Gretchen Morgenson and Joshua Rosner just published a major book, Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon. The book is excellent in explaining the misconduct of executives who ran Fannie Mae and Freddie Mack. Yet it goes off the rails by overstating the role of these firms (and understating the role of others) in creating the housing meltdown and the closely-linked foreclosure crisis. Indeed, our current economic crisis should prompt us to ask more far-reaching questions about the origins of the crisis.

Looking back, many of us—and by “us,” I certainly include liberal Democrats—were slow to recognize the general dangers posed by the housing bubble, and the specific dangers posed by the political economy of government sponsored enterprises (GSEs). Many of us were also unduly credulous about the presumed benefits of home ownership. While perhaps not as easy to address, these uncomfortable questions must be raised if we hope to guard against the possibility of something of this magnitude happening again.

In an excellent review in the American Prospect, Robert Kuttner demonstrates how private firms such as Countrywide were far more culpable—economically, morally, and legally—than Fannie Mae, Freddie Mac, or other GSEs in initiating the current crisis. Fannie and Freddie certainly did not originate “liar loans” and other predatory mortgage products that have cost the taxpayer so dearly and that led so many families to lose their homes. The timing of events demonstrates that GSEs were profit-chasing followers rather than fraudulent leaders herding into the abyss.

That said, Fannie and Freddie’s conduct was both appalling and reckless. Many of the ultimate victims were moderate-income residents of predominantly minority communities, precisely the sort of people whom progressive housing policy seeks to help. The GSEs’ culpability starts with two principal malefactors, Jim Johnson and Franklin Raines. These executives earned enormous salaries by taking on enormous risks—risks which led to the eventual destruction of their companies and to a massive bailout. The culpability extends to many others, too—to the industry’s many patrons and enablers in both political parties. These officials helped to mix an explosive brew of for-profit incentives backed by implicit government guarantees. When the housing market blew up, this mixture blew up, too. We should hold people accountable.

The dangers embodied in Fannie and Freddie were hardly unknown. Two of my politically moderate professors noted the dangers of such hybrid arrangements thirty years ago. On the left, James Galbraith’s Predator State noted the same familiar pathologies, though he drew somewhat different political implications.