In this TARP passage sentence, select the word that best completes the blank: “... the banks now find themselves ______ with loans made by them to an individual with negative net worth.”

Introduction / Context:
This question tests understanding of vocabulary in an economic and financial context. In the passage, the banks are described after they have made loans to an individual with negative net worth. The expression “find themselves ______ with loans” describes their burden or difficulty. The correct answer must be the verb or participle that best conveys the idea that the banks are burdened by problematic loans.

Given Data / Assumptions:

• The key part of the sentence reads: “the banks now find themselves ______ with loans made by them to an individual with negative net worth.”
• Options: saddled, baffled, puzzled, caught.
• The context is financial strain, not emotional confusion.
• We assume standard usage in economic commentary, where certain verbs are regularly used to describe financial burdens.

Concept / Approach:
In financial and economic writing, the phrase “saddled with debt” or “saddled with loans” is very common. It means being burdened or weighed down by heavy obligations. The other options primarily relate to confusion or surprise, which do not fit the sense of long-term liability. The approach is to match the collocation “find themselves ______ with loans” with the word that naturally forms a common and meaningful phrase in this domain.

Step-by-Step Solution:
Step 1: Understand the scenario. Banks gave loans to a person with negative net worth. Now they are facing the consequences of those risky loans. Step 2: Consider “saddled.” This word is frequently used metaphorically to describe a person or institution burdened with debt, responsibility, or problems. Phrases like “saddled with debt” are common in financial reporting. Step 3: Consider “baffled.” This means deeply confused or perplexed. While banks may be confused, the sentence specifically emphasizes the financial burden, not confusion. Step 4: Consider “puzzled.” Similar to “baffled,” this refers to being confused by a situation. It does not fit naturally with “with loans” in the sense of long-term financial strain. Step 5: Consider “caught.” “Caught with loans” is not a standard phrase and does not strongly convey the idea of being weighed down by bad assets. It suggests being trapped or discovered, which is not the nuance the passage emphasizes. Step 6: Recognize that “saddled with loans” is a textbook expression for being burdened with problematic loans and fits perfectly in this context.
Verification / Alternative check:
We can verify by checking parallel usage: newspapers and articles often state that “households are saddled with high mortgage debt” or “governments are saddled with heavy public debt.” The structure “find themselves saddled with” is also common and means that they unexpectedly or unfortunately end up bearing a heavy burden. Substituting into the sentence gives a natural result: “the banks now find themselves saddled with loans made by them to an individual with negative net worth,” which clearly shows that the loans have become a problematic burden.

Why Other Options Are Wrong:

• baffled: Refers to confusion or inability to understand. It would be used as “baffled by the situation,” not “baffled with loans.” It does not express financial burden.
• puzzled: Similar to “baffled,” this relates to mental confusion. It does not collocate with “with loans” to mean ongoing financial strain.
• caught: Suggests being trapped or discovered doing something, but “caught with loans” is not a standard or clear phrase in this context. It fails to emphasize the idea of a burdensome liability.

Common Pitfalls:
Students may focus on the emotional reaction of the banks and choose “baffled” or “puzzled,” imagining that the banks are surprised by the situation. However, the sentence is written in an economic context, where the key idea is financial burden, not surprise. Another pitfall is not recognizing fixed expressions like “saddled with debt,” which appear frequently in business news and editorials. Building familiarity with such collocations greatly improves performance in reading comprehension and vocabulary questions.

Final Answer:
The correct word to complete the sentence is saddled, giving “find themselves saddled with loans.”