Banks aim to boost liquidity for foundering SIV sector

Bank of America, Citigroup and JP Morgan unveiled a plan last month aimed at restoring calm to the troubled structured investment vehicle (SIV) sector. The three banks plan to create a Master Liquidity Enhancement Conduit (MLEC), which will buy highly rated assets from SIVs struggling to refinace in the short-term money markets.

SIVs are term arbitrage vehicles that fund themselves by issuing short-dated asset-backed commercial paper (ABCP) and medium-term notes, and invest in longer-dated cr