(FINANCE) financial instrument in which buyer is someone who needs insurance against the possibility that a borrower will default on a loan. In that case, the counterparty is whoever receives the CDS premiums, and pays out in the event of default.
WHY IT'S BAD
Loans are usually made by either commercial banks (in which a loan officer is supposed to make a professional assessment of risk of default before handing over the money), or by investment banks (which underwrite securities like bonds). If the borrower has a high risk of default, then the loan should not be made--period.
Credit default swaps were a stupid method of supposedly turning a bad loan into a "risky" (and potentially high-yield) "investment"; they were in reality a strategy for fraud. Since portfolio managers knew they were bundling securitized loans that contained mostly crap, they would arrange credit default swaps and cash in when the borrowers defaulted.
WHY IT'S BAD
Loans are usually made by either commercial banks (in which a loan officer is supposed to make a professional assessment of risk of default before handing over the money), or by investment banks (which underwrite securities like bonds). If the borrower has a high risk of default, then the loan should not be made--period.
Credit default swaps were a stupid method of supposedly turning a bad loan into a "risky" (and potentially high-yield) "investment"; they were in reality a strategy for fraud. Since portfolio managers knew they were bundling securitized loans that contained mostly crap, they would arrange credit default swaps and cash in when the borrowers defaulted.
What the bankers hit on was a sort of insurance policy: a third party would assume the risk of the debt going sour, and in exchange would receive regular payments from the bank, similar to insurance premiums. JPMorgan would then get to remove the risk from its books and free up the reserves. The scheme was called a "credit default swap," and it was a twist on something bankers had been doing for a while to hedge against fluctuations in interest rates and commodity prices.
{Newsweek, "The Monster That Ate Wall Street," 27 Sep 2008}
{Newsweek, "The Monster That Ate Wall Street," 27 Sep 2008}
by Abu Yahya July 17, 2010
Get the credit default swap mug.A term used to describe a secret activity. If one is not privvy to the definition of Drop 'n' Swap, one is not invited to the activity.
Guy 1: Hey, man. We're doing some good ol' drop 'n' swap tonight, you in?
Guy 2: What the hell does drop 'n' swap mean?!
Guy 1: Oh, sorry man, I thought you knew. I can't tell you.
Guy 2: What the hell does drop 'n' swap mean?!
Guy 1: Oh, sorry man, I thought you knew. I can't tell you.
by Drop 'n' Swappers of America March 18, 2009
Get the Drop 'n' Swap mug.Related Words
After removing fiber from one's diet, it is the act of expelling rigid fecal matter directly into another individual's anus. For members of the same sex, the act is only considered homosexual in nature if the rectums touch (intentionally or unintentionally). This act carries a moderate risk of inadvertently becoming a homosexual.
Randy and I performed The Chocolate Drop and Swap while hanging out last night. It was a close call, we came within about half an inch of accidentally becoming gay.
by Mister Wanky December 8, 2013
Get the the chocolate drop and swap mug.Domicile swap bro/s: noun. When you sleep at your bro's house with a girl while he's sleeping at your house with a girl whilst thine families art awayeth until morrow so that when families come home the bros can meet up next dawn to reminisce about yesternight, and hereby pound out the domicile swap brosness (respectable and luhgend ahdem) (is that a flashlight?) and then light up yet another jay that, can we play ping pong and eat them legend goafers (creative spelling item)(taaaaaaasty), will be smoked on the last drop of cherrydew to respectfully honor thine mighty Hyperion.
Act 2
Scene 1
After coming back from a bubbly water break sesh, Eliansel and Viclentodius returned to Elsingstone, (n.b.: no relation to the jamaican highland), whenceforth they seated for supper, served by none other than that hairy guy, who pronounced "and specials off the menu for tonight, food ahdem numba 1, food ahdem number 2, food ahdem number 3, and pasta a la pot, (n.b.: not to be confused with a francophone transposition of language), and proceeded to consume tons and tons of sheep shlong, (joast joaking).
Goafer intermission.
Act 2
Scene 1
After coming back from a bubbly water break sesh, Eliansel and Viclentodius returned to Elsingstone, (n.b.: no relation to the jamaican highland), whenceforth they seated for supper, served by none other than that hairy guy, who pronounced "and specials off the menu for tonight, food ahdem numba 1, food ahdem number 2, food ahdem number 3, and pasta a la pot, (n.b.: not to be confused with a francophone transposition of language), and proceeded to consume tons and tons of sheep shlong, (joast joaking).
Goafer intermission.
by trololovski October 2, 2011
Get the domicile swap bro/s mug.When you and your buddy are fucking a girl, she's blowing one and taking one, then on the count of 3 you and your busy yell "SCOOBY DOOBY DICK SWAP!" And you switch places and make her ask for Scooby snacks at the end.
by TrippinBananaz June 6, 2017
Get the scooby dooby dick swap mug.A sexual act that involve 1 woman and 2 men. That once the 1st man finishes and is pulling out the other is going in to prevent from a wiener-less vagina. In a proper dirty swap there will be approx. 45 seconds of double stuff action before back to normal.
Joe: Hey Ralph, did you hear what Jonathan and Brandon did to Precious?
Ralph:No, Whats that?
Joe: They did the dirty swap on her.
Ralph:So they touched cocks...kinda homo
Ralph:No, Whats that?
Joe: They did the dirty swap on her.
Ralph:So they touched cocks...kinda homo
by SocalSmith1 March 11, 2015
Get the dirty swap mug.When fucking a woman cum inside, then suck out your own semen only to kiss her and put it in her mouth so she can swallow it
by Mr brownstone September 19, 2021
Get the Dakota cum swap mug.