Explaining the decline in the auction rate securities market

D'Silva, Adrian; Gregg, Haley; Marshall, David
November 2008
Chicago Fed Letter;Nov2008, Issue 256, p1
Trade Publication
The article provides an overview of auction rate securities (ARSs) as well as examines the collapse of this market and its effects starting in February 2008. ARSs are long-term securities, but with time-varying interest rates which are reset periodically at fixed intervals through an auction process. The collapse of ARS market has made a great impact on the U.S. financial crisis and has affected all arrangements which funded several long-term investments with short-duration liabilities.


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