Not only had Congressional members been warned for years about Fannie & Freddie's accounting manipulations and dangerously unstable loan portfolio by regulators (OFHEO, SCC, etc) and industry watchdogs, but a number of Representatives themselves chastised the GSEs and pushed for more stringent oversight and regulation (ex. Rep. Richard Baker, R – LA).
1.)http://www.c-spanarchives.org/library/index.php?main_page=product_video_info&products_id=184820-1
2.)http://www.c-spanarchives.org/library/index.php?main_page=product_video_info&products_id=177173-1
3.)http://www.nytimes.com/2008/10/05/business/05fannie.html?_r=1&oref=slogin

Was it really too much regulation that made Fannie/Freddie overstate their income in order to pay out excessive bonuses to their executive management? And was it congressional legislation like the CRA or or was it just the fear of loosing market share that twisted their arms to buy subprime & alt-a mortgage pools from Countrywide.

Anyone who blames the current condition of the GSEs on too much regulation has failed inform themselves of the history behind the crises. It's not about too MUCH or too LITTLE. The ideologues like Barney Frank want us to believe that.

Instead it's this: How about just enforce regulation that is already on the books. That's all they had to do.

And while I also don't agree with your conclusion that FNMA/FHLMC be privatized, I do believe that it has to be one (privatized like a bank) or the other (government agency like FHA). No organization can successfully survive in the private/public state of duality.

Now, we have the spigots being opened up, with Fannie and Freddie to be shamelessly turned into vehicles to prop up housing prices (or attempt to) at the expense of the taxpayer. This is not conservatorship; it is obviously nationalization.

I find it hard to believe they will be able to cleanly “privatize” Fannie and Freddie now, since they have set a precedent that they would make good even without an explicit guarantee.

If the government wants to do something about the housing market, it should do so with a separate measure that all private players can (or must) participate in. Its not as if banks don't need the help either!

However even the proposition that there should be intervention to prop up home prices is a little perverse… you are basically asking anyone who does not yet own a home to pay out of their own taxes in order to keep home prices propped, making it take longer for them to be able to afford a home.

This does not exactly strike me as a government that treats all citizens “equally.”