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When Safe Proved Risky:Commercial Paper During the Financial Crisis of 2007-2009
- redis_mlc 5y agoAs a reader of the financial press since the 1970s, I never "got" commercial paper. Everybody just assumed it was as safe as a govt. bond. Yeah it had slightly higher rates, but wasn't backed by anything. Then 2008 happened. One of the ugliest stories was that a family sold a US port for $1 billion just before then, and specified to their advisors to put the proceeds in safe instruments. Commercial paper was used, which then seized up for years. In fact, disclosure laws were weakened for it, which explains why you don't hear much about the risks: https://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=2013&context=facpub https://www.repository.law.indiana.edu/cgi/viewcontent.cgi?a...
- linksnapzz 5y agoThis was brought to fore when GE Capital imploded; the book on Jeff Immelt's tenure as GE CEO ("Lights Out" I think it was?) has a great rundown on what it means for a large company to not be able to borrow w/ commercial paper...