Originally Posted by aceventura3

Greed is a given. The problem began with Fannie Mae and Freddie Mac creating a secondary market for mortgage loans. These institutions used leverage to over-extend the industry. They had the benefit of getting below market money to buy and package loans that they could sell at market rates. They had no incentive or reason to stop doing more and more. The irony is that we have known for years that these organizations were bankrupt, depending on how you valued the underlying assets, or at the very least unreasonably leveraged. The Bush administration actually tried to reform these organizations but was not able to because of Congress.