Bush tried but was defied

[T]he Bush administration warned in the budget it issued in April 2001 that Fannie and Freddie were too large and overleveraged. Their failure "could cause strong repercussions in financial markets, affecting federally insured entities andeconomic activity" well beyond housing.

Mr. Bush wanted to limit systemic risk by raising the GSEs' [i.e."government-sponsored enterprises" like Fannie and Freddie] capital requirements, compelling preapproval of new activities, and limiting the size of their portfolios. ... Mr. Bush wanted the GSEs to be treated just like their private-sector competitors.

But the GSEs fought back [ with a massive $170,000,000 lobbying campaign!]. They didn't want to see the Bush reforms enacted, because that would level the playing field for their competitors. Congress finally did pass the Bush reforms, but in 2008, after Fannie and Freddie collapsed. ...

The housing meltdown is largely a story of greed and irresponsibility made possible by government privilege. If Democrats had granted the Bush administration the regulatory powers it sought, the housing crisis wouldn't be nearly as severe and the economy as a whole would be better off. -- Karl Rove, Wall Street Journal, 1/7/09