As the financial crisis threatens to spiral out of control, it’s more likely Treasury Secretary Henry Paulson will take extraordinary steps through the extensive authority granted to him under emergency rescue legislation, say analysts.

“I don't wish to spread alarm on the line people but the big issue confronting the market is I'm afraid the health and sustainability of Morgan Stanley and Goldman Sachs," Hugh Hendry, Partner and CIO at Eclectica, told CNBC. "It is unimaginable that they can be allowed to go, I suspect that they will be nationalized at some point today or over the weekend," he add.