Don’t buy the OP’s premise.
Agree with some of the other commenters about this being like the pre-bubble era where we should see something closer to the “soft landing” predicted in 2004.

Easy way to fix this:
The benefit of hindsight is that the the mission of the GSE’s is more clear and risk easier to manage.
Now that we have seen the private secondary market collapse, it is much easier to argue that they DON’T need to compete with private MBS investors.