Don't let the pontificators fool you.

The blame for the financial crisis does not (entirely) rest on the shoulders of greedy Wall Street bankers. I know it's hard to wrap your mind around this fact. Those Gordon Gekko wannabes are very ripe for condemnation with their million-dollar bonuses and lavish lifestyles. How dare they?

But don't let emotion cloud your judgment. True blame for the current financial mess lies squarely in the laps of the political leaders of both parties in Washington.

The problem started with the widespread notion that the most American characteristic next to patriotism is home ownership. As the thinking went (and goes), if only we can get more people into homes, the better off this country will be.

Unfortunately, there is a more cynical reason for this trend besides simple moral crusading: votes.

The idea actually is not new. Julius Caesar after the Gallic Wars faced a problem. He had hundreds of thousands of battle-tested troops sitting by with no wars to fight. He needed to appease them somehow in order to preserve his good standing. His solution was to give his “crack troops” (in Dr. Fears' words) free land all over the Roman Empire as a reward for their service. Securing power requires commoners to vote for you, and what better way to secure support than with the gift of home ownership?

As market scholar Jeffrey Miron pointed out in a recent article, "Private entrepreneurs have adequate incentive to build and sell houses, just as individuals and families have adequate incentives to purchase them.” Our illustrious leaders felt that these normal economic incentives that have ruled commerce for two millennia were not enough, so they got down to work.

Miron provides a partial list of the government programs designed to put people in homes they otherwise couldn't afford: the Federal Housing Administration, the Federal Home Loan Banks, Fannie Mae, Freddie Mac, the Community Reinvestment Act, the deductibility of mortgage interest, the homestead exclusion in the personal bankruptcy code, the tax-favored treatment of capital gains on housing, the HOPE for Homeowners Act and the list goes on and on.

The result of the artificial demand for housing was not surprising. More people wanted homes, so more homes were built. (Greenspan’s insistence on keeping interest rates low for so long didn’t help things, but that’s another subject.) As more construction was ramped up, home ownership rates went up and prices continued to climb. So what was the result of all this extra activity? A bubble.

If you look at a graph of home prices from the early ’70s until the mid-’90s when many of these policies were put into place, the line is pretty flat. Then there is a giant spike lasting until 2007.

Yes, the banks took too many risks. No, the regulation was probably not adequate. No, AIG's massive portfolio of credit default swaps was not a great idea. These actions were only ancillary though, akin to throwing a half-bottle of lighter fluid on an already-burning bonfire.

The housing bubble at the root of today's problems was not only exacerbated, but created, by the short-sighted policies of our heroic leaders in Washington.

-Elijah Lavicky is a finance senior. His opinion column appears every other Monday