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ENDNOTES

  1. See Braverman (1997) for additional discussion.
  2. See Hahn (1993) for further discussion on the role of dealers in the commercial paper market.
  3. See Carty and Lieberman (1995).
  4. Of course, this portfolio shift is not due solely to the rise of the commercial paper market. Over the past decade, banks have become increasingly interested in holding mortgage loans for a number of reasons, including the decline of the thrift industry.
  5. See Vaughan (1996).
  6. The difference between a standby letter of credit and a bank line of credit is that the standby letter protects the commercial paper holder against default by the issuer, whereas the line of credit protects the issuing firm against market-wide conditions that would prevent a rollover. For more details on standby letters of credit, see Koppenhaver (1992).
  7. See Post (1992) and Kavanagh and others (1992).
  8. See Calomiris (1994) for further detail on the Penn Central default and the Federal Reserve's response to it.
  9. Regulation Q imposed interest rate ceilings on certain types of bank deposits.
  10. "Sub-prime" generally refers to loans made to borrowers with very poor credit histories.

REFERENCES

Braverman, Melissa. "Trends in the Region: States Increasingly Turn to Flexible Commercial Paper Deals," The Bond Buyer (March 24, 1997), p. 28.

Calomiris, Charles W. "Is the Dis-count Window Necessary? A Penn Central Perspective," Review, Federal Reserve Bank of St. Louis (May/June 1994), pp. 31-55.

Carty, Lea V., and Dana Lieberman. "Commercial Paper Defaults and Rating Transitions, 1972-1995," Moody's Investors Service (December 1995).

Hahn, Thomas K. "Commercial Paper," in Instruments of the Money Market (Seventh Edition), Timothy Q. Cook and Robert K. LaRoche, ed. Federal Reserve Bank of Richmond (1993).

Kavanagh, Barbara, Thomas R. Boemio, and Gerald A. Edwards, Jr. "Asset-Backed Commercial Paper Programs," Federal Reserve Bulletin (February 1992), pp. 107-16.

Koppenhaver, George D. "Standby Letters of Credit," in Bank Management and Regulation: A Book of Readings, Anthony Saunders, Gregory F. Udell and Lawrence J. White, ed., (1992) pp. 136-46.

Post, Mitchell A. "The Evolution of the U.S. Commercial Paper Market since 1980," Federal Reserve Bulletin (December 1992), pp. 879-91.

Vaughan, Mark D. "Bullish on Banking: Thriving in the Information Age," The Regional Economist, Federal Reserve Bank of St. Louis (January 1996), pp. 5-9.