The fast-growing financial crisis in the U.S. continues to surprise even the savviest investors and members of the federal government. This week headlined sinking stocks, anxious investors, frazzled credit markets, and the stunning collapse of the nation’s fifth largest global investment bank – Bear Stearns. In such uncertain economic conditions, there are plenty of issues that remain on the backburner as the Fed, Congress, and Wall Street kick into damage control mode to mitigate the impact on the overall economy. The question that remains: how long will it take for the backburner issues to boil up and spill over into next week’s headlines? That is a question that some members of Congress do not want to wait to find out the answer to.

House Financial Services Committee Chairman Barney Frank (D-Mass.) and Senate Banking, Housing and Urban Affairs Committee Chairman Chris Dodd (D-Conn.) are floating a housing-market proposal around the halls of Congress trying to mount support following the Feds bailout of Bear Stearns. The proposal would allow the federal government to guarantee home mortgages after lenders have voluntarily marked them down. The logic behind the proposal is that a Federal Home Administration (FHA) guarantee will provide enough incentive for lenders to proactively work with borrowers looking to avoid foreclosures.

The Frank-Dodd proposal has become a source of anxiety for some members of Congress who believe the proposal is over reaching and that government-funded bailouts should not be the solution. One of the opponents to the Frank-Dodd proposal is Sen. Johnny Isakson (R-Ga.) a major player in the real estate business for over 33 years.

Stated Isakson, “What we need to do is incentivize the market to get us out of this problem.”

Isakon’s concerns are echoed by many individuals both on and off the hill given the large scale impact that the proposal could potentially have. While the proposal limits the program to homeowner-occupied primary residences with loans that fall within FHA-conforming loan limits, it would not have any strict income limits. It is estimated that the proposal would authorize the FHA to make up to $300 billion in new guarantees which would impact between 1 million and 2 million homeowners.

While nothing has formally been introduced on the floor it is expected that the proposal will surface when Congress returns from its recess. The House has already indicated that it intends to hold hearings on Frank’s proposal as early as April 9 with hopes that it would move to the floor by May. The Senate has not announced any specific dates regarding tackling the housing markets, but Senate Majority Leader Harry Reid (D-Nev.) has indicated that upon returning from recess, a housing package from earlier in the year will be brought to the floor again, and some speculate that a mortgage-guarantee program will be attached.

Small-business owners across the country will keep a vigilant eye on how the story progresses, particularly given that an estimated 18 percent take out a second mortgage on their homes to finance their business. This is one step in many that the Feds will have to take in helping the country tackle the current credit crunch, which has limited the capital available to America’s small-business community further fueling the flames of economic stagnation.