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Lede: The Center for Economic and Policy Research says the U.S. financial crisis is a policy failure of massive proportions. Doug Cunningham has more.

Economist Dean Baker says although the central economic problem is the collapsing housing market, former Fed Chairman Alan Greenspan and other economic policymakers had the tools to rein in the housing bubble before it reached this crisis stage. The Case-Shiller 20 city index shows a housing price drop of nearly 20 percent in two years. That came after home prices adjusted for inflation jumped by more than 70 percent between 1996 and 2006. The price decline of the past two years has triggered unprecedented rates of mortgage defaults and failures of financial investments based on these bad mortgages. And the worst of that wave isn’t over. The sheer magnitude of these defaults and the fact they mortgage debt has been packaged into derivatives throughout the financial sector has led to the insolvency of banks and other financial institutions. Baker says the path out of this disaster isn’t going to be easy. But he says one vital lesson in it is that future speculative bubbles that depart so dramatically from past sound financial practices must be stopped before they grow so large as to threaten the entire financial system.