I was reading Panic: The Story of Modern Financial Insanity last night, collection of articles edited by Michael Lewis that goes through the history of recent financial panics starting with Black Friday in 1987 and on through through the present day crisis. Anyway, one of the articles included was this astoundingly prescient piece by John Cassidy from The New Yorker in 2002:

By far the biggest purchasers of residential mortgages are Fannie Mae and Freddie Mac. The two quasi-governmental enterprises are now among the biggest financial institutions in the country, with almost four trillion dollars in assets between them. Their remarkable growth has helped millions of Americans to purchase their first home, but it has also concentrated a great deal of risk in two enterprises that maintain a smaller capital cushion than regular banks. Fannie and Freddie both buy mortgages on which the borrower has put down as little as three per cent of the purchase price, and they’re giving an increasing number of loans to people with suspect credit histories. Inevitably, concerns have arisen about what would happen to them if the housing market crashed. “They look O.K., but they are big, they are powerful, and they have systemic risk,” Karl Case commented. “And it’s not the kind of risk you can diversify around. You can’t hedge real-estate values.”
Frank Nothaft, Freddie Mac’s chief economist, repudiated concerns about its financial stability. He reminded me that Fannie and Freddie have their own regulator, the Office of Federal Housing Enterprise Oversight, which is about to subject them to quarterly “stress tests,” in which it simulates a sharp rise in interest rates and mortgage delinquencies over a ten-year period, and then checks whether they have enough capital to survive. So far, Fannie and Freddie have passed all the dry-run tests. “For a calamity to happen to Freddie Mac or Fannie Mae, you are talking about some economic scenario that is probably as severe as, if not worse than, the Great Depression,” Nothaft said.
Not everybody is convinced by this argument. William Poole, the president of the Federal Reserve Bank of St. Louis, recently warned that the sheer size of Fannie and Freddie could create a “massive problem in the credit markets.” To pay for all the mortgages they buy, Fannie and Freddie issue bonds, which pay interest to their owners. What would happen, Poole asked, if the market value of these bonds fell sharply, because investors grew concerned about the financial soundness of Fannie and Freddie? “I do not know, and neither does anyone else,” he said. Poole is hardly alone in expressing concern. A couple of months ago, Fannie’s stock price sank after it announced that the recent wave of mortgage refinancings had adversely affected the balance it tries to maintain between its assets and its liabilities. (Fannie has since moved to restore the balance, and its stock price has recovered some of its losses.)
If Fannie or Freddie did get into serious trouble, the repercussions would dwarf the problems at Long-Term Capital Management in 1998, when buyers and sellers withdrew from the credit markets and the financial system almost seized up. That “liquidity crisis” prompted the Fed to organize a multibillion-dollar bailout, which a number of big Wall Street firms paid for. If Fannie and Freddie needed bailing out, taxpayers would probably end up paying for it. The federal government doesn’t guarantee the survival of Fannie or Freddie, but it is unthinkable that it would let either of them fail. When it comes to housing, even the most ardent conservatives in Congress tend to forget their free-market principles.

In the space of a few paragraphs we have warnings about Fannie Mae and Freddie Mac defaulting, a liquidty crisis, a Federal bailout and the “most ardent conservatives in Congress” forgetting free-market principles over six years ago.

On a related note, this is just one of many prescient cautionary notes William Poole — who stepped down as head of the St. Louis Federal Reserve last year and is now a Senior Fellow at CATO — sounded over years leading up to the current crisis. Speaking as someone who covered the Fed for two years, Poole commanded immense respect within the Federal Reserve system and among Fed watchers on the street. A case could be made that he was most closely followed Fed official outside of the Chairman himself. Why didn’t anyone inside or outside the Fed heed his warnings?