Congressional pressure on Fannie Mae and Freddy Mac to secure homeowner loans to people who didnt necessarily deserve the loans was what allowed the banks to make such poor choices and decisions. The fact that a quasigovt agency was in effect backing all the loans, bad or good, allowed the banks to go wild with the refinancing and crazy ARM's. While the banks absolutely took advantage and went too far, the politicians courting special interest groups (like acorn) created the atmosphere for this kind of behavior to flourish.
The govt basically said make the bad loans we will cover them, until FM and FM ran out of money.
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