Ha, that's a joke - are you aware that during and prior to the crisis, Fannie and Freddie were both PRIVATE companies? They traded on the stock market, as private companies do. The government eventually nationalized them (in 2009 I think) and completely destroyed their value on the stock market (I should know, I owned stock in the two during the crisis - they traded under FRE and FNM before they turned into junk stock).
The only respect in which Fannie and Freddie were public (prior to being nationalized) is that they were federally-backed. What happens when you have lenders backed by government dollars? They take in riskier loans and leverage the hell out of their credit line. In reality, it is much more complex than that though - there are many layers on which debt is traded. But the end message is that private companies should never be federally backed!
The only respect in which Fannie and Freddie were public (prior to being nationalized) is that they were federally-backed. What happens when you have lenders backed by government dollars? They take in riskier loans and leverage the hell out of their credit line. In reality, it is much more complex than that though - there are many layers on which debt is traded. But the end message is that private companies should never be federally backed!
http://en.wikipedia.org/wiki/Fannie_Mae http://en.wikipedia.org/wiki/Freddie_Mac
Freddie Mac and Fannie Mae were not the sole catalysts, but they were silos for toxic debt.