A lot of banks and private equity firms are thinking about ways to profit from the credit crunch. Some, such as KKR, already have plans to invest heavily in distressed debt. According to breakingvews.com, Goldman Sachs CEO Lloyd Blankfein is now mulling a plan that would create an investment vehicle to buy hard-sell loans that back sponsor deals. The firm would kick in some equity and bring on partners. It would then entice bond buyers with higher rates perhaps. While such a plan would create some losses initially, if the bonds rise in value, the funds and investors will fare well. You have to think that a lot of banks are thinking about similar moves to get them off the leveraged loan hook.  

For more:
- here's the breakingviews.com article