Auction Rate Security - ARS

Most securities - we're talking debt investments like bonds - have a set interest rate. A 10-year bond might have a rate of, say, 3%. That rate is typically locked in at the time the security is issued, meaning the investor will continue to get 3% each year for the duration of the bond, no matter what happens to the interest rate markets.
Auction rate securities act differently. Instead of having interest rates permanently set, the rates are re-set through periodic auctions. When the auctions actually happened (yes, they stopped happening at one point, but more on that in a second), they took place at relatively short intervals - 7, 14, 28 or 35 days in most cases.
Auction rate securities were invented in the 1980s and things went well until the financial crisis of 2007 to 2008. By 2007, trouble in the financial markets led some auctions to fail due to lack of bidders. Eventually, the market collapsed altogether. By February 2008, ARS couldn't even find underwriters to conduct the auctions in the first place.
Eventually, federal and certain state authorities reached a deal to buy back some ARS in an effort to unfreeze the market. However, according to a report in Barron's, there were still $5 billion of the securities held by investors in 2015.