It was not the banks that created the mortgage crisis.
It was, plain and simple, Congress, who forced everybody
to go and give mortgages to people who were on the cusp..
But they were the ones who pushed Fannie and Freddie to
make a bunch of loans that were imprudent, if you will.
They were the ones that pushed the banks to loan to everybody.
Which is, not surprisingly, completely false :-)
Here's a good overview (H/T Krugman) for those who are looking to refute their friends and families who tell them that they know for sure that Freddie and Fannie "caused" the crisis.
Some gems:
<snip>
The first thing to point out is that the both the subprime mortgage
boom and the subsequent crash are very much concentrated in the
private market, especially the private label securitization channel
(PLS) market. The GSEs were not behind them. That whole fly-by-night
lending boom, slicing and dicing mortgage bonds, derivatives and CDOs,
and all the other shadiness of the 2000s mortgage market was a Wall
Street creation, and that is what drove all those risky mortgages.
For some data, start here: "More than 84 percent of the subprime
mortgages in 2006 were issued by private lending institutions..
Private firms made nearly 83 percent of the subprime loans to
low- and moderate-income borrowers that year."
</snip>
Worth a read if you're interested in this stuff.
/jordan