If there was no FHA backstop people would have a very hard time getting the credit approval they would need to buy a home. There wouldn't be zero money or 5% down loans like you can still get today. It was a political choice to meddle in the housing industry because a) the realty industry in this country is bananas huge and they spend large sums money on political campaigns, b) construction is the single biggest source of jobs for low skilled males and c) politicians can say that they helped put people in their own home instead of being at the mercy of a landlord. The realty industry marketed the American Dream, but the politicians are the ones that put the system in place that allowed the stupidity to occur.
And you're right, I don't like regulation, because it doesn't work. That's very different from being angry about the SEC incompetently misleading millions of people by utterly failing at their job. People bought the MBS' because they assumed that the SEC had done their job. Those idiots cost millions of people their jobs.