In the financial crisis that began in August 2007, securitization activity virtually dried up. When the housing bubble burst, the value of the collateral backing much of the asset-backed securities (ABS) declined sharply, and so did the value of the securities themselves. The Federal Reserve...

The current recession has deepened because of shrinking credit flows from banks, nonbank lenders and securities markets. This contrasts with the early 1990s, when new bonds and commercial paper cushioned a bank credit crunch, and with the high-tech investment bust of the early 2000s, when steady...