By Pamela Lawrence
It wasn't until 1994, more than five years after the 1980s bubble burst, that the credit market fully recovered. It could take even longer this time.
Today's distressed market is like that of the late 1980s and early 1990s, albeit on a grander scale. During the 1980s, easy money led to the creation of the high-yield bond market and a real estate bubble. The banks and other financial institutions took excessive risk and purchased highly levered products. By the end of the decade, the real estate market collapsed, the credit bubble burst, and many banks had failed.
To stabilize the market, the government established the Resolution Trust Corporation in 1989 to buy many of the troubled assets from the banks. The 1980s also had its share of insider trading scandals, such as the ones that led...