Fannie & Freddie participated along with the other financial institutions in the mortgage security industry.<quoted text>
Did you read the article from San Jose state economics dept?
"Although some people erroneous attribute the financial crisis to this mortgage default insurance and/or to securitization, these practices are perfectly legitimate and appropriate for financial markets. The problem arose because Fanny Mae and Freddie Mac were the key institutions in providing mortgage default insurance and in buying subprime mortgages. There were abuses of the derivative instruments that should have been punished by the market but were not because the perpetrators were ultimately bailed out. "
It's all there dave, read it.
San José State University
Department of Economics
& Tornado Alley
The Nature and the Origin
of the Subprime Mortgage Crisis
But they did not cause it.