A Very Model of a Modern Major Funding Vehicle

The full-court press from Congress and the Bush Administration will likely yield some form of banking bailout. Whether higher levels of deposit insurance are the key to unlocking a $700 billion treasure chest will be determined later today in the U.S. Senate.

I’ll put the cart a little before the horse and begin to look forward.

Let’s say TARP lives and $700 billion unfreezes the credit markets. Do those markets return to pre-2007 levels and standards? Will the asset-backed securitization, collateralized debt obligation, and credit-default swap still rule the day? Or will there be some new innovations that will act as the main providers of liquidity to the credit markets?

I have my thoughts, but want to hear your comments first. Please let me know what you think.