The administration has told us that American financial markets are in a perilous state because of recent and prospective losses of financial institutions that threaten the adequacy of their capital1 and because of the illiquidity and presumed market underpricing of Mortgage Backed Securities. Both of these have increased banks' demand for liquidity and tightened bank lending standards. A credit crunch, which would worsen an economic slow down, could result if markets for normally liquid assets such as MBSs and bank capital are not restored.