Yes Barney Frank and Chris Dodd and a whole lot of other people missed the boat on Fannie and Freddie, but I would laugh in the banks' face if they made this argument.  The mortgage bankers actively lobbied for the government to back more loans every step of the way, to smooth the way for more volume, more volume, more volume.  And even though they got just about everything they ever asked for, it wasn't enough for them and many if not most of them either commited outright mortgage fraud or looked the other way as rampant mortgage fraud was occurring within their shops.

If you don't believe me, here's a couple past press releases from the MBA:

Exhibit one:  The mortgage bankers, along with the realtors and home builders, ask for Fannie and Freddie to back even more loans, a year before Fannie and Freddie collapse:

MBA Welcomes OFHEO Move to Raise GSE Portfolio Caps

WASHINGTON, DC (September 19, 2007) — John M. Robbins, CMB, Chairman of the Mortgage Bankers Association (MBA) reacted positively to today’s announcement by the Office of Federal Housing Enterprise Oversight (OFHEO) Director James Lockhart that OFHEO would provide Fannie Mae and Freddie Mac additional flexibility in managing their mortgage portfolios in order to comply with their portfolio caps.

“This is a move in the right direction,” said Robbins. “By providing Fannie Mae and Freddie Mac this additional flexibility, Director Lockhart has taken a helpful step to allow the GSEs to help improve liquidity in the mortgage markets. He has also sent a strong signal that they should use this flexibility to assist distressed and subprime borrowers who are having a difficult time refinancing into a mortgage they can afford.”

Today’s action could allow the GSEs to purchase at least an additional $20 billion in mortgages by changing how the portfolios are measured; increasing the cap on each GSE to $735 billon and allowing the caps to grow at a rate of 2 percent annually. OFHEO will also require Fannie Mae and Freddie Mac to report on market conditions and make a monthly report on purchases of nonprime and multifamily loans.

In August. MBA joined with the National Association of Realtors (NAR) and the National Association of Home Builders (NAHB) in writing a letter to OHFEO calling for an increase in the portfolio caps to allow the GSEs to help stabilize the liquidity crisis in the mortgage markets. A copy of that letter can be found here.

 Exhibit two:  We aren't getting enough of a fix at Fannie and Freddie, lets further degrade underwriting standards at FHA as well,  with 40 year mortgages, phony downpayment schemes, and bigger loans, says the MBA as the housing market is about to fall off a cliff:  (LOL @ "underserved borrowers" in 2006-- what were these guys smoking?)

MBA Calls for Legislative Reforms for FHA to Better Reach Underserved Borrowers

(June 20th 2006)--  The viability of the Federal Housing Administration (FHA) is in jeopardy without legislative reform, according to testimony today by Regina M. Lowrie, CMB, chairman of the Mortgage Bankers Association (MBA) and president and founder of Gateway Funding Diversified Mortgage Services, LP. Lowrie testified on behalf of MBA during a Senate Banking Housing and Transportation Subcommittee hearing entitled, "FHA: Issues for the Future."

"FHA's most important role today is to give first-time, minority and low- and moderate-income homebuyers the ability to climb onto the first rung of the homeownership ladder," said Lowrie. "Unfortunately, FHA has been hindered in this role by a statutory framework that does not allow FHA to adapt to changes in the mortgage market and thus be able to better serve borrowers. Without key legislative reforms this year, the future of FHA is in doubt."

MBA believes FHA should be empowered to adapt itself to meet the needs of homebuyers now and in the future. In order to do so, MBA believes the following three reforms are necessary:

• Flexible authority to introduce new products and program changes, such as a flexible downpayment program, longer mortgage terms, and raising FHA loan limits to the levels in high cost areas;
  
• The ability to directly invest a portion of its revenues into technology improvements, which will improve management of its portfolio, gain efficiencies, lower costs and ease interfacing with FHA lenders; and
  
• Greater control in managing its human resources to enhance its ability to attract and manage talented and knowledgeable industry professionals.