Up pops those pesky Auction Rate Securities. You remember them. Financial institutions sold them to the wealthy as a place to park their money that was just like cash but yielded a bit more. Whoopsie. They weren’t like cash at all. Rather, they are long-term debt instruments that get turned over on a short-term basis. But when the credit markets froze up, institutions stopped buying them back.

That meant investors could no longer withdraw their money. Wealthy investors. Who called lawyers. Now attorney generals are getting involved.

According to Bloomberg, the auction rate securities market was worth $330 billion before its sudden collapse in February. If the stated goal of buying back securities at par with a penalty comes to pass, it looks like the banking industry may be dealing with another large writedown.

Looks like cheerleader Jim Cramer of TheStreet.com who has been going boo-yah, the bear market in financials is over, might have to eat his words.

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