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.

A massive intervention would focus on all three aspects and would be quite difficult to implement. But an intervention by the Fed, limited to parts b & c of the subprime mess, would, in effect, nullify the impact of 'a' on the markets.