suddenly bad loan practices were not merely legal but mandated and backed by the full weight of the Federal government.

That's a stretch. Government set targets, they didn't tell bankers to sell shonky mortgages and disguise them using CDS.

If the targets weren't achievable without chicanery then the bankers should have said so. Instead they commenced deceptive behavior far beyond any reasonable response to targets that seem more of an excuse than a reason for the exaggerated use of instruments to sell mortgages to people who couldn't possibly service them. Why would any government want that?

As always, you have to ask "who has the motive." Obviously it was a bad deal for mortgagees who could not service their mortgage and so lost everything. Since they are the very voters who the targets were supposed to assist, that's a bad deal for Government too. Meanwhile bankers made lots of profit and mega-bonuses for doing it. So who has the motive?