The mortgage debacle has provided a lot of fodder for the presidential-campaign trail: bereft bankers, preying brokers, and sad, sad tales of hardworking families losing their homes. All the candidates have had something to say about the crisis, whether it’s Hillary Clinton's call for a freeze on foreclosures, Barack Obama's plan for extending the Federal Housing Administration's reach, or John McCain's vaguer comments that he might approve of government intervention. But there's another part of this mess—a scarier one—that the candidates aren't discussing.

It has to do with Fannie Mae, the quasi-governmental corporation that dominates the mortgage-backed-securities market. An odd company with a funny name doesn't exactly make for gripping campaign rhetoric. But there are a couple of things you should know about this one: First, with more than $800 billion in assets, Fannie Mae backs one out of five mortgages in the United States. And second, if it were to collapse, it would make the current housing woes seem minuscule. (Read more about the history of Fannie Mae.)

A collapse is highly unlikely, but it's no longer inconceivable. Even though Fannie Mae never dabbled much in subprime loans, its stock fell more than 40 percent last year as it took huge write-downs and slashed its dividend. Once seemingly immune from economic turbulence, Fannie Mae has been made vulnerable by the same housing typhoon that has buffeted other venerable institutions.

Fannie Mae, though, is a corporation that the next president of the United States can actually do something about. Five out of 18 Fannie board members are presidential appointees. A new president needs to have ideas to expand Fannie's authority, not only in the short run to help with the current housing mess but also to deal with the long-term implications of what a vulnerable Fannie means for taxpayers.

It's worth stepping back here and looking at Fannie Mae's controversial history. Fannie is what's known in Beltway parlance as a G.S.E., or government-sponsored enterprise, meaning that it's not fully in the private sector even though it's listed on the New York Stock Exchange and its website ends in a .com and not a .gov. All those companies with grandmotherly-sounding names like Fannie Mae and Freddie Mac are G.S.E.'s. Fannie Mae was created during the Depression to keep money flowing into the housing market. Originally, it was a government agency whose purpose was to buy mortgages from banks and, in so doing, provide money for them to make more loans. It packaged those mortgages into securities and sold them, just as it does today.

In 1968, Fannie Mae became a private corporation—but here's the rub—with government ties. Its charter was congressionally approved. Critics charge that while Fannie may have been a good idea in the '30s or even in the post-W.W. II years, it has outlived its usefulness and become like the Rural Electrification Administration, which lasted until 1994, long after it was hard to find a farmer without a television. These critics maintain that Fannie should be privatized like other companies that sell mortgage-backed securities.

As a G.S.E., Fannie Mae still has all kinds of privileges that other firms can only dream about. Under its charter, the company pays no state or local income taxes. It is exempt from registering its securities with the Securities and Exchange Commission, although it chose to do so voluntarily six years ago. Above all, it is perceived as having its solvency guaranteed by the federal government.

This is where things get tricky today. While Fannie Mae's charter specifically states that it is not backed by the federal government, the markets have long treated the company as though it were. That's in part because Fannie has special borrowing privileges with the Federal Reserve, but it's also because of the company's genesis as an arm of the government. And some believe that Fannie is too big to be allowed to fail. Daniel Mudd, Fannie Mae's C.E.O., has predicted further downturns for the housing market, but he maintains that the company can more than weather the storm. Maybe he's right, but in this turbulent climate, no one can be entirely sure.

So it's important for the next president to consider what the right road for Fannie Mae will be. I think it would be crazy to privatize the company or even tinker with Fannie's charter, which gives it all those special privileges—at least for now. The jumpy housing market needs a Xanax. This is not the moment for giving it more jitters, and rocking Fannie Mae would cause more trouble than it's worth. But at some point when we're past all of this, Congress should cut Fannie Mae loose. It's been done before. Sallie Mae, the student-loan bundler, was privatized in 2004.

Meanwhile, it makes sense to prepare for the unlikely eventuality of a Fannie Mae collapse. I don't think that will happen, but as Peter Wallison, a longtime conservative Fannie Mae critic, has pointed out, something needs to be done about the company's status if it goes all wobbly. It's bad enough that the government would be seen as Fannie Mae's savior. But because of its special status, Fannie Mae is not covered by normal bankruptcy laws, which means that in the event of financial disaster, the Office of Federal Housing Enterprise Oversight, or Ofheo, Fannie's little-known regulator in the Department of Housing and Urban Development, would most likely become its guarantor but not its receiver. The distinction, which would seem to be of interest only to the nerdiest of accountants, is important because, as Wallison points out, a guarantor does not have the same power to shut down a company's operations that a receiver does. That means that a reeling Fannie Mae could keep operating and chalking up even bigger losses, because failing financial enterprises have a tendency to make risky Hail Mary gambits when they're on the verge of collapse.

Legislation is pending that would give Ofheo the power of a receiver and allow it to shut down Fannie Mae in an orderly manner. It'd be good to move this along.

It may seem contradictory, but Fannie, in the meantime, should be given a bigger role in solving the mortgage mess. After an accounting scandal forced Mudd's predecessor, Franklin Raines, out, Ofheo slapped tougher capital restrictions on Fannie, meaning it had to keep more money on hand. So far, Ofheo has refused to budge on altering Fannie's capital requirements, but it should be persuaded to loosen up, at least a bit. If Fannie falls, it won't be the result of some tinkering at the edges, but something that devastates the housing market. In a wise move, the stimulus package passed by Congress back in February includes a provision to allow Fannie Mae to play in the market for jumbo mortgages—those for more than $419,000. In much of the country, of course, that's not enough for a mansion. That buys a condo. Now, thanks to the stimulus package, Fannie Mae can buy or guarantee single-family mortgages of up to $729,750.

The housing crisis managed to sneak up on a lot of smart people. Ask Citigroup's Chuck Prince, or Merrill Lynch's Stan O'Neal, or Ben Bernanke himself, for that matter. Daniel Mudd's smart too. He has wisely tempered Fannie from the days when it ostentatiously hired as many former government officials as it could to wield influence and preserve its special status. But Mudd could do a lot more by setting up a long-term plan to ease Fannie into becoming a normal corporation that no longer depends on a wink and a nod from Uncle Sam. If he doesn't, the next president really should.