This chapter first considers the dim prospects for the actual reform of government-sponsored enterprises or the system of regulation and supervision of Wall Street. It argues that the government has played a significant role in reducing the stability of the system and perverting the incentives that would naturally emerge. In particular, policy makers have been too eager to cushion creditors from the consequences of financing imprudent risk-taking using large amounts of borrowed money. It concludes with the following recommendations: don’t try to re-create the old system while trying to make it “better”; recognize that having every American own a home is not the American Dream but the dream of the National Association of Home Builders and the National Association of Realtors; and be aware that the Federal Reserve is certainly part of the problem and may not be part of the solution.