From a Congressional Research Service report:

GSEs were not created for the purpose of expanding home ownership by lower- and middle-income members of the public. Rather, Congress established GSEs "to improve the efficiency of capital markets" and to overcome "statutory and other market imperfections which otherwise prevent funds from moving easily from suppliers of funds to areas of high loan demand..."

The economic rationale for GSEs is the belief that, without such government-sponsored institutions, a critical area of necessary debt financing would be underserved or served inefficiently.

Doug Ross writes:

In other words, the GSEs were yet another example of government thinking it could better engineer the debt market than Adam Smith's "invisible hand", the world of free enterprise.

It's a startlingly stupid proposition, when you stop and think about it, but then this is Congress we're talking about.

I couldn't have said it better. Read more here.