Was Financial Crisis the Result of Not Enough Housing?

A former investor is set to try in the weeks ahead to convince Congress, regulators, and academia that they have fundamentally misunderstood the causes of the financial crisis.



Kevin Erdmann, now a visiting fellow with the libertarian Mercatus Institute set to meet with lawmakers and staffers, argues that the housing bubble and its collapse weren't caused by Wall Street predation or the government — and in fact, that there might not have been a bubble at all.

Instead, in a book out this week, Shut Out, Erdmann concludes that restrictive land use regulations in big, coastal cities cut off the supply of housing and pushed up prices, creating a historic outmigration. Prices only collapsed when the federal government, in a panicked response, tightened mortgage credit.