Is the FED the sole culprit for the financial crisis?

Figure 1: Real Fed Funds Rate and residential investment in the US over the years



Figure 2: Relation between real rents and real home prices

The immediate motivation for this post is Greenspan's comment that the FED is not solely responsible and cant be held wholly accountable for the financial crisis. I hate to agree with Greenspan but I sort of agree with him on this.

First, let us look at the following fact: This is the first time in the last 50 years that the relationship between lower rates and higher residential investment is even seen. In figure 1, we can see that in the 2000-2006 time period, the fed funds rate and residential investment move in opposite directions. This has naturally led to the conclusion, obviously appealing, that lower rates would stimulate housing and prolonged low rates caused the bubble. However, there have been eleven recessions in this time period in the US, nine of which were linked to declining housing markets, and none of them have even remotely shown this trend. In fact, one can claim that, based on figure 1, the Fed cuts rates whenever investment falls, rather than the claim that raising rates caused a decline in home ownership (note the almost identical routes followed by the fed funds rate and investment in housing). This is obviously misleading and hence using the theory which has been universally propagated is questionable at best.

Of course, one can argue that history is not a good guide and this time was different (as it undoubtedly was), which brings us to the next question. The period from Nov 1998 to January 2001, the fed funds rate was raised from 4.75-6%. However, from Quarter 1, 2001 to Quarter 4, 2005, there was a sharp rise in ownership coincides with sharp falls in fed funds rate. If the rate hikes that followed in 2004 really caused the bubble to burst and home prices to fall (with a lag of 2 years), then how is it that the same lagged decline is not visible after the 1998-2001 rate hikes? Clearly, the contention that monetary policy is countercyclical to investment in housing seems tenuous at best.
An even more important question is this: Economic logic dictates that the lag (assuming that there is some relation between fed funds rate and investment) should be MORE IMPORTANT for rate cuts than rate hikes. This is because rate hikes would immediately be used as a reason to deny loans and postpone new construction decisions (these can be implemented immediately). On the other hand, starting a new construction or bringing in more mortgage-financed investments is more time consuming, as would be required in the event of a fall in rates. On the other hand, we have observed the reverse: the fall in rates has no lag while the rise in rates does have a lag. In short, factors other than mere interest rate cuts where playing a far bigger role in the boom.
Housing is a long term investment: typically a house is expected as an investment over a 50 yr period or more. It is considered a durable investment. Hence, a rational economic agent will focus on long term fundamentals rather than counter cyclical monetary policy as a reason to invest in a house. . The fed funds rate is an overnight rate. It would seem that an investment would be made more on psychological factors than short term interest rates.
In the period of the bubble, there was a growing divergence between real home prices and real rent as shown in figure 2. This fact seems to have been ignored by both home buyers and lenders. This is certainly not directly related to monetary policy.