Alas, such contamination was a much bigger problem for the shadowy vehicles that issued asset-backed securities before the crisis.Another concern is any disparity between the time scale of a financial institution's borrowing and lending (called a maturity mismatch if you think it is worrying and maturity transformation if you think it is helpful).
It neglects investment banks, hedge funds and institutions like mortgage companies that issue asset-backed securities.
It could do this by issuing asset-backed green bonds, for example, to improve Britain's energy efficiency or build offshore wind farms.
On Monday, Coventree, a Canadian financial services company, said it could no longer issue asset-backed commercial paper because of a liquidity squeeze.
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.
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.
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.
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.
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.
Mr. Strauss-Kahn said that while the fund might be called upon to provide a globally issued reserve asset some day, "that day has not yet come".
By the time the last bonds were issued, those assets would exceed more than $200 trillion in today's dollars.
