Leveraging is a big gamble at the best of times. When you factor in the astronomical sums, the borrowed capital and top that off with a credit crunch, what you end up with is hedge funds with billions of dollars' worth of unmet margin calls. To make it simple, I'll explain Carlyle Capital's problems with margin calls in plain english.

Should the Fed directly start lending directly to mortgage REIT investors and reduce their load by taking the mortgage-backed securities off their hands? If this does happen, it will, in one stroke, wipe out the impact of subprime mess, which has three parts - a) Home owners facing foreclosure, b) Investors holding tainted mortgage-backed securities, and c) A credit crunch.