MONTREAL (Reuters) - The liquidity crisis in Canada's seized-up market for nonbank asset-backed commercial paper may weigh on the country's financial markets for some time as key players try to sort out the mess.

The C$33 billion ($33 billion) ABCP market has been frozen since mid-August as a blue chip group of investors and banks tries to craft a workout under a standstill pact dubbed the Montreal Accord.

Hoping to avoid a wholesale liquidation of ABCP assets, Banks and corporate holders have already taken some C$1.2 billion in writedowns on the opaquely structured paper that is backed by bundles of mortgage, credit-card and other payments.

Stephen Jarislowsky, the octogenarian billionaire and pre-eminent Canadian investment counselor, steered clear of ABCP. He left it, rather, to the market "alligators" to gobble up what was supposed to be triple-A short-term investment.

"It's all part of the greed and performance measurement syndrome in this country," Jarislowsky told Reuters.

"They thought that it was perfect, solid, sound paper, but how they cane to that conclusion I will never understand."

Jarislowsky said investors relied too heavily on debt rating agencies rather than doing their own investigation into exactly what had been bundled into the complex ABCP products being shopped around.

Analysts figure more writedowns may land with a thud in already jittery markets before and after the December 14 deadline for the Montreal Accord workout, especially once the lawsuits start flying.