Okay, fuck it. I've read way too many books on this to not reply.
The lending crisis is so misunderstood because there were soo many different people responsible for it.
There is nothing wrong with collateralizing mortgage debt and selling it on the secondary market. It literally has been happening since Fannie Mae was created by the National Housing Act in 1938. The whole point is liquidity. They need to collateralize the debt and sell it, so they can buy more loans to collateralize, so lenders can offer more loans, and more people can become homeowners.
Responsible Party #1 - Ronald Regan signed the Garn-St Germain Depository Act of 1982 which deregulated the banks and allowed them to offer adjustable rates mortgages, balloon payments, etc. Deregulation = increased risk
Responsible Party #2 - In 1994 JP Morgan created the Credit Default Swap financial derivative product in order to get risk of their books when they wanted to open a line of credit for 5 billion for Exxon for the Valdez spill. They had to keep 8% of capital in reserves for outstanding loans, so to get the risk off their books, they sold the risk to someone else in a Credit Default Swap. Later on, these swaps were used to bet against the collateralized debt obligations.
Responsible Party #3 - President Bill Clinton signed the Gramm-Leach-Bliley Act (GLBA) into effect in 1999. GLBA repealed Sections 20 and 32 of the Glass-Steagall Act, which had prohibited the interlocking of commercial bank and investment firms.
Responsible Party #4 - The ratings firms that rated CDOs filled with subprime mortgages as AAA because everyone was paying them to do it, and they were making too much money. (special fuck you to these people)
Responsible Party #5 - SEC for not coming up with any rules or enforcing any of the existing rules.
Responsible Party #6 - The "Greenspan Put". Alan Greenspan kept lowering interest rates any time there was a hint of trouble, creating huge bubbles that eventually burst. In fact, he probably deserves more blame than most, or the ratings houses that rubber stamped dogshit.
Responsible Party #7 - Buyers of Mortgages (Fannie/Freddie/Banks/Investor) - They were making so much fucking money on Mortgage Backed Securities, they couldn't get enough of them. They literally were asking loan officer to do whatever it took to get more.
Responsible Party #8 - Lenders & Loan Officers - There wasn't any rules like the Dodd-Frank act, so the private industry was supposed to be acting responsibly, not being greedy, and only loaning money to people that could pay it back? Wrong, the investors were saying give us more loans, we don't give a fuck, so lenders were more than happy to oblige.
The answer is a lot of people were responsible.