As the Bush administration attempted to dismiss speculation on Friday that the US government might have to nationalise Fannie Mae and Freddie Mac, talks continued behind the scenes about what contingency plans might be necessary if the two mortgage financiers continued to deteriorate.

Fannie and Freddie’s share prices have plunged by 47 and 50.1 per cent this week amid fears that they are poorly capitalised and any government-led rescue plan would leave little, if any, value for share-holders.