Auction Rate Bonds have been marketed by Wall Street as a safe and liquid alternative to cash. They were not. Last February these auctions started to fail. Investors couldn’t get their money when they needed it.
In the last few days, UBS Citigroup and Merrill Lynch agreed to buy back about thirty seven billion dollars. The trouble is that the amount of shares outstanding in the market as a whole is about 330 billion.
The Auction Rate Bond Industry is further proof that financial deregulation leads to corruption. For a free market system to function, the market has to be regulated. Read about the situation here , here , here here and here.
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