In 1995, Fannie was essentially private, and was working the way it had been working for decades. Before the aforementioned legislation, Fannie and Freddie actually worked rather well, and without federal dollars.
The problem was, though, they DID have the full weight of the government behind them, which gave them a SIGNIFICANT advantage, not to be found in any truly private company.
I would argue that it was a complete facade that they were private, with that guarantee.
When they began their push to get everyone a loan even if the criteria was to be able to “fog a mirror”, that was when things went ballistic. Because Fannie Mae would buy every loan in sight, no matter how flawed, and take the risk away from lenders where it should have been, it was Katie bar the door.