“No, 2008 was because of the 90’s law called the Community Reinvestment Act that officially created a quasi-government organization to purchase all mortgages (regardless of risk).”
That’s a myth no matter how often it gets repeated around here. The CRA applied only to deposit takers and it played a very minor role in the housing bubble.
The major players in the housing bubble were Argent, Ameriquest, and the trillion dollar shadow banking system, none of which were covered by the CRA or any government regulation for that matter.
With the CRA, helped by the government loan machines Fannie and Freddie, marginal borrowers were mainstreamed shifting the whole lending curve.
Economists at the National Bureau of Economic Research concluded that banks undergoing CRA-related regulatory exams took additional mortgage lending risk. The authors of a study entitled "Did the Community Reinvestment Act Lead to Risky Lending?" compared "the lending behavior of banks undergoing CRA exams within a given census tract in a given month (the treatment group) to the behavior of banks operating in the same census tract-month that did not face these exams (the control group).
This comparison clearly indicates that adherence to the CRA led to riskier lending by banks." They concluded: "The evidence shows that around CRA examinations, when incentives to conform to CRA standards are particularly high, banks not only increase lending rates but also appear to originate loans that are markedly riskier." Loan delinquency averaged 15% higher in the treatment group than the control group one year after mortgage origination.