At the height of the credit crisis last fall, the spread between the 3-month Treasury bill and the Asset-Backed Commercial Paper rate was about 225 bps. Now we are at 110 bps. For most of the 2000’s it’s been about 40-50 bps. Was risk being priced properly then? Is it being priced properly now?  I doubt it, so it’s impossible to guess what the right spread should be. Maybe it just depends upon the yield-chasing demand at the time. There has been improvement in the ABCP market, but remember that the subprime component is not 100% of the ABCP problem. We still have to deal with credit card and auto receivables. Keep your eye on the ABCP vs. 3-month Treasury spread.