But of course in the mind of right wingers it doesn't and a key pillar of the argument is that the blame lies with Freddie and Fannie. The theory is that the government not only encouraged, but mandated that banks issue risky loans. That's Thomas Sowell's assertion here.
But as far as I can tell that's just not true. The Community Reinvestment Act did not require banks to make loans to the poor and risky. What it did was disallow redlining. Redlining was a process whereby services and the costs associated with them were determined by simply drawing a "red line" on a map and saying those on one side of the line get one set of services at a certain cost and on the other side people get other services and costs. The effect was to generally make things tougher for minorities. What the CRA did was it required institutions to use consistent standards that were not based on which side of the tracks someone lived on but based on other factors, like a person's financial status.
There were a number of causes for the crisis in 2008. Several are discussed in this article that also addresses this myth that Freddie and Fannie are to blame. These causes don't support free market dogma. But why are people blaming the CRA? In fact CRA regulated institutions were less likely to make subprime loans. Further they were less likely to repackage and sell them. According to Wikipedia "every empirical study that has looked at CRA loans has concluded that they were safer than subprime mortgages that were purely profit driven, and CRA loans accounted for a tiny fraction of total subprime mortgages." Wikipedia cites this paper from Michael Simkovic out of Seton Hall and Harvard to justify that claim.
So if every empirical study shows that Freddie and Fannie were not responsible where are these claims coming from? The paper from Simkovic provides insight, so I will quote it below:
A. Industry has sought to defend itself by blaming governmentFor further analysis of Wallison and Min's apologetics for the financial industry, go here. I keep coming back to this point. You might think it strange that such smart people can argue in this way when all of the empirical evidence is against them. But it makes perfect sense when you recognize that confusing people on behalf of wealth is their job.
Arguments that government policy primarily caused the financial crisis have generally been made in the context of advocacy paid for by the financial industry rather than through empirically substantiated academic scholarship. Many of the most forceful proponents of these arguments—such as mortgage consultant Edward Pinto and Financial Crisis Inquiry Commission dissenting member Peter J. Wallison136—are not academics but are instead affiliated with “think tanks” such as the American Enterprise Institute (“AEI”) which fundraise based on their efforts to deflect blame for the financial crisis from private financial institutions and which are committed to advocating free market ideology and limited government.137 AEI “is governed by a Board of Trustees, composed of leading business and financial executives.”138 During the five-year period from 2005 to 2009, the vast majority of its revenues came from annual donations.139
AEI’s 2009 report trumpeted Wallison and other AEI-funded writers efforts to deflect blame for the financial crisis from private financial firms and to place the blame for the financial crisis on government policies.140 The report also highlighted AEI’s ability to influence “Financial Regulation’s Future” because of Wallison’s role on the Financial Crisis Inquiry Commission.141 The report suggested that Wallison would likely use the opportunity to blame the GSEs for the financial crisis and to combat more comprehensive financial regulation.142
AEI’s 2010 annual report points out that in his role as a dissenting member of the FCIC, Wallison did in fact blame government policy for the financial crisis.”143 The report reiterates Wallison’s opposition to regulation and his ability to influence legislation.144
Wallison’s unwavering efforts to blame GSEs and government policies for the financial crisis were noted by other members of the commission, including fellow Republicans, who were often critical of his single-minded approach.145