As it failed to meet financial goals Prime ran into the classic problem of a highly leveraged company: there was little room for error without default on obligations.

Geithner responded that prioritizing debt would require "cutting roughly 40 percent of all government payments", which could only be achieved by "selectively defaulting on obligations previously approved by Congress".

If questions on the legality of many - or even some - of these instruments stick, commercial and investment banks fear that investors might default on obligations or even sue the banks for issuing illegal contracts.