How did the financial crisis happen?

From the American Enterprise Institute for Public Policy, What got us here?:

"Despite politicians' best efforts to blame the roots of the financial crisis on missteps by the private sector, the true culprit is the U.S. government itself. It was the government's policies that first created the housing bubble and then allowed, and even encouraged, the removal of equity from homes and capital from the banking system--both of which would have provided a cushion against a meltdown when the bubble burst."

Paul Wallison discusses the current financial crisis in a video from reason.tv

"At Reason's 40th anniversary event, held in Hollywood on November 14 and 15, the American Enterprise Institute's Peter Wallison analyzed the roots of the current market meltdown and explained how government policies directly caused or massively exacerbated the housing bubble and the subsequent bust at the center of things."

Paul Wallison on the roots of the Financial Crisis

Watch the video here.

This video is rather long (25 minutes) but Wallison does an excellent job in detailing how we got to the financial crisis with which we are dealing with today. It is WELL worth watching.