The Feds set the rate too low and kept it low too long. That wasn't *the* reason for the housing bubble, but it certainly helped to inflate it.

How much it contributed overall is very hard to judge. The direct contribution appears small, but there are a lot of indirect contribution. As long as money was flowing into the housing market because rates where low, too many companies where actively trying to skirt the rules to get into the hot market and too many little problems where papered over or ignored.

It's a bit like drunk driving. Most of the time, the alcohol isn't the direct cause of the accident, it just sets up conditions that make them much more likely.

Jay