A commenter on an earlier post recommended a timeline created by Aaron Rodriguez that lists the attempts (mostly by Bush Administration officials) to regulate Freddie Mac and Fannie Mae. At every turn, they were blocked by Democrats. Read the whole thing. I would simply add that:
1. Even under President Clinton, Larry Summers wanted to tighten regulation over the two firms. He also recognized that their political clout was bad for the country.
2. At the time, Freddie Mac and Fannie Mae were shareholder-owned companies. If you want to maintain a narrative that the blame for the housing bubble falls on the private sector and too little regulation, they could include Freddie and Fannie in that narrative. In my opinion that would make the narrative of “not enough regulation” more intellectually respectable. But if your goal is to exonerate Democrats and blame Republicans, then you want to use the younger Tsarnaev’s defense in the Boston Marathon bombing case: Freddie and Fannie would have never gotten in trouble had they not fallen under the spell of their evil over brother, Wall Street.
Regulation is too constrained a concept. Fannie and Freddie were (are) the ultimate government-guaranteed rent seekers. They might have been insufficiently reigned in, but too much government involvement and protection caused the ultimate problems which led to the bail-outs. The fact that they were “private” enterprises in the Clinton years does not exonerate Democrats..or many Republicans (who threw in the towel).
The problem was Bush had more success at influencing them than policy indicates. His attempt at stifling them did lead them to purchase more Wall Street junk to sway him towards their aims. In the end, there really wasn’t daylight between them and the investment banks. Both operated with implicit guarantees and both were bailed out, investment banks just took it to further extremes and were usually better at it, just as they are better at protecting their rent seeking now.
Steve Sailer has pointed out that Bush himself supported loans with no down payments. See here:
http://isteve.blogspot.com/2013/10/george-w-bush-launches-mortgage-bubble.html
I think Bush’s statements effectively cancelled out any attempt from his officials to reform Freddie and Fannie. I think the most important item Rodriguez mentioned is that the home builders lobby opposed tightening mortgage qualifications. Few congressmen of either party will take on the real estate lobbies.