July 10 (Bloomberg) -- John McCain said the federal government can't allow the government-sponsored mortgage companies Fannie Mae and Freddie Mac to fail amid the worst housing slump since the Great Depression.

Fannie Mae and Freddie Mac ``are vital to Americans' ability to own their own homes,'' the presumptive Republican presidential nominee said in response to a reporter's question during a campaign stop at a diner in Livonia, Michigan. ``They will not fail; we cannot allow them to fail.''

Later, speaking to reporters in Belleville, Michigan, McCain said ``at this time I don't think there's a requirement for a government bailout.''

Concern has grown that Fannie Mae, the biggest provider of financing for U.S. home loans, and the smaller Freddie Mac won't have enough capital. Together, they own or guarantee about half the $12 trillion in home loans outstanding.

Jason Furman, the economic policy adviser for Democratic presidential candidate Barack Obama, accused President George W. Bush of ``willful neglect'' that ``compromised the nation's housing-finance system.''

``Obama believes Congress should act quickly to support homeowners facing foreclosure, limit the impact of the subprime- mortgage crisis on our economy and strengthen the financial position of American families,'' Furman said in a statement.

`Biggest Thing'

White House spokesman Tony Fratto said today that the ``biggest thing we can do'' to help Fannie Mae and Freddie Mac is to pass legislation now in Congress that boosts oversight of the two companies.

Fannie Mae tumbled as much as 24 percent and Freddie Mac slumped as much as 34 percent in New York Stock Exchange composite trading after UBS AG analysts said in a report today that Freddie Mac's decline creates ``challenges'' for the company's plan to raise $5.5 billion.

Former St. Louis Federal Reserve President William Poole said chances are increasing that a bailout may be needed.

``Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer,'' Poole, 71, who left the Fed in March, said in an interview yesterday.

McLean, Virginia-based Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules, Poole said. The fair value of Washington-based Fannie Mae's assets fell 66 percent to $12.2 billion, data provided by the Washington-based company show, and may be negative next quarter, he said.

To contact the reporter on this story: Hans Nichols in Detroit at hnichols2@bloomberg.net

Last Updated: July 10, 2008 14:45 EDT