This was a no-brainer. Bush or McCain should have been promoting this idea two weeks ago
I'm not sure I agree. Liquidity is the main problem right now; this would tend to take capital away from institutions and could exacerbate the problem. Also, 401k's are for retirement and should be left that way if at all possible.
People are not starving in the street; unemployment is not that great.
If the accounts are used to pay down mortgage dept or buy up foreclosures only, then loosening up these 401ks would improve the liquidity situation.
Most people have more tied up in their primary residence than their retirement account anyway - my order of priority is maintaining my mortgage first.