ABSTRACT
During the 1970s and 1980s, banks became increasingly involved in selling various contingent commitments (such as note issuance facilities) which guaranteed support to an issuer of notes, if the notes were not all purchased in the market. While these added to the profitability of banks, regulators became concerned that the risks involved in these commitments were often poorly understood, underpriced and (because they were not reflected in balance sheets) not subject to traditional forms of regulation.
