The Government Mortgage Complex

What caused the 2008 financial crisis? The left’s immediate response to the crisis was to fasten all the blame on Wall Street and the private sector. The Dodd-Frank Act and the burdensome regulation it imposed on borrowers and the entire financial system was the result. Our view is that the financial crisis was primarily caused by government housing policy, particularly the government’s promotion of loose mortgage underwriting standards after the adoption of the affordable housing goals for Fannie Mae and Freddie Mac in 1992 and HUD’s National Homeownership Strategy in 1995. This webpage contains commentary by Edward J. Pinto, Alex J. Pollock, and Peter J. Wallison, AEI's financial services experts, on this and other issues of financial regulation, as well as proposals for eliminating Fannie and Freddie as government sponsored enterprises and creating a predominantly private system of housing finance.



As illustrated above, flawed government policies were central to creating an unsustainable housing boom and ultimately the 2008 financial crisis.


How did the financial system accumulate an unprecedented number of risky mortgages? Learn more in this primer on the Government Mortgage Complex, "Government Housing Policy: The Sine Qua Non of the Financial Crisis," by Edward J. Pinto.


View a more comprehensive timeline showing how government policies promoted loosened credit standards and led to the mortgage meltdown.




Low-income and minority borrowers have suffered disproportionately from subprime lending
Eliminating leverage among homebuyers is a poor choice
New year, same advice