It isn't fair to paint Fannie/Freddie with the same brush that you'd use for (say) Bear Stearns.
These guys have been serving as the de-facto buyer of last resort for all of the bad debt that other banks have accumulated. They're acting as the US mortgage-banking safety net, and as such, have knowingly taken on a huge amount of bad debt that other commercial banks wouldn't touch. If it weren't for Fannie/Freddie, the mortgage crisis would be much worse than it is.
(That said...if they had the good sense to raise their lending standards back in 2003, we probably wouldn't be in this mess.)
Actually if it weren't for the actions of Fannie/Freddie, the mortgage crisis would have needed to be dealt with sooner. By F/F taking on all the toxic loans that the mortgage banks wanted to dump, they allowed the problems to increase in size and scope thus prolonging the bubble much longer. All this quasi-government intervention does is to distort the true market. I want transparency in government and I want it in business. When you allow these mortgage banks to fail on their own (no safety nets), you clear the system of inefficient players and allow the market to adjust.
I'm all for free enterprise. You take risks, you make some smart moves, and you profit. You take another risk, you make some mistakes, you lose, and you can start over (and learn). You don't keep doing it like these banks did (I don't even know if you can call them mistakes, more like reckless disregard). Like degenerate gamblers who got their line-of-credit extended, they double-downed and lost.
Think about it, the average US citizen's safety net is quite small. Get sick, get dropped by insurance, lose your job and you're basically on your own. We're told to buck up, stop whining, take responsibility, and work harder. Fine, but don't tell me these companies need our sympathy and help. They profited handsomely during the run-up by making risky loans and lobbying for tougher bankruptcy laws.
There's no easy answer. Bail them out, the dollar plummets and the economy goes to shit. No bailout, the financial market freezes up and the economy goes to shit. I'm leaning towards no more bailouts. At least then we might be able to address the root cause, which I think was reckless risk taking and financial engineering, with the perpetuated belief that the US government (tax payers) would be the ultimate safety net.
These guys have been serving as the de-facto buyer of last resort for all of the bad debt that other banks have accumulated. They're acting as the US mortgage-banking safety net, and as such, have knowingly taken on a huge amount of bad debt that other commercial banks wouldn't touch. If it weren't for Fannie/Freddie, the mortgage crisis would be much worse than it is.
(That said...if they had the good sense to raise their lending standards back in 2003, we probably wouldn't be in this mess.)