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Unpublished Paper
A Troubled Asset Reverse Auction
Working Paper, University of Maryland. (2008)
  • Peter Cramton, University of Maryland
  • Lawrence M. Ausubel, University of Maryland
Abstract

The US Treasury has proposed purchasing $700 billion of troubled assets to restore liquidity and solve the current financial crisis, using market mechanisms such as reverse auctions where appropriate. This paper presents a high-level design for a troubled asset reverse auction and discusses the auction design issues. We assume that the key objectives of the auction are to: 1) provide a quick and effective means to purchase troubled assets and increase liquidity; 2) protect the taxpayer by yielding a price for assets related to their value; and 3) offer a transparent rules-based process that minimizes discretion and favoritism. We propose a two-part approach.

Publication Date
September, 2008
Citation Information
Peter Cramton and Lawrence M. Ausubel. "A Troubled Asset Reverse Auction" Working Paper, University of Maryland. (2008)
Available at: http://works.bepress.com/cramton/9/