Keeping Fanny Mae and Freddy mac in the game buy buying any and every crappy mortgage the mortgage brokers could get rubes, illegal aliens to sign allowed the carny game to continue. The Democrats screamed bloody murder when attempts were made stop the game or at least add some sensible guidelines.
Allowing a majority of the bundled loans to be graded AA securities and sold because the loans were backed up by the federal government was the true crime. Investors all over the world bought these. Good as gold they thought.
It is not only the Democrats fault by any means. If it was so obvious, Bush and Republican leaders could have insisted that the issue be dealt with. Walking out of the House and Senate and bringing them to gridlock until they were given a chance to explain the con game going on would have helped.
Yes the moral hazard of F&F backed up by government made our mortgages much cheaper than they should have been. But the packaging was not the creation of F&F, it was done by very smart Wall St types. The excessive liquidity at short rates that fed the monster came from Easy Al and Japan (especially Japan, have you looked at the carry trade unwind lately?)