Note that the statements from the CEO's of Fannie and Freddie make it clear that Fannie and Freddie are in no way a truely private sector lending institution.

Former Fannie Mae, Freddie Mac CEO’s: ‘It was the Market’s Fault’-“Fannie Mae is required by law to support the housing finance market,” Daniel Mudd, Fannie Mae’s CEO from 2005 to 2008, told the House Committee on Oversight and Government Reform Tuesday....“As the guarantor of almost half of the home mortgages in the country, it is not at all surprising that these two firms would get hit hard by the biggest housing collapse in 75 years,” he said....“Freddie Mac entered the non-traditional slice of the market because, as the private lending sector shifted toward those types of loans, Freddie needed to participate in order to carry out its public mission,” Syron claimed....“Fannie Mae had a limited market presence in promoting or investing in sub-prime or Alt-A loans,” Raines testified. “If anything, Fannie Mae played catch-up to the banks and investment banks who drove the securitization of the most toxic sub-prime mortgages,” he said...."

So there you have the side of the Fannie and Freddie CEO's blaming the "private lending sector" for the economic crisis and that they were forced "to participate in order" "as the private lending sector shifted toward those types of loans".

"Rep. Christopher Shays (R-Conn.) reacted harshly to the CEOs’ claims, when asked about them by CNSNews.com. “That’s just bull****,” Shays said. “The bottom line to this was they were entering into a market they didn’t have to enter in to.”

“That was, ironically, one of the concerns of the private sector, that they were broadening their reach beyond what their mandate was,” Shays explained....“The irony was, had the private sector succeed in keeping them out, they would have been kept out,” he added....Rep. Brian Bilbray (R-Calif.), meanwhile, said that there was no doubt that Fannie and Freddie were to blame in creating the housing bubble. “I think that the responsibility they’re denying was the responsibility in the creation of the bubble,” he told CNSNews.com....“There’s enough blame on both sides,” he said. “There were political and economic abuses here, a lot of people saying ‘I’m going to get what I can out of it now’ both the politicians who want to take credit for expanding a market far beyond what was sustainable in the economy and those who were in the private sector who were looking to make the dollars and get out with huge amounts of money.”

Shays said that everyone involved has paid for their mistakes, except the former CEOs. “The companies have paid for it, the stockholders have paid for it, and the public’s paid for it, and the CEOs have made a fortune,” he said. Both Raines and Syron brushed aside CNSNews.com’s requests for interviews."

So therein lies the dispute. Was this mortgage crisis truely a private sector failure alone or was it a Government Sponsored Enterprise in Fannie and Freddie that tampered with the private sector in a negative way? One thing for certain is that we won't really be able to answer the question "what if the private sector were left alone would this crisis have still occurred?" but one thing that is certain is that this private sector and Government Sponsored Enterprise marriage hasn't so far worked as both are blaming each other or at least not under prior regulations of such a marriage and concerning those regulations check out Dow has gained 1400 points since 11/21/2008 after dropping 2000 points from 11/4/2008 to 11/20/2008 inspite of recession and unemployment news... and read how Freddi Mac lobbied only Republicans cause Democrats were already theirs for less regulations!!!

Maybe we need a separation of private sector and government clause as much as some say we need a separation of church and state!!!

To get into more details and history on Fannie and Freddie see:

New York Times articles in 1999 and 2003 on the Economy
New York Times not telling you the whole story once again
Media is not giving you the whole Mortgage Crisis story: Fannie and Freddie is Enron x 19/Microsoft Sized Monopoly/Leading Compaign Giver and Lobbyist
The Economy and what Big Media is not telling you...
Obama's connection with Fannie Mae and Freddie Mac ignored in Big Media. The Fact that Bush tried to reform Freddie and Fannie ignored in Big Media.
Mortgage Crisis
Orson Scott Card (Democrat who is also, highly critical of the free-market and capitalism) writes a powerful argument and telling piece!!! Must read!!
$4.6 of the $6.6 trillion mortgage-backed securities at the heart of the financial crisis are from Government Sponsored Enterprises!!!!
Dow has gained 1400 points since 11/21/2008 after dropping 2000 points from 11/4/2008 to 11/20/2008 inspite of recession and unemployment news....