Immigrants and speculators can solve the housing crisis, argues former Bush administration economic adviser Lawrence Lindsey.

Excess housing supply — vacant homes driving down prices — is at the root of the housing crisis, says Lindsey, former director of the National Economic Council and assistant to the president on economic policy.

The only solution is new types of buyers, he writes in the Weekly Standard.

Simply loosening immigration laws and letting more "volume" immigrants into the country won’t absorb excess housing supply. They’re here to make money and save it, not buy homes, he writes.

Working in home construction, many are now unemployed and leaving the country. And recent immigration controls, with lax enforcement, have been plenty loose anyway.

"By contrast, 'targeted' immigration might just work the trick," he writes.

His idea: give a provisional green card to anyone investing at least $10 million in residential property and holding it for five years, with a $1 million per property cap.

"A mere 100,000 people signing up would not only pump a minimum of $1 trillion into the housing industry, they would also absorb at least one third of the current excess inventory," he argues.

The trouble is a Democratic Congress might oppose such a "high end" immigration plan. But with the dollar falling, foreigners are scooping up American properties, regardless.

Inflation hedgers also can help clean up the supply overhang. Those folks, he explains, are speculators betting that real estate, purchased with low fixed-rate interest rates, will beat long-term inflation.

The problem? Congress doesn’t want to appear to be helping speculators, who are often blamed for causing crises.

The federal government can also acquire properties, as it did in the last real estate collapse in the 1990s through the Resolution Trust Corp (RTC).

"The chances are reasonable that at some point late in 2009 a similar approach might be adopted," Lindsey warns.

"It is the ultimate last resort, using the balance sheet of Uncle Sam to save the housing market. If nothing else works, a new RTC is in the cards, and those who think Barney Frank's bill is a ‘bailout’ will be shocked by its size."

Barney Frank (D-Mass.) has proposed mortgages be refinanced into FHA-guaranteed loans if lenders write down values to 10 percent below current market value and pay a 5 percent fee.

It’s the only sensible proposal coming out of Washington, according to Lindsey. Its cost is estimated at $1.7 billion, "which in Washington is a rounding error as ‘bailouts’ go."

Other bills ignore or even exacerbate the problem of vacant homes. For instance, Congress already passed a $25 billion net loss carryback tax break to the homebuilding industry.

"One of the least helpful things Congress could do would be to keep the homebuilders in business so they could increase supply still further," Lindsey asserts.