[L,TOWM]

“Before the credit crisis is over [we] expect the federal mortgage agencies to be formally nationalised . . . The explicit commitment will be demanded by the market to forestall a full-scale panic.”

Panic all you want to, buddy. FNMA and FHLMC are not going to be integrated into the Federal Government. Wall Street makes too much $$$ on packaging the loans that fannie and freddy buy from the lenders and selling it to you.

The firms have the best of both worlds now and they will not give it up.

[taxcontrol]

Your statements hold true .... until the market for repackaged securities dries up. If Asia decides to no longer buy Fredicrap securities .... then Wall Street will join the bandwagon - to get their money that they have invested into the market back out.