[ikka]

MY VIEW: If BS had failed, all of the "unknown value" CDOs/SIVs/etc. would have had to be auctioned off. Because of the fire-sale conditions it would sell for low amounts.

However, the prices would be public and therefore, *every other holder of this exotic paper* would have to assign a value to what they were holding. And then bump up their reserves to cover it.

[L,TOWM]

the prices would be public and therefore, *every other holder of this exotic paper* would have to assign a value to what they were holding. And then bump up their reserves to cover it

An extremely astute observation.

[NVDave]

You’re right.

Following that, the financial markets would have melted down. The credit markets would have frozen solid - for weeks.

The mark-to-market has to happen. The speed with which it has been happening already has caused severe credit market disruptions.

Forcing it yet faster would have finished vapor-locking the credit markets.

And then you would have seen the Fed do some even more extraordinary things.