Steven Pearlstein of the Washington Post is good this morning (on a very tight deadline) on the unimpressiveness of both presidential candidates in the debate last night. Nobody’s rising to the historic occasion here.

At least McCain pivoted somewhat in saying he would be aggressive in buying up and redoing mortgages for homeowners unable to afford their payments, something that would help put a bottom under prices that are nowhere close to turning around. Until they do, there’s no end in sight for this crisis.

Yet both candidates were milquetoast and largely non-specific about what they’d do and how bad this is.

… failing to show sufficient urgency about the problem and familiarity with its scope and details can undermine the confidence that people have in the leaders at the helm. It’s one thing to tell people they have nothing to fear but fear itself — but that works best once you’ve also declared a bank holiday, announced a program to recapitalize the banking system, and promised to provide sufficient cash to state and local governments to help them maintain vital services.

Daniel Gross of Newsweek goes off on those propagating the smokescreen that Fannie Mae, Freddie Mac, and the Community Reinvestment Act of 1977 caused the bust. (hat tip Barry Ritholtz)

Look. There was a culture of stupid, reckless lending, of which Fannie Mae and Freddie Mac and the subprime lenders were an integral part. But the dumb lending virus originated in Greenwich, Ct., midtown Manhattan, and Southern California, not Eastchester, Brownsville, and Washington. Investment banks created a demand for subprime loans because they saw it as a new asset class that they could dominate. They made subprime loans for the same reason they made other loans: They could get paid for making the loans, for turning them into securities, and for trading them—frequently using borrowed capital.

At Monday’s hearing, Republican Rep. John Mica of Florida gamely tried to pin Lehman’s demise on Fannie and Freddie. After comparing Lehman’s small political contributions to Fannie and Freddie’s much larger ones, Mica asked Fuld what role Fannie and Freddie’s failure played in Lehman’s demise. Fuld’s response: “de minimis.”

Bloomberg has an interesting story about how the worst subprime wreckage neatly tracks geographically that of the S&L debacle twenty years ago. One exception:

Texas, where failed thrifts in the Dallas and Houston areas had assets of more than $45 billion in the 1980s and 1990s, has largely sidestepped the subprime crisis by learning a lesson from the S&L scandal and ratcheting up regulation.

The Journal frames the big story of the day—government entering the commercial-paper market—better than anybody else: “Fed Will Lend Directly to Fed to Lend Directly to Companies for First Time Since Great Depression”.

Martin Wolf of the FT hits the panic button and offers prescriptions for resolving the crisis:

The finance ministers and central bank chiefs of the Group of Seven leading high-income countries will soon convene in Washington. For once, these are the right people. They must travel with one task in mind: restoring confidence. History will judge their success. These people may go down as the authors of another great depression. It is a destiny they must now avoid, for all our sakes.

The bad-debt loss estimates continue to soar. The IMF now says junk U.S. assets will cost $1.4 trillion. The bad news (as if that wasn’t bad enough)? Banks have only written down about half that amount so far.

The Journal reports that one in six home loans is now “underwater”—the note is more than the home’s value as prices plunge. That’s a negative feedback loop that will continue to exacerbate the crisis. Of course, it’s worst in places like Las Vegas, where 56 percent of homeowners now have now equity in their homes.

The paper also says one in eleven mortgages were at least one month late on payments in the third quarter.

On the economic fallout watch, the WSJ says exports, which have helped prop up the economy, are slowing sharply, as the world economy hits the downturn.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.