“But all the White House would have needed to do in, say, early ‘05, was to repeatedly make it clear that housing prices were getting way out of touch with fundamentals, and that investing in mortgage backed instruments was entirely at your own risk.”
If they said this, was there some sort of secret "Hey guys, this is just for the press, we really don't mean it" translation for the party-hearty traders?
“that investing in mortgage backed instruments was entirely at your own risk.”
first, there is (1) NO LEGAL OR MORAL basis to say such a thing, because the general idea of “mortgage back securities” or any other “securities” are invested at your own risk
and so what they did try to do was to end the excess in the growth of Freddie and Fannie (the government), which created and most of the securitized mortgage packages and then sold them into the system, and they tried to end Freddie and Fannie soaking up Sub-prime and Alt-A debt.
2nd: saying so would have been a fiction, in terms of stuff that came from Freddie and Fannie because the law that created them places the U.S. government backing behind them; which everyone knew was, and would be the case.
The second part of the GOP attempts to reign-in Freddie and Fannie, once they were tamed, would have come later in a full privatization plan - debt and capital broken up and sent out as 6 to a dozen completely private companies.