Auction Design Critical for Rescue Plan
The Treasury proposes to invest $700 billion in mortgage-related securities to resolve the financial crisis, using market mechanisms such as reverse auctions to determine prices. A well-designed auction process can indeed be an effective tool for acquiring distressed assets at minimum cost to the taxpayer. However, a simplistic process could lead to higher cost and fewer securities purchased. It is critical for the auction process to be designed carefully.
|Date of creation:||2008|
|Date of revision:||2008|
|Publication status:||Published in The Economists' Voice, 5:5, www.bepress.com/ev/vol5/iss5/art5, September 2008|
|Contact details of provider:|| Postal: Economics Department, University of Maryland, College Park, MD 20742-7211|
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