Tell me, why are the Republicans getting the blame? There is plenty to go around. There are a couple of pretty high profile democrats who are wrapped up in the idiocy of Fannie and Freddie.
Yes there are many politicians in both parties that were legally bribed by both Franny and Freddy. But the Republicans led this charge to deregulate everything. Republicans threatened to remove all funding to the SEC when Clinton tried to increase SEC funding after a long series of corporate scandals were about to pop one after another.
After Enron was discovered, both Republicans and Democrats tried to increase SEC funding. Harvey Pitts represented the administration attitude when he refused that funding during his Congressional testimony. The Republicans whose political agenda demanded total deregulation - those exxtremist Republicans dominated the George Jr administration. Moderate Replublicans were driven out of George Jr's administration for opposing political agendas.
Some industries need minimal regulation. The computer industry has little because the computer industry has been so responsible. The auto industry has massive regulation because historically, the auto industry refused to innovate until required by that regulation. The industry that needs most regulation is the industry most chock full of greed and self serving people - the financial industry.
As one white haired analyst explained, the problem people reside mostly is 'tails' of a normal distribution curve. With proper regulation, these shady types make little money and suffer repeated regulatory punishment for their actions. Deregulate and those shady types start making big money. This causes the center part of that distribution curve to see those profits and migrate to that 'tail'. We call this a herd mentality. The herd in mass numbers moved into equities without due diligence because deregulation made it profitable to live iin that 'tail' area; to do as only the shady people did.
ARMs bundled in tranches, SIVs, CDOs etc made it popular and profitable for finance types to operate as their shady peers without punishment - to not even know what risks were inside those mortgage backed securities. Deregulation pushed by the political agenda of this administration cause the herd to operate without due diligence that was once a routine and standard practice.
Economics will take revenge. The herd will stampede back to the center of that distribution curve. This finance market meltdown is how economic forces punish the herd.