The Occupy Wall Street phenomenon is perfectly understandable if we recognize it as an artifact of the conventional narrative about the financial crisis—that it was caused by Wall Street greed and insufficient regulation. If the demonstrators new the truth—that the government's housing policy caused the financial crisis and the subsequent recession—they would be on the Capitol steps.

In less than twenty-five years, government “affordable housing” and other housing policies have turned a healthy market into a financial ruin. Until Fannie and Freddie’s market dominance and the government’s role in the housing finance system are substantially reduced or eliminated, the United States will continue to have an inferior and unstable housing market.

It's always painful to take on the myths and ideological narratives of the left. The pundits of the liberal (excuse me, "progressive") media make a pretense of listening to reason, but when their views are challenged, they become abusive.

When the bubble deflated in 2007, an unprecedented number of weak mortgages went into default - those that were held or guaranteed by Fannie and Freddie, and those that had been securitized by Wall Street. This drove down housing prices and threw Fannie and Freddie into insolvency. 

It's somewhat implausible that two guys at a Washington think-tank, arguing that the financial crisis was caused by government housing policy, could create a widely accepted alternative to the conventional liberal narrative that the financial crisis was caused by the greed and lack of regulation of Wall Street. 

FHA Watch, a new monthly online publication, will focus on the government’s 100 percent taxpayer-backed Federal Housing Administration (FHA) mortgage guarantee program and the risks it poses for taxpayers, families, and communities. 

FHA Watch, now in its second issue, focuses on the government’s taxpayer-backed Federal Housing Administration (FHA) mortgage guarantee program, the risks it poses for taxpayers, families and communities, and the opportunities for reform that lead to sustainable homeownership and a fiscally sound FHA Mutual Mortgage Insurance Fund.

As government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac are subject to Department of Housing and Urban Development (HUD) regulations that require them to foster the growth of low-income and minority home ownership. Over the years, many studies have questioned whether the performance of these GSEs has been satisfactory...