Auction-rate securities (ARS) as Roach Motels - You can check in but never leave

Al Lewis of The Denver Post has a nice blog post on auction-rate securities (ARS) entitled "Roach Motel of investing." He tells the stories of a couple of investors:

... a TD Ameritrade employee told him the money market wasn't paying well so why not invest in auction-rate securities?

That seems to be a common theme for how customers get sucked in: "the money market wasn't paying well."

Al continues:

"I called the bond desk at TD Ameritrade," Cohen said, "and the guy there said, 'You can get in, but I'm not quite sure you can get out.' I said, 'What do you mean I can't out?' He said: 'Yeah, you can't get out. There are no more auctions. The auctions failed.' "

Who would have believed that Wall Street could sink this low?

-- Jack Krupansky