The New York Times has an article about events, policies and actions leading up to the failure of Fannie Mae. They put the quote that stuck in my craw right up front:

“Almost no one expected what was coming. It’s not fair to blame us for not predicting the unthinkable.“— Daniel H. Mudd, former chief executive, Fannie Mae

This seems to be a common refrain from or government these days.No one could have predicted 9/11. No one could have predicted the Iraqi insurgency. No one could have foreseen the levies failing during Katrina. Unless there’s someone named “No One” that these people are referring to there are people who could see the potential for all of them. It’s just they were ignored because they were considered idiots.

In the case of the mortgage crisis, the short term profits blinded people to the long term impact. From the article:

Disregarding warnings from his managers that lenders were making too many loans that would never be repaid, he steered Fannie into more treacherous corners of the mortgage market, according to executives.

Sounds like there were people there who saw the problem, but they were ignored because Mr. Mudd was afraid of losing business. The only thing that can be said in his defense is he wasn’y the only one blinded by short term profits.