In a medium saucepan, heat milk until film forms over top. Add butter and stir until butter melts. Cool to lukewarm.
Beat together sugar, eggs, cinnamon, nutmeg and vanilla. Continue beating and gradually add milk mixture.
Place torn bread in a buttered 1 1/2 quart casserole dish. Sprinkle with raisins, if using. Pour milk mixture on top of bread. Bake at 350* for 50 minutes to one hour. Serve warm either plain or with whipped cream or caramel sauce.