Government intervention into the free market (getting into the mortgage business just like healthcare) could cause such catastrophic results. The free market quickly exposes bad business practices. Governments create perverse incentives that last a long time...
And enslaves us, which was the intention all along.
That would be a valid point if the source of the crisis had come out of government intervention.
It didn’t in this case. This was the result of financial engineering in the private sector that entirely divorced mortgage creation from mortgage ownership, effectively removing any inherent concern that a mortgage writer had when writing a loan. Previously a lender stood to lose his own money. In the new model the mortgage writer had no skin in the game.
If anything the bubble was a time of less government regulation. The new mortgage market developed after Glass Steagall was scrapped giving financial firms more freedom to act. And the Commodity Futures Modernization Act of 2000 prevented the regulation of some of the derivatives involved in the bubble.