The article says: "But this argument seems especially inopportune now, since whatever happened in the past, there is broad agreement about what should happen in the future: The old "government-sponsored enterprise" model is a proven failure. Fannie and Freddie should be gradually dismantled and replaced with a new system of mortgage finance that does not permit ostensibly private companies to profit from an implicit federal government guarantee. To be sure, there is no consensus between, or within, the two parties as to how much - or how little - government involvement to retain, and how precisely to structure a federal role. But all serious proposals emphasize a greater role for private capital than it currently has."
A brief history lesson will be of help here, and it will NOT make the anyone happy who thinks that a. the free market would have corrected this or b. that the mission of Fannie Mae and Freddie Mac was inherently flawed. Both agencies were directly controlled by the government until the mid-1970's. Then, the process of their privatization began. They were sold off to help pay for the debt accumulated during the Vietnam War. Had they been left alone, we probably wouldn't have this situation now. Since privatization is primarily a Republican "solution" I am more inclined to fix blame on that side. It is clear that both parties were whooping it up during the bubble and were too afraid to look at the dark underbelly. Because I am a former mortgage loan officer, I soon realized that the mortgage companies had abandoned tried and true underwriting principles. I could see it coming, and I am a nobody. Why couldn't all this high-priced help stop it?