for the economy to recover either. According to a Wall Street Journal internet forum, an overwhelming majority, 55 percent, believe it will take more than two years to recover while 29 percent believe it will take two years and only 16 percent believe it will take a year. Experts are fairly divided on the subject with some reporting in years, others in decades and many with opinions that fall somewhere in between.

America is entering a new and dangerous era where we have forgotten that our decisions today not only affect us personally but have the potential to deeply affect those around us; an era beginning with the expectations that government regulation and oversight will protect us from ourselves; an age of entitlement, where we believe the government should provide us with a bail out at the expense of our future generations. Do we really believe these are the answers? One president didn’t. Perhaps it is time to recall and put into use the immortal words of Mr. John F. Kennedy:

“And so, my fellow Americans: ask not what your country can do for you - ask what you can do for your country. My fellow citizens of the world: ask not what America will do for you, but what together we can do for the freedom of man. Finally, whether you are citizens of America or citizens of the world, ask of us the same high standards of strength and sacrifice which we ask of you. With a good conscience our only sure reward, with history the final judge of our deeds, let us go forth to lead the land we love, asking His blessing and His help, but knowing that here on earth God's work must truly be our own.”