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The class C addresses used 24 bits for the network identifier and only 8 bits for the computer identifier Class C addresses have a first byte with a value in the range 192 223 (the first three bits are 110-binary) While there were a couple of million such network addresses possible, each of these networks could have at most 254 machines (the machine addresses 0 and 255 are reserved for things like broadcast messages on the network) Network addresses were allocated by a central Internet authority (which eventually became ICANN Internet Corporation for Assigned Names and Numbers) Once an organization had a network address, it was responsible for allocating individual machine addresses within its address space A two-level system of network and machine identifiers was never very practical Administering the records of the (60 000+) machines in a Class B network would be quite onerous.

7 VV Chari, Lawrence Christiano, and Patrick J Kehoe, Facts and Myths about the Financial Crisis of 2008 Federal Reserve Bank of Minneapolis Research Department, October 2008, Fig 2A 8 David Enrich and Dan Fitzpatrick, Loans Shrink as Fear Lingers Wall Street Journal, July 27, 2009, p A1 9 Ethan Cohen-Cole, Ethan, Burcu Duygan-Bump, Jose Fillat, and Judit Montoriol-Garriga, Looking behind the aggregates: A reply to Facts and Myths about the Financial Crisis of 2008 Federal Reserve Bank of Boston Quantitative Analysis Unit, November 12, 2008, p 3 10 Ibid, Figure 1A 11 Sudeep Reddy, Homeowner Re nance in Droves Unseen Since 03 April 23, 2009, p A4 12 Saskia Scholtes and Chrystia Freeland, Re nancing Offers Prospects of $18bn Savings for Homeowners Financial Times, May 4, 2009, p1 13 Federal Reserve Press Release, Treasury and Federal Reserve announce launch of Term Asset-Backed Securities Loan Facility (TALF).

Further there were typically complicating factors An organization might employ multiple technologies Ethernets, Token Rings or proprietary systems (many of these LAN systems are limited in the number of machines on a particular physical network), or might have its machines distributed over many sites These complications meant that it was best to break up the address space further Machine addresses could be administered separately for different physical networks within the organization Data routing could be made more efficient if the IP routers could take cognizance of different subsets of IP addresses being in different physical networks and relay data only as needed For these reasons, it became common to sub-net a class A, B or even C network Sub-netting is an internal responsibility of the organization It is achieved by changing how the company s own routers and switches interpret the private machine address part of an IP address.

March 3, 2009 14 Liz Rappaport, TALF is Reworked After Investors Balk Wall Street Journal, March 14 15, 2009, p B4 15 Federal Reserve Bank of New York, Term Asset-Backed Loan Facility: Frequently Asked Questions wwwnewyorkfedorg/markets/talf_faqhtml 16 The Fed now permits legacy CMBS, issued before January 1, 2009, to be legible collateral under the TALF program CMBS stands for Commercial Mortgage-backed Securities Federal Reserve Press Release, May 19, 2009 17 Edmund Andrews, Lender s Role for Fed Makes Some Uneasy New York Times, June 13, 2009, p A1 18 Anusha Shrivastava, Investors Back Away From Fed s TALF Wall Street Journal, April, 2009, p C8 19 Big Government Fights Back Economist, January 31, 2009, p 80 20 US Department of the Treasury, Legacy Loans Program: Summary of Terms March 23, 2009 wwwtreasgov/press/releases/reports/legacy_loans_termspdf US.

The 24, 16 or 8 bits of address space again get broken up, this time into a sub-net address and a machine address defined relative to its sub-net Sub-netting is achieved by the routers using different masks to select bits from an IP address For example, a standard class B address is composed of 16 bits of network address and 16 bits of machine address The network part can be identified by an AND operation between the address and the bit pattern 25525500:.

Treasury Department Press Release, Treasury Provides Updated Guidance on Legacy Securities Public-Private Investment Program April 6, 2009 21 James Keller, How Not to Price Toxic Bonds Barron s, April 6, 2009, p 41 22 Scott Lanman and Craig Torres, Fed Struggling to Win Over Investors Wary of Sharks in TALF Bloombergcom April 3, 2009 23 FASB Issues Final Staff Positions to Improve Guidance and Disclosures on Fair Value Measurements and Impairments April 9, 2009 at wwwfasborg/news/nr040909shtml) In fact, the FDIC put on hold its legacy loan program during June of 2009 24 For the purpose of illustration, 70 percent is used as a hypothetical percentage In practice, this percentage could also be 80 percent or 60 percent 25 Eugene A Ludwig, Thumbs Up for the Citigroup Bailout Wall Street Journal, November 25, 2008, p A13 26.

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