(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.Often considered the Final Fantasy that never was, Bravely Default is an innovative and critically acclaimed JRPG for the 3DS that happened to be one of Square Enix's non- fuck ups in recent years. Starring four protagonists, Tiz, Agnes, Edea, and Ringabel, and one really bitchy fairy, it utilizes many common FF elements such as the job system, crystals, and monsters while also adding in new ones such as the titular brave and default system that breath life into the rapidly staling RPG market.
by KeyboardingChihuahua March 14, 2015
Get the Bravely Default mug.Related Words
when you abort a baby so hard that it kills the nearest default making him self implode and cry tears of blood therefore allowing you to summon the demons of celzar and wipe out the human race.
wife: im pregnant
husband: you know what we have to do
wife: what?
husband we have to YEETUS THAT FETUS AND MAKE THAT DEFAULT DELETUS
some 11 year old at home playing fortnite: i don't feel so good
*11 year old self implodes leaving blood and meat all over the walls and his eyes rolling on the floor*
*mum walks in*
mum: HOLY FUCK MY SON MY BOy, OH GOD PLEASE NO, NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO
husband: you know what we have to do
wife: what?
husband we have to YEETUS THAT FETUS AND MAKE THAT DEFAULT DELETUS
some 11 year old at home playing fortnite: i don't feel so good
*11 year old self implodes leaving blood and meat all over the walls and his eyes rolling on the floor*
*mum walks in*
mum: HOLY FUCK MY SON MY BOy, OH GOD PLEASE NO, NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO
by deletus October 29, 2018
Get the yeetus that fetus and make that default deletus mug.When in a game, a paid skin is so overused that it is no longer a signifier of a baseline of skill. Usually this happens due to either a skin's immense popularity, or the skin being commonly offered compared to other options.
Comes from when The Reaper in Fortnite was used by a third of every lobby, leading to no indication of skill when spotted, analogous to seeing a default.
Comes from when The Reaper in Fortnite was used by a third of every lobby, leading to no indication of skill when spotted, analogous to seeing a default.
by Onandonandomnom November 28, 2022
Get the John Default mug.When someone tells you you're their best friend but you are painfully aware you're their ONLY friend.
by Chumbo82 July 17, 2017
Get the Best friend...by default mug.Someone who plays Fortnite, who owns any skin but chooses to play as the default skin to lure other players to him.
by blackpoweramerica July 4, 2018
Get the Fake Default mug.by i raped 6ix9ine March 11, 2020
Get the stinky stinky default mug.