It neglects investment banks, hedge funds and institutions like mortgage companies that issue asset-backed securities.
The borrowers, companies that issue asset-backed commercial paper, have found it highly profitable.
The entities then issue asset-backed securities to investors and provide businesses with access to new capital, often at a lower cost than is available elsewhere.
On Monday, Coventree, a Canadian financial services company, said it could no longer issue asset-backed commercial paper because of a liquidity squeeze.
Another rule, which will most likely take effect early next year, requires banks and other financial firms that issue asset-backed securities to review the quality of the underlying assets, including commercial real estate.
Problems stemming from the inability to issue asset-backed commercial paper — from higher funding costs to the prospect of a major logjam that could derail the banking system — have only added to the list of woes.
Hedge funds live on leverage, often borrowing 10 times their equity, 20 times when they issue asset-backed commercial paper to finance subprime-related securities.
It could do this by issuing asset-backed green bonds, for example, to improve Britain's energy efficiency or build offshore wind farms.
KKR Financial raises money by issuing asset-backed commercial paper — a claim that's sort of like a short-term C.D., used by large investors to temporarily park funds — and invests most of this money in longer-term assets.
JPMorgan and Bank of America had prevented Sallie Mae from issuing asset-backed securities in September, amid the credit crunch, until Sallie Mae agreed not to use the fact in its litigation.
For many companies, the natural capital approach is a risk management strategy - a way to identify high-impact environmental issues, assets and regions - to communicate this risk in the language of business: dollars and cents.
