3 The runs on ABCP also put considerable pressure on the banking system because of the liquidity backstops that banks had provided to the vehicles. 4 Some of the guarantors also insured mortgage-backed securities, and when doubts arose about the ability of the guarantors to pay claims on mortgage-backed securities, the credibility of their guarantees of municipal securities was also reduced.
I think that is an important part of the explanation for why the IMF found it so difficult to respond to the Asian crisis, and why its critics contend so vigorously that the IMF “got it wrong” in Asia. In essence, the Fund was confronted with a set of problems that were, in many respects, new and unfamiliar.