We’ve heard from practically everyone that’s not within the class of consumer ABS and SBA loans. We have heard from the commercial real estate people and from the auto dealers about their floor plan loans; we have heard from the banks that would like to get the motorcycles ...

I think the conduits were more important in some asset classes than others. In credit cards, for example, the conduits were pretty important. But even there they were important in recent years. I think they were important in recent years because spreads kept on coming down and down and deterred ...

I think it comes back to the point that Bill made earlier. If you’re a hedge fund, even LIBOR plus 500 is still not a rich enough return to that hedge fund unless you can borrow against those securities and leverage it up into a higher return. And until ...

No.

Well, that’s the fundamental problem. Again, some of them were these classes of investors, who are no longer around. Even if they were around, I don’t think we’d want them around—the SIV and securities lenders et cetera. But then you have the pension funds, the insurance ...

Even of those who are saying that today they’re having trouble not only placing the AAA but also placing the other tranches, a number say that, if you could start pricing the AAA tranche, that would make placing the others a lot easier. Basically you’d be determining how ...

But we could accelerate that process by raising the minimum rate at which we would lend and so make it a higher spread above LIBOR. If we are going to do it through an auction—there are still some questions about how to allocate the credit within this program—and ...

The lenders, I think he was saying. Some of the buyers vanished in the sense that they were SIVs or a lot of them were actually securities lenders who were reinvesting their cash collateral in this, and they have learned a lesson about doing that.

No, I don’t think so. Again, I think the message, as Bill is saying, from the investors and the issuers was that a three-year term would greatly enhance the chances of success. Indeed, I think our friends in the Treasury Department, at least in the case of government-guaranteed loans ...

The repos are exempt from the automatic stay provisions of the bankruptcy code. But if Lehman had gone into SIPA liquidation, they could have been subject to a SIPA stay.

Well, the other big category that we have been able to identify of entities that are providing tri-party financing is the custodian banks that act as agents for securities lenders. When someone lends out securities, they often take in cash collateral. Then they want to reinvest that collateral, and the ...

I have in front of me data from Bank of New York, which facilitates about two-thirds of the repos. At Bank of New York, 18 percent of the collateral is debt that’s settled through DTC—so that would be non-government, non-agency debt—and another 6 percent is equity. So ...

I can’t answer that, but that’s a good question. I mean, the basic problem here is that you have a tremendous demand for investments that have essentially the characteristics of Treasury bills, but the supply of Treasury bills isn’t nearly as large as that demand coming from ...

Thanks. I’m just going to go over the last few pages of the handout you have, pages 13 through 15. Page 13 is just a table reminding you who the primary dealers are and providing some basic information about their size, borrowing activity, and regulatory status. As you probably ...

Well, partly what I would say, in general, about the pricing of risk is that many, many people, including people in the Federal Reserve, were concerned about how narrow spreads were, were concerned about some of the slippage of practices, and were predicting that trouble lay ahead. But—and I ...

Right. Well, particularly with respect to developments in the last month or two, obviously the economic outlook is cloudier. As you know, I don’t think we try to reflect that fully in the capital ratios, and there is an element of stress testing and whatnot, but your other important ...

Yes. They reflect the developments in terms of the changes in their financial statements during the fourth quarter until the year-end.

Yes.

I think that was the rating at origination.

Mike is going to address that in his briefing. I guess I’d prefer to delay and just simply say that I think we can point to aspects of their methodology that look fairly weak so that it wasn’t simply an ex post result but one that should have ...

Thank you, Mr. Chairman. The first exhibit provides some background on efforts to analyze the policy issues raised by recent financial developments and an overview of today’s briefing. As indicated in the top panel, in response to a request from the G-7, at its meeting last September the Financial ...