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WSJ "Conduits" and ABCP Primer Shows Money Funds' Risks Minimal. Today's Wall Street Journal contains an article entitled, "'Conduits' in Need of a Fix", which explains the workings of asset-backed securities (ABS) and asset-backed commercial paper (ABCP) structures and which discusses some large banks' role and exposure to the current market turmoil. The piece should ease money fund investors worries tremendously, because it discusses the prevalence of backup funding for ABCP. "Banks earn fees to set up and run the conduits. They also often agree to provide funding if a conduit can't resell its commercial paper when it matures, which is generally every 90 days." Of the $1.3 trillion in ABCP, "$1.1 trillion is backed by funding lines from banks says the article based on a Merrill Lynch estimate. (See also WSJ's "Short-Term Paper Goes on a Tear".
