The banks have been backstopping the market for auction rate securities since sometime late last year. Before then, according to DealBreaker commenters 1-2, 80-90% of these auctions would have failed without the underwriter taking on their unsold inventory. But the people on the ARS desks not only didn't tell the investors that demand had collapsed, they often didn't tell their firm's own investment professionals. As recently as two weeks ago, the ARS desk at one bank was reassuring wealth managers that the ARS market was fine.

Will anyone trust this market again? Or are the ARS done forever?