As the housing market slumps and roils other markets with it, politicians are entering the fray, promising that new government regulations and spending will help solve the current conundrum. Senator Clinton unveiled a new plan this week that included promising to spend billions on new housing trusts and state programs that help borrowers avoid foreclosure, requiring federal registration of mortgage brokers, and the complete elimination of prepayment penalties on mortgages.

Count us as skeptical that more government intervention will magically make the housing and credit crunches facing both consumers and lenders disappear. The root of the problem is twofold. During the housing boom, banks made loans to many consumers who simply could not afford them. With more people now going into foreclosure, banks are reaping what they sowed.

Consumers are not without blame either. To be sure, there are unscrupulous mortgage brokers and bankers out there, some of whom took advantage of the relaxed lender standards and conned honest people. But many consumers were not duped and were just sloppy or ignorant in agreeing to a mortgage. As anybody who has taken out a mortgage knows, you have to sign your name on the dotted line to dozens and dozens of forms. If you didn’t fully comprehend what you were doing or didn’t completely understand the terms of the loan, then you only have one person to blame for the result, and it’s not your mortgage broker.

The new spending in Mrs. Clinton’s plan on housing trusts and foreclosure avoidance programs duplicates an entire department of the federal government, not to mention hundreds of state and local programs, already devoted to housing. While the elimination of prepayment penalties sounds like a winner, the practical reality is that these penalties make the mortgages attractive for investors. And without these investors, the mortgages would be less likely to be funded in the first place.

The provision that would require federal registration of mortgage brokers would probably not do much harm, but many states have already required this type of registration for years. If state regulators cannot shake out the crooks, it’s hard to fathom that another layer of federal government bureaucracy will do the job.

What’s unfortunate is that none of these provisions, all proposed in the name of helping consumers, actually get to the crux of the problem. A much more modest and productive idea from a resident fellow at the American Enterprise Institute, Alex Pollock, would require a simple two-page disclosure form that would state in plain English the loan terms and include loan repayment amounts. Mr. Pollock’s form would also include the warning “DO NOT SIGN THIS IF YOU DO NOT UNDERSTAND IT.”

President Bush addressed the issue yesterday and offered a bracing contrast to Mrs. Clinton’s approach. “If you mean direct grants to homeowners, the answer would be no, I don’t support that,” he told a reporter. “One thing is for certain, is that there needs to be more transparency in the — in financial documents. … We’ve had a lot of really hardworking Americans sign up for loans, and the truth of the matter is they probably didn’t fully understand what they were signing up for.”