Preserving Frannie Mae and Freddy Mac is among the most important challenges that face this country. These two huge mortgage organizations have been the mainstay of the American tradition that every family should, within its means, buy its own home with a reasonable down payment and a mortgage at a reasonable rate. That system must be restored, and delay makes things worse.

It has been temporarily wrecked by the housing market’s bubble and bust, by the greed of lenders, by the improvidence of borrowers, by poor management by both Fannie Mae and Freddie Mac and by a president and Congress that ignored risk and encouraged the delusion that home values would keep going up forever.

An administration that obsessively hates government regulation and prefers letting the supposedly free market settle all financial problems is slow to act. It seems also to be overly fearful that some interests will suffer, while the plain fact is that they are already suffering. The suspicion grows that it hopes to bumble along until a new president and Congress take office in January.

But shareholders in the two government-sponsored entities are jittery over their nearly worthless investments. And even holders of their debt worry about its security, despite implicit and frequently promised government backing. The agency bonds have long been considered gold plated, but holders are finding them somewhat shaky as collateral for loans. The credit system is crippled to the extent that these two huge, troubled entities have become about the only ultimate basis for new home mortgages.

What precisely to do is a job for financial experts, and they are in wide disagreement. They have seen us through bailouts in the past – the savings and loan crisis, Chrysler, Bear Stearns, New York City, and the collapse of the Long Term Capital Investment hedge fund. Injection of federal funds has sometimes been unnecessary, but this time it looks essential.

Shareholders probably will suffer further losses, and they should. Corporate democracy is mostly a fiction, but stockholders have the right and the responsibility to require the directors and management to run a corporation honestly and soundly. They have forfeited any right to financial protection.

On the other hand, the debt holders – including banks and pension funds and foreign governments and private interests – deserve renewed confidence in the Mae and Mac bonds. Even if they didn’t deserve it, a collapse of confidence would jeopardize the entire world economy.

What is needed now is a continuing flow of cash into Fannie and Freddie to keep them going, plus new and stiff regulation to correct their performance and rein in speculation and manipulation of the markets.

If strong leadership takes over (one longs for a Franklin D. Roosevelt or a J.P. Morgan), it should tell us clearly in advance how the reconstruction will be paid for and what it is going to cost the taxpayers.