Russell Roberts over at Café Hayek provides as a good an explanation as any about what went wrong and who is to blame in the Fannie Mae-Freddie Mac mess. Here is a bit, but you should read the whole, whimsical thing:
I actually think this is an emergent mess that evolved out of no one's design. An alliance of bootleggers and baptists that created something that was no one's intention but that served many people well until it fell apart. It's a study in flawed incentives and institutional design. The lesson is that government agencies work best when we know what they're doing and there is some measure of accountability, even if it's only political.