These weaknesses were particularly evident with respect to managing risks from exposures related to collateralized debt obligations, offbalance-sheet conduits that issued asset-backed commercial paper, and leveraged loan syndications.
The combination of unanticipated losses, which reduced capital, and severe liquidity pressures has significantly reduced the ability and willingness of some large financial institutions to extend fresh credit or to make markets, with adverse effects for the broader markets and for the economy.