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credit default swap
(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}
credit default swap by Abu Yahya July 17, 2010
Related Words
default dinner
Damn, the folks are coming over...mac n cheese default dinner? Maybe with hot dog chunks?
Nothing to eat kids. Can smell Jim's grill, though. Sneak over for default dinner.
Nothing to eat kids. Can smell Jim's grill, though. Sneak over for default dinner.
default dinner by msdee January 5, 2017
Default face
The look on somebody's face when they're just sitting there thinking or are doing nothing & have no other emotions. The a way a person's face naturally falls.
Everybody kept asking me if I was sad today! But, nobody understands that it's just my default face. I've just been zoned out lately.
Dude: Hey, is Shauna pissed off?
Dude 2: Nah, dude, that's just her default face.
Dude: Hey, is Shauna pissed off?
Dude 2: Nah, dude, that's just her default face.
Default face by heylobster September 1, 2009
default dinner
Damn, the folks are coming over...mac n cheese default dinner? Maybe with hot dog chunks?
Nothing to eat kids. Can smell Jim's grill, though. Sneak over for default dinner.
Nothing to eat kids. Can smell Jim's grill, though. Sneak over for default dinner.
default dinner by msdee January 5, 2017
Default Hot
Every job has at least one female employee who is considerably more attractive than all the others. She might not actually be that good looking, but it doesn't matter. If you had a job where you only got paid in pennies, finding a quarter would be like winning the lottery. It's all relative.
And, because this one female has the dubious honor of being deemed "default hot" by every male employee at the company (most likely including the creepy store manager who has a daughter the same age) she is rewarded with what could easily be considered non-stop sexual harassment.
And, because this one female has the dubious honor of being deemed "default hot" by every male employee at the company (most likely including the creepy store manager who has a daughter the same age) she is rewarded with what could easily be considered non-stop sexual harassment.
Shanaye is only a 6.5 out of 10, but since she's the only female that works here under 30 years old, she's default hot.
Default Hot by surefire13 October 31, 2009
Defaulty
I tried using Ubuntu's Unity desktop, but I discovered right after installing it that it's defaulty.
More from Urban Dictionary
pod person
A person pretending to be something they aren't, or an impostor. This is inferred because of the old alien movies where alien pods appear on earth and the "pod people" dispose of the humans and slowly reproduce the bodies, pretending to be humans.
The pod person was pretending to be my father, but I knew that he was an alien when he acted differently than my father ever would have.
pod person by Christopher M. May 9, 2005
Word of the Day on November 10, 2026
dead drop
A dead drop is a location used to secretly pass items between two people, without requiring them to meet.
Spies have been known to use dead drops, using various techniques to hide the items and to signal that the drop has been made. Drug dealers use this as well.
A common place is to duct tape the item to the underside of a toilet cover in a public restroom.
A signal is sometimes used as well to indicate there is something to pickup, like a pile of stones in a certain formation. After checking the drop the signal is removed.
Spies have been known to use dead drops, using various techniques to hide the items and to signal that the drop has been made. Drug dealers use this as well.
A common place is to duct tape the item to the underside of a toilet cover in a public restroom.
A signal is sometimes used as well to indicate there is something to pickup, like a pile of stones in a certain formation. After checking the drop the signal is removed.
"The dead drop is the restroom toilet at the Gulf station at the corner of Commercial Ave. and Georges Rd."
dead drop by rubberroom July 23, 2008
Word of the Day on November 9, 2026
No Surprises Wedding
A "No Surprises Wedding," or NSW, is a wedding invitation designation that tells attendees that there can be no unplanned announcements, engagements, events or speeches at the wedding - all actions must be pre-approved by the couple. Anyone who performs an unapproved "surprise" will be asked to leave the wedding early.
This designation comes from Reddit, where so many stories of bad wedding behavior indicated a need to communicate expectations for the wedding behavior of attendees.
This designation comes from Reddit, where so many stories of bad wedding behavior indicated a need to communicate expectations for the wedding behavior of attendees.
You are cordially invited to the nuptials of Brian and Tom on October 31 at noon.
Please note that this wedding is child-free (under 10) and a No Surprises Wedding (NSW). Reach out to wedding planner Sami Smith to request approvals or exceptions; please note that exceptions will be rare. Limited child care for under-10s will be available. All approvals will be noted and included in planning. Unapproved, or surprise exceptions, will result in guests being asked to leave.
Please note that this wedding is child-free (under 10) and a No Surprises Wedding (NSW). Reach out to wedding planner Sami Smith to request approvals or exceptions; please note that exceptions will be rare. Limited child care for under-10s will be available. All approvals will be noted and included in planning. Unapproved, or surprise exceptions, will result in guests being asked to leave.
No Surprises Wedding by dbdefenestrate August 27, 2023
Word of the Day on November 8, 2026
ulzzang
Ulzzang true definition is "best & "face" = best face in korean. They are basically people with above average looks, sometimes with the use of photoshop and haduri who post their pics online, some becoming internet celebrities.
ulzzang by `r i k kit t y February 26, 2008
Word of the Day on November 7, 2026
EBK
EBK stands for "Elite Ball Knowledge." 1 In internet slang, "ball knowledge" originally referred to a deep understanding of football/soccer or basketball, but it has evolved into a broader term for having a highly sophisticated, deep, or niche understanding of any specific topic (such as music, movies, or subcultures).
Yap Trap
Yap Trap by WolfieSnack November 4, 2026
Word of the Day on November 5, 2026