Politics: Fannie, Freddie Fix May Not Come Quick

Frank also touted Fed Chairman Ben Bernanke's decision outlining new rules to ban subprime mortgages in the future -- something former Fed Chairman Alan Greenspan opposed.

The political landscape has been dominated for years by polarization with Congress accomplishing little, aside from passing bloated budgets. The presumptive presidential candidates represent change for their parties and are in a position to offer important leadership on the issue.

The presidential candidates haven't added much to the debate either. Neither Sen. John McCain (R., Ariz.) nor Sen. Barack Obama (D., Ill.) had much to say.

Obama's campaign released a statement Sunday:

The situation in our housing finance system is serious, and I am continuing to monitor developments closely. ... I believe that any actions taken with respect to Fannie Mae and Freddie Mac should be guided by two basic principles. First, we must maintain a steady flow of capital to the housing market to make sure that home ownership remains attainable and affordable for American families. Second, any measures should protect taxpayers and not bailout the shareholders and management of Fannie Mae and Freddie Mac.

Those mild statements won't reassure homeowners or shareholders of the two struggling mortgage giants.

McCain appeared Monday at the National Council of La Raza convention to woo Latino voters. He didn't comment on the Treasury plan in his appearance. His campaign press office had no statement for the press nor plans to issue one. McCain was also slow in suggesting a plan to deal with the housing crisis in the spring.

The lack of clear and concerted leadership in Washington is a problem. The destruction of wealth in the housing market and the subprime crisis has crushed the stock market.

Fannie Mae and Freddie Mac combined hold $5 trillion worth of mortgage liability, and they are bellwethers for other financial institutions. Both investors and home owners would fare better with action to resolve the housing crisis.

Listening to the politicians, they understand the stakes are high for both the economy and the upcoming election. Strangely enough, they still do little. This inaction on important issues has the president's approval rating in the 20% range, while Congress sinks closer to single digits.

The House must pass the housing bill next week and then work on reassuring the public on the viability of both Fannie Mae and Freddie Mac. Only then will markets be able to get back to creating value, instead of destroying it.