It is government's fault for offering a housing finance program without making an effort to maintain underwriting standards.

In the latest Financial Services Outlook, American Enterprise Institute (AEI) housing experts Peter Wallison and Edward Pinto explain how decades of government intervention have gravely harmed America's housing market.

As we enter the fall of 2011, three years after the Lehman Brothers crisis, Europe and the United States are teetering on the brink of another, potentially more serious, systemic crisis.

The mortgage meltdown and ensuing financial crisis were the result of an unprecedented accumulation of weak and risky Non-Traditional Mortgages (NTMs). By mid-2008 about one-half of outstanding all loans were NTMs. The early 1990s is the appropriate benchmark since shortly thereafter government policies required the broad-based introduction of “flexible underwriting standards.”

How did the financial system accumulate an unprecedented number of risky mortgages?

As the housing market struggles to keep pace with economic recovery elsewhere, homeowners would love to have a crystal ball.  Absent that, however, they have AEI resident fellow Edward Pinto, one of seven panelists to be awarded with Zillow and Pulsenomics' Crystal Ball Award.

Dodd-Frank overall is a poorly drafted statute that drastically expands the power of the federal government, creates new bureaucracies staffed with thousands, and does little to help the struggling American citizen.

The overall direction of the Commission majority's report was determined before the Commission started its work. Throughout its 18 month life, the Commission focused only on issues that the chairman wanted to cover, was more interested in publicity than in a thorough investigation, and never paid serious attention to other views. It was not in any sense an objective or thorough study, did not produce any facts or data that could aid scholars in the future.