Yglesias sums it up

Matt Yglesias gets what for me might as well be the last word on the "New Narrative":

[I]t seems to me that the Republicans were right on the merits of this controversy and that [Democrats were] wrong. In fact, all before this crisis I generally agreed with the conservative view on the so-called “government-sponsored entities.” [And] I actually understand what that view was! The view was that the implied government guarantee to Fannie and Freddie might cause them to take unduly large risks, and that the very scale of those risks would mean that in the event of a crash we actually would need to bail them out despite the lack of explicit guarantee. Thus, the idea of limiting the size of the Fannie/Freddie portfolios. The point was that if the Fannie/Freddie portfolios could be kept small, then perhaps the GSEs wouldn’t be “too big to fail” and we could afford to avoid bailing them out. And if we did wind up needing to bail them out, we wouldn’t be on the hook for such an enormous amount of money.

These were sensible concerns and I hope that when we come through this current crisis we won’t repeat the mistakes that were made when Fannie and Freddie were privatized in the first place. That said, this has nothing to do with the current crisis in the financial system. In case you, Murray, John McCain, or the WSJ opinion section hasn’t noticed, it’s not as if we’ve managed to get away with not bailing out non-GSE firms. Instead, the magnitude of the crash has been so giant that we’re now partially nationalizing the entire banking system. Fannie and Freddie being somewhat smaller wouldn’t have changed anything. At all. Capping their portfolios was a good idea for avoiding a potential problem that, as it happens, wound up not being relevant because something much worse happened instead. It’s a red herring. You might as well blame the crisis on ethanol subsidies or sugar tariffs or the stupid structure we use to allocate airport runway space or any number of other things that happen to be bad policies but that fixing would in no sense have prevented the current crisis.

Pretty much sums it up. Sorry Republicans, Democrats didn't cause the financial crisis. I know you're all reading this and will immediately see the truth of my words.