The Role of Government Affordable Housing Policy in Creating the Global Financial Crisis of 2008: Staff Report, Originally Released July 1, 2009; Updated May 12, 2010

The housing bubble that burst in 2007 and led to a financial crisis can be traced back to federal government intervention in the U.S. housing market intended to help provide homeownership opportunities for more Americans. This intervention began with two government-backed corporations, Fannie Mae and Freddie Mac, which privatized their profits but socialized their risks, creating powerful incentives for them to act recklessly and exposing taxpayers to tremendous losses.