While I agree with Aztec's comment that the government had to step in and do what they did with Fannie and Freddie, they still deserve to be bashed.
The GSEs go well beyond the realm of regulation into the realm of government participation in the markets. This has led to the ultimate manifestation of the moral hazard problem (public risk, private gain); enormous leviathans that dominated the market; and an expansion of scope well beyond their original charter into risky assets.
Government should set the rules of the road and actively enforce them. (And I agree with Aztec's point that the CDS market should be regulated...probably like the insurance industry.) But that's it. Government should not become an active market participant that distorts competition through unfair advantages like below-market borrowing costs, guaranteed debt, and weak oversight. Fannie and Freddie's size and market power today would make them subject to anti-trust laws if they weren't already government entities with powerful lobbies. And all of this to what end, exactly? Increasing home ownership in America to include people who cannot afford to buy homes? Bad governmental policy + poor implementation = disastrous results not just for America, but for the global financial system. I wonder how Chris Dodd and his ilk can sleep at night.
Essentially, the GSEs are off-balance sheet financing for the federal government. The only good explanation is that they were set up that way to hide debt obligations from creditors and the American public. It's not a stretch to say that such an approach is Enron-esque. Now that they are in conservatorship, the government should break them up, sell off the parts to private investors, and get out of the mortgage business once and for all.