From 1992 through the height of the housing bubble, Fannie Mae and Freddie Mac used their monopoly position in the mortgage securitization industry to reward firms like Countrywide for making bad bets in the housing market. Countrywide’s success was a signal to other market participants to lower their standards as well.
Wall Street banks are not blameless for the financial crisis. But they were only responding to the incentives set up by the federal government. Read more at Conn Carroll: Facts show Fannie, Freddie led mortgage market to the collapse | Conn Carroll | Columnists | Washington Examiner.