The US Treasury, accompanied in some way by the Federal Reserve, is about to get into the debtor-in-possession, or DIP lending business in a big way. The debate over the auto industry bailout, conducted by Congress with the calm deliberation of a parent facing a teenager who has taken a credit card without permission, is just a preliminary round.

DIP lenders to bankrupt companies have special status and protections under the 1978 revisions to the US bankruptcy laws. As long as a bankruptcy judge finds there are sufficient unpledged assets available in the "estate", or the balance sheet of the bankrupt, then a post-bankruptcy lender can have a priority claim on them to support new lending that keeps the company operating. The idea is that going concerns are more likely to pay back other creditors and stakeholders than businesses that go into liquidation.