It already has dried up. The bet right now is to hold onto your stuff if you can’t sell it to a rube at a profit or an acceptable loss, and use every bit of cash you can get your mitts on to meet capital requirements.
I just posted on another thread that the liquidity issue is now becoming front and center as a consequence of the asset quality issue.
But Fannie and Freddy are not going to be doing anything about the fractionalized mortgages already out there; heck, they sold these people complete mortgages. It is not their mandate to create liquidity for the Asset Backed Debt market — it is their mandate to keep themselves liquid so they can keep buying mortgage loans.
What this guy is talking is basically turning Uncle Sugar into a mortgage lender and asset backed debt issuer. Not gonna happen, unless and until we go completely communist.