Troubles in the financial and housing sectors have led to trillion-dollar losses in wealth and economic growth. It is a disaster for everyone except those in Washington who covet an opportunity to expand regulation.

For a bird’s-eye view of the proponents of increased Washington regulation, watch this morning’s Senate Banking Committee hearing on federal regulation of housing financing. Senator Dodd will hold the gavel on proposals to reform FNMA, Freddie MAC, and the Federal Home Loan Banks.

The Banking Committee senators are not alone in wanting more federal regulation as a solution to every ill in America. Just look at the Web sites of the leading presidential candidates. Senator Obama’s campaign site lists four proposed solutions to the subprime mortgage issue, none of which would have done anything to avoid or to aid recovery from last year’s subprime market collapse. Indeed, two of them involve credit card disclosure and a “Credit Card Bill of Rights.”

The remaining two proposals would crack down on mortgage fraud and create a fund to help Americans avoid foreclosure. Needless to say, no price tag is put on the fund. Washington loves to create new trillion-dollar entitlement programs. But Mr. Obama’s programs would do nothing to discourage bad lending practices; indeed, his proposal to bail out borrowers facing foreclosure would merely encourage more bad lending practices.

Senator Clinton’s program, while more on point, is perhaps even worse. She proposes a moratorium on foreclosures, a freeze on adjustable rates, and status reports to — where else? — Washington. Surely homeowners will rest easier knowing that the American public may elect a president who campaigns on a platform of abrogating private mortgage contracts.

Mr. Obama and Mrs. Clinton are not the only members of Congress with new ideas about how to “help” America recover from the financial market distress. Hearings are convened, bills are introduced and, remarkably, just about everyone in Washington comes to the same conclusion: America needs more regulation of financial markets.

Few in Washington dare whisper that financial institutions are already heavily regulated or that the distressed financial institutions complied with all government regulations. No one dares suggest that financial institutions were hesitant to turn down borrowers with weak credit histories for fear of provoking the wrath of federal regulators whose policy is to promote home ownership. Between 2004 and 2006, no one in Washington peeped about lenders issuing too many mortgages. To the contrary: Any mortgage company in 2006 would have been threatened with federal investigations had it turned down many mortgage applications. Today, all mortgage companies are threatened with investigations for having accepted too many.

Many federal agencies regulate the finance and housing industries. Mr. Dodd’s Banking Committee will address only a few of these agencies today. Federal regulation of the mortgage industry is so pervasive that the government even owns mortgage companies such as FNMA, which crowd out private businesses. The CEO of FNMA, Daniel Mudd, recently took a compensation cut to $12.2 million in 2007, for running a government corporation that cannot fail.

It would be wrong to conclude that the federal government is entirely or even largely to blame for the ills in the financial and housing sectors. But it would be preposterous to assume that these sectors need additional regulation to recover or to prosper.

Eight years ago, financial markets declined rapidly, and dozens of publicly traded companies in the telecommunications and information sectors went into bankruptcy. Countless privately held companies followed suit. Trillions of dollars in wealth was lost. Business plans based on new federal regulation fueled the increased valuation of telecommunications equities between 1996 and 2000. Unresolved legal uncertainties regarding that regulation and shifts in federal policy triggered their subsequent collapse. In response to the industry’s panicked request for help, the federal government had a consistent policy — doing nothing.

The telecommunications industry took years to recover even partially from its financial collapse. Those that survived are much tougher, more financially sound companies. More federal regulation would only have prolonged the agony rather than hastening the recovery.

As they consider the challenges facing the housing and financial sectors today, Mr. Dodd and his colleagues might reflect on the recent history of the telecommunications industry. Regulation creates many financial problems; more regulation is not the proper prescription.

A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He is organizing a seminar series at the Hudson Institute. He can be reached at hfr@furchtgott-roth.com.