August 16, 2007 (LPAC)--Eight Canadian and international banks agreed today to a bailout scheme for issuers of asset backed commercial paper (ABCP), held by 17 firms holding over $27 billion dollars of this speculative paper which is rapidly collapsing in value. Apparently brokered under the initiative of Caisse de Depot et Placement du Quebec, a financial institution whose principle depositors are Canada's pension funds, the agreement includes ABN Amro, Deutsche Bank, Desjardins Group, HSBC, PSP Investments, Merrill Lynch & Co. and UBS AG. Also present was the Canadian rating agency DBRS, which has been issuing statements blaming the banks for the crisis, as they were refusing to honor their back up financing agreements with the ABCP operators.

According to Canada's NewsWire, the banks agreed to convert the short term third party asset backed commercial paper to floating rate notes that will not mature until the underlying financial assets do. A banking source told EIR, that this, at best, will only delay the inevitable.

For troubled Coventree Inc., a major player in the Canadian ABCP market, the agreement came none to soon as it was unable to find financing for $1.6 billion worth of ABCP since August 13th.