According to the NYT article "Pressured to Take More Risk, Fannie Reached Tipping Point," Fannie Mae CEO Daniel Mudd was bullied by Angelo Mozilo (of Countrywide Financial infamy) to purchase more risky loans or Mozilo would take his paper elsewhere: "if you don't take these loans, you'll find you can lose much more."
Investors were also pressuring Mr. Mudd to take greater risks.
On one occasion, a hedge fund manager telephoned a senior Fannie executive to complain that the company was not taking enough gambles in chasing profits.
"Are you stupid or blind?" the investor roared, according to someone who heard the call, but requested anonymity. "Your job is to make me money!"
In response, "Fannie began buying huge numbers of riskier loans:"
In one meeting, according to two people present, Mr. Mudd told employees to "get aggressive on risk-taking, or get out of the company."
Far from simply being the fault of previous CEOs (Johnson and Raines) and Congress, there's plenty of blame to go around. Look especially to the tendency of greed and general short-sightedness to bypass higher decision-making processes.