Credit requirements are set by the lenders not the government unless you are are talking about FHA loans. The government didn't say you have to start doing ninja (no income no job approved) loans. They didn't tell banks that you should have fake pay stubs and bank statements on loan officers computers to make anyone qualify for a loan. This was all because of packaging of the loan by the private sector and because of individual and collective greed. Read the lost bank about WAMU. Or just actually look at the numbers from 2000-2007. Loan originators started making a killing on subprime any really any type of mortgage and since they didn't have to care about accepting the risk down the line they approved everyone. Check out the rise in subprime lending since 2000. Now remember subprime was something that freddie and fannie had no imput on it is the closest thing to a true free market in mortgage industry during this time. As we know subprime loans were the biggest driver of the crisis. http://upload.wikimedia.org/wikipedia/commons/e/e0/Subprime_mortgage_originations%2C_1996-2008.GIF