It's long past time for the feds to ride to the rescue, says Angelo Mozilo, CEO of the beleaguered mortgage lender Countrywide. Speaking at a Milken Institute conference in Beverly Hills on Monday, Mozilo blasted government leaders for their failure, so far, to do anything meaningful to breathe life into the increasingly moribund housing sector.

From the Financial Times:

"In terms of tangible effort from the federal government ... there has been no program, no federal effort, no legislative assistance -- zero," he said.

He criticized the U.S. government's refusal to lift caps on the size of loans that can be bought by Fannie Mae and Freddie Mac, the government-sponsored entities created to promote affordable housing.

How the World Works can't resist pointing out that the feds are doing something -- the SEC is looking into whether there is any evidence of insider trading connected to Mozilo's $132 million worth of stock sales earlier this year. But that's probably not the attention Mozilo wants. His goal is to have the government make it easier for homeowners to buy expensive houses.

Right now, Fannie Mae and Freddie Mac are only allowed to guarantee loans up to a cap of $417,000. Democratic legislators, among whom the rabble-rousing Mozilo now apparently groups himself, have been agitating to raise that cap to around $650,000. Conservative economists and some Republican lawmakers, along with Fed chairman Ben Bernanke, oppose raising the cap.

Why? Here's the funniest part: Because they are afraid it would encourage reckless lending. To which one must ask, what in god's name do they think has been going on for the past decade?

A more fundamental philosophical problem relates to the issue of what constitutes affordable housing in an era when the median home price in California in August was $589,000. Mozilo says now, "Only the wealthy and privileged can afford to buy homes." But others argue that the problem is not whether Americans have enough access to loans enabling them to buy half-million-dollar homes, but whether those prices are fundamentally out of whack.

But maybe that's a problem that will fix itself. According to the Case-Shiller price index released Tuesday by Standard & Poor's, home prices fell a record 0.7 percent in August. They could have much further to go. A new report from Goldman-Sachs suggests that in California, homes are 35-40 percent overpriced. "Compared with past relationships between home prices and income growth," Goldman said, the median sales price of a home in California "should be around $375,000."

Which would put it nicely underneath the FHA loan cap. Want affordable housing? Just wait.