Good friend Tim is--I believe--a bit more obsessed with the financial crisis than I am. This I know because he provides me with a steady stream of stuff designed to educate me further on this issue. Like most big screwups in government, this one is truly bi-partisan.
Let's start with the Dems in Congress and here's the video. Watch this all the way through. Here you'll see the workings of a House Committee with oversight responsibility for Fannie and Freddie. Now obviously, it is clipped and cut and pasted in order to show Dems in a poor light. But the background information getting out into the media about the Dems two pronged strategy....lean heavily on Fannie and Freddie to make riskier loans while resisting additional regulation necessary to protect taxpayers...is well-known.
Then there's the Bush Administration...oh yes, the SEC had quite a hand in this. You see, as my friend Joe H rightly points out, Fannie and Freddie don't lend to anyone. They buy/back mortgages arranged by others. Wall Street found an excellent way to make money by turning these bad mortgages into derivatives, and they needed a little help from the SEC to make it a reality.
And then there's the President himself, with the zany Ownership Society. Don't even get me started on this one.
But really now, no one saw all this coming. Whoops, not exactly true....this article called it in 2002.