Imagine waking up one morning to discover your life savings have vanished. Your broker is on the phone telling you in a calm, almost indifferent voice that, like it or not, your "cash equivalent" investment, sold to you as ordinary cash, is now frozen, illiquid. Sorry, you can't get your hands on it.

What the trusted broker is careful not to tell you is that you've become part of the biggest alleged fraud in modern Wall Street history, the $336 billion auction-rate securities (ARS) scandal. He's not calling it fraud, of course. More like "temporary illiquidity."

The shock hits hard. When you finally catch your breath you come to a life-altering realization. Surprise! You're broke—or broke enough so that your life and your plans for the future have been significantly altered. But you can relax, it's only a temporary glitch, your broker says. Still, he can't or won't tell you when (or if) you'll ever get your cash back. But he's hopeful, sort of. And when hope runs out, he's evasive, defensive, or absent.

And as days pass into weeks, weeks into months, months into more than a year, you wake up to the grim reality that you're stuck in what Spencer Bachus, the Democratic congressman from Alabama, calls "a financial roach motel." You checked in to the auction-rate securities market believing your broker's reassuring line about "safety" and "liquidity," that auction-rate bonds are "better than Treasuries," and now you can't get out. You're stuck. Your money's illiquid and frozen ...

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