07/27/2009 05:12 am ET Updated May 25, 2011

Housing Crisis Solution: Bring in the Entrepreneurs

Last week I attended a conference about the housing crisis in Washington, D.C. Speakers included several senior Administration officials and members of Congress.

I learned what the government is doing and thinking.

Here was my take on what I heard:

The people handling the government's approach to the housing crisis are bright, well-intentioned and committed. They are also academic, theoretical and insulated. For the most part, they are life-long public servants or politicians. Nothing wrong with that, of course. They can just get a little lost when trying to connect the dots in the street.

Life-long public servants tend to lose contact with how real people act in real situations. The way they obtain information is from government reports and hearings. The people from whom they learn usually have a job to protect, an agenda to sell or an unfounded deference. This view from 30,000 feet is nice I guess but not much help when dealing with a problem that arose on Wall Street and Main Street at the most granular levels of human greed, negligence, ignorance and disinterest.

As we all know, the housing crisis had many mothers. But, trying to understand and address it from 30,000 feet is, in my view, a mistake.

That is why I say bring in the entrepreneurs. Create a contest and invite entrepreneurs to come up with ideas for slowing down foreclosures and addressing falling housing prices. The winning ideas would receive government support (financial or otherwise) with the entrepreneurs standing to gain a lot of money if their suggestions work (and lose money if they don't).

Now watch the ideas fly. People who have their money on the line - and with the opportunity to make big money if their ideas work - tend to be very creative. If necessity is the mother of invention, opportunity might be the father.

Entrepreneurs will stay up long hours, work day and night, risk money and relationships if they believe they are on to something. The fact is that we have a real issue with U.S. housing - foreclosures are not slowing down, the government's ideas for modifying mortgages have not taken hold, housing prices are stabilizing a bit but only at the very low ends and consumers still are unsure about real estate.

I say turn the entrepreneurs loose. Yes, put governors (not the elected type) on the ideas so nothing crazy gets tried. But who knows what "crazy" is today anyway. Our country was built by nutty ideas carried forward by men and women who had something really serious to gain. Let's turn these people loose on our big challenges of the day.

Jim Randel is the founder of The Skinny On book series. His book, The Skinny on the Housing Crisis, was just awarded first prize in a book competition sponsored by NAREE - an association of 650 journalists and professionals with interests in housing, finance and business.