Given a blank sheet of paper and a forum sponsored by their own agencies, what would two top U.S. regulators say about the foreclosure crisis?

Federal Reserve Chairman Ben Bernanke and Federal Deposit Insurance Corp. Chairwoman Sheila Bair had just that opportunity Monday at a conference in Arlington, Va., hastily arranged to put two heavyweights at the podium to scold, cajole or reaffirm commitments — and to whom?

As in many legal cases, the point is to get opposing parties to stand on the same regulatory paragraph. From opposite sides of the spectrum, lenders and homeowners are in the same pickle jar, both dealing with a court system that is not happy that banks are cutting corners, but not likely to hand a delinquent homeowner the deed to the place because a bank misspelled their name on a foreclosure document.

Here’s where Bernanke began his remarks: “Any discussion of housing policy in this country must begin with some recognition of the importance Americans attach to homeownership. For many of us, owning a home signaled a passage into adulthood that coincided with the start of a career and family. High levels of homeownership have been shown to foster greater involvement in school and civic organizations, higher graduation rates, and greater neighborhood stability.”

This stalwart axiom says as much about the financial crisis as a whole as it does about the foreclosure crisis specifically.

As Bair pointed out, the United States has become too good at writing mortgages. We were, as she said, the envy of the world in our development of a system in which local banks and their depositors no longer managed the mortgages they wrote. Instead, they were bundled into securities and sold to a bigger bank, which meant the stream of money was flowing faster and more mortgages could be written.

“We were more adept at financing and building suburban homes than at providing the transportation and other public infrastructure needed to support these new communities. As a result, Americans today spend more than twice as much time stuck in traffic than they did 30 years ago,” she said.

What happened next?

“Dubious underwriting practices and mortgage products inappropriate for many borrowers became more common,” Bernanke said.

Banks, arguably, became blinded by their own magic show. As the derivatives market mushroomed and the securities game became more and more complicated, bankers stopped asking if the mortgages they were playing with were sound in the first place.

The government was also willing to close one eye. The home, two cars and 2.5 kids in college still attracts voters to the polls and the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. are the direct results. Fannie Mae and Freddie Mac, now in conservatorship, represent about half of all U.S. mortgages and as government-sponsored enterprises, they all but have “too big to fail” stamped on their stationary.

In international markets Tuesday, the Nikkei 225 index in Japan fell 0.25 percent, while the Shanghai composite index in China dropped 0.32 percent. The Hang Seng index in Hong Kong fell 0.11 percent, while the Sensex in India lost 0.4 percent.

In Australia, the S&P/ASX 200 lost 0.47 percent.

In midday trading in Europe, the FTSE 100 index in Britain dropped 0.86 percent, while the DAX 30 in Germany slide 0.33 percent. The CAC 40 in France shed 0.77 percent, while the Stoxx Europe 600 slid 0.32 percent.

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