Problem? What problem?
An examination of regulatory decisions shows that the Federal Reserve and other agencies waited until it was too late before trying to tame the industry’s excesses. Both the Fed and the Bush administration placed a higher priority on promoting “financial innovation” and what President Bush has called the “ownership society.”
On top of that, many Fed officials counted on the housing boom to prop up the economy after the stock market collapsed in 2000.
There's an interesting timeline here.