Investors in their securities didn't ask whether the supporting collateral was inflated because they didn't have to. And because the GSEs made up the bulk of t

Investors in their securities didn't ask whether the supporting collateral was inflated because they didn't have to. And because the GSEs made up the bulk of the market, it was their willingness to lend that drove that market. Their expansion of excess credit (along with the Fed's constant easing) lead to the bubble in housing prices that drove the whole thing.