In essence, the Federal Reserve went overboard in an attempt to stave off a severe recession in 2001 in the wake of 9/11 and the dot-com bust. Because of the way the economy works (it takes time for these things to make their way through a capitalist economy as large as ours) much of the pain we should have faced then was simply delayed until recently.
The open market operations, including the injection of money into the US banking system, lowering of the federal funds rate and interest rates increased dramatically the supply of money which due to government and political pressure found its way into housing. Once the bubble burst and the mortgage meltdown turned into a financial crisis with the banks (distributors of the newly injected money) it culminated in severe recession we've experienced.