Well, I went to Crisis meeting in Boston Fed. Just a few pointers.

1. Nobody has a clue. Feldstein put forward plausible proposal that is based on simple assumptions that mortgages are non-recourse loans. But then Paul Willen said that it is true for only 8 states. And in CA it is true only for FIRST mortgage. So, actually changing recourse feature is kind of pointless. What seem to be needed instead is to get rid of fresh start in individual bankruptcies.  But what are chances of that happening?
2. Regulators are completely worked out. They are in firefighting mode. No idea about incentives or how they are going to restart markets after (if) feds are going to get out Freddie and friends. The simple idea of insuring MM funds without limits cause flight of large deposits from banks into MM funds.
3. The biggest risk in banking (and the reasons why banks are hoarding money) are unused credit lines that banks extended in good times. In many cases they do not have covenants written in.  Kind of modern bank run is associated with such behavior.
4. CP paper market is still dead, especially for maturities >30 days. See #3.
5. Banks are still able to raise capital, but they are slow.
6. all talks about debt for equity swaps are just talk. No scope there.

Depressing...