In a nutshell, rather than making any attempt to address the problem of poverty itself (and what the government should be responsible in that regard, of course, is up to much debate), any system of "objective measurements" was considered racist and discriminatory, and the Feds encouraged riskier business practices to make the system more inclusive. In other words, common sense and thoughtful, objective business practices were to blame, not actual individuals personal responsibility and incomes.
Rather than make the fundamental reforms needed to help the bottom half actually become economically productive and domestically stable enough to afford to buy a home, the government tried to juice the home-ownership rate directly.
This is completely analogous to how affirmative action thinking has warped the education system. Objective measures like GPA and test scores are increasingly considered racist, and the responsibility for achievement has shifted from individual students to the institutions themselves. Rather than address any problems with academic preparation prior to college, whether with the students or the K-12 schools, universities are expected to create a level playing field, shifting the blame to an objective system, vilifying real success, diluting the quality of education for all, and creating unfairness all around.
Something to keep in mind as the Federal government, both Democrats and Republicans alike, contemplate a $700 Billion dollar bailout, at least.
Also, Michelle Malkin notes that:
"Student loans, car loans, and credit card debt have been snuck into the bailout proposal."