Feds Can't Rebuild Housing in a Day

The federal government has tossed hundreds of billions of dollars at the various problems that ail the U.S. economy, but housing, the root cause of the crisis, will require more time than money to heal.

Despite the best efforts of the Treasury Department and the Federal Reserve, banks' wariness about consumers' financial health has become so dramatic, that even the unprecedented measures taken by authorities over the past few months to spur lending and boost the economy will take a good deal of time to have a measurable effect.

The government seems to be using all the tools in its arsenal to tackle housing from all ends. On the lender side, the Treasury Department has agreed to buy up to $500 billion worth of banks' bad loans; invest $250 billion in preferred equity stakes in banks to spur new, better lending; and engineered the rescue of several companies that were crumbling under the housing catastrophe. ...