President Obama should acknowledge that something is seriously wrong with the government's response to the financial crisis of 2008 and chart a new course. The wisdom in comic strip legend Pogo's famous remark comes to mind, "We have met the enemy and he is us."

Nearly four years after the recession of 2007 began and more than two years after it officially ended, the economy remains on life support. Despite massive fiscal and monetary stimulus, the official unemployment rate remains stuck at 9.1 percent, the government reported zero job growth in August, and there is widespread fear of a double-dip recession.

The government mismanaged the financial crisis and turned what should have been a serious correction into a worldwide financial panic. Then the government itself panicked and enacted the $700 billion Tarp program.

Tarp did nothing that could not have been done without it. And it unnecessarily stoked public fears about the economy and banking system and created a political backlash against the banks that continues to this day.

Trust and confidence in our public and private institutions was badly damaged by the crisis. President Obama inherited an economic mess and offered change and hope for a better future.

Instead of making economic recovery his primary focus, the president spent his first two years and most of his political capital on enacting two harmful legislative programs, neither of which was urgent: the Dodd-Frank financial reform legislation and healthcare reform.

We know what needs to be done to restore confidence, promote spending and investment, and put America back to work. First, we must resolve the fiscal crisis along the lines suggested by the Simpson/Bowles fiscal commission. It would eliminate most tax deductions, move to lower tax rates, and reduce federal spending by at least $4 trillion over the next ten years.

Second, we need to change course on monetary policy and make clear that fighting inflation is the Federal Reserve's primary job. The Fed has worked mightily to maintain liquidity in the markets during this period of economic turmoil but there is a point when easy money policies undermine confidence. I believe the Fed's bloated balance sheet and commitment to maintaining extremely low rates into 2013 impede or at least delay spending and investment decisions.

A third priority must be to curtail the government's relentless attack on the banking system and do everything we can to allow banks to get back into the business of lending and promoting economic growth. The banking system cannot be stronger than the economy and the economy cannot be stronger than the banks.

The Federal Housing Finance Agency recently brought suit, as conservator of Fannie Mae and Freddie Mac, against 17 large banks alleging that they sold $196 billion in mortgage loans to Freddie and Fannie without properly disclosing the risks. The last thing the housing market and the economy needs is the uncertainty created by these enormous claims.

Freddie and Fannie are giant, highly sophisticated government sponsored entities that knew very well what they were buying and the risks they were taking. Pressured by Congress and the Clinton Administration, Fannie and Freddie reduced their credit underwriting standards, greatly increased their leverage, and went on a two-decade growth binge.

Former Congressman Richard Baker (R-La.) waged a vigorous fight in the 1990s to slow the growth of Fannie and Freddie by proposing to eliminate their government line of credit and calling for tougher regulation. Former Fed Chairman Alan Greenspan urged Congress to rein in Fannie and Freddie as did the Bush Administration. Their efforts proved futile. Freddie and Fannie's suits are the equivalent of a guy with six speeding tickets who totals his Corvette at 130 mph and then sues the dealer who sold him the car.

Congress and the Obama administration have launched a series of measures against the banking industry that are retarding economic growth. The Dodd-Frank Act is causing a great deal of uncertainty and is imposing tens of billions of dollars of additional costs on the banking industry while doing little to address the issues that led to the recent crisis.

Regulators are forcing banks to spend billions of dollars to review all of their mortgage practices and documents. Then there are the lawsuits by the attorneys general for 50 states that are impeding the ability of banks to clean up the mortgage problems.

When you add up all of this — and toss in inflationary fears and artificially low interest rates — it's difficult to envision banks deciding to re-enter housing finance in a significant way. Without a vibrant housing market and strong banks confident about the future, it's difficult to see what will create economic growth and jobs.

Government is the problem, not the solution. Government needs to get out of the way and let the private sector get back to work.

William M. Isaac, former chairman of the Federal Deposit Insurance Corporation, is senior managing director and global head of financial institutions at FTI Consulting, chairman of Fifth Third Bancorporation, and author of "Senseless Panic: How Washington Failed America. The views expressed are his own.