Sen. Hillary Rodham Clinton (D-N.Y.) called for a new government agency that could buy up mortgages and allow struggling homeowners to refinance them to avoid foreclosures.

Clinton, in an interview on CNBC Monday, said that she spoke to New York Federal Reserve President Timothy Geithner about the plan, which has also received support from Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee.

"I think it's imperative that we start considering such an entity like this," Clinton said. She said that giving the sole authority to manage the mortgages to the Treasury Department, which is what Treasury Secretary Henry Paulson has proposed in the government's $700 billion mortgage bailout plan, is not a "good long-term decision."

Clinton likened her proposed agency to the old Home Owners' Loan Corporation, a New Deal agency that allowed homeowners to refinance mortgages during the Great Depression.

"To be prepared, we should start working on the legislation now to try to get something like that up and going so that we can have one place in the government to do these mortgage modifications and try to replicate the success that we had 70 years ago," she said.

Clinton was also asked about the symbolism of lipstick in the presidential race. Republican veep nominee and Alaska Gov. Sarah Palin has referred to lipstick in her speeches, and an attendee at one of her campaign rallies toted around a large lipstick tube, ostensibly as a show of support for her.

"Well, you know, I want to keep my focus on the real challenges, issues and even crises we face as a country," said Clinton, a supporter of Barack Obama. "And, you know, being able to smile or laugh from time to time helps to break the seriousness of what we're dealing with."

Clinton added: "And, you know, I'm all for lipstick. I wear it myself. But at the end of the day, let's stabilize our financial markets, and I think the best people to do that are not the party that helped get us into the mess we're in right now. "