Treasury, Bankers Planning 'Master Conduit'

Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co., and other financial institutions have been working with the U.S. Treasury on a plan they believe may help mitigate the global credit crunch sparked by U.S. mortgage woes.The companies say they plan to create a single "master liquidity enhancement conduit" within the next 90 days that will agree, for a set period of time, to purchase "qualifying highly rated assets" from certain existing structured investment vehicles that choose to tap the new liquidity source. This may restore some liquidity by helping SIVs -- which borrow short-term and invest long-term -- refinance their asset-backed commercial paper borrowings. ABCP rollovers have been difficult during the credit crunch because many market participants have considered the trading value of mortgages and other assets to be uncertain, even if they have had strong credit.