by deftu May 7, 2022
Get the Deftu mug.(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.Related Words
Deftu
• default
• deftones
• Default Dance
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• default setting
• defuck
• defunct
• defuckify
• Defund the police
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.
by msdee January 5, 2017
Get the default dinner mug.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.
by heylobster September 1, 2009
Get the Default face mug.An idiotic Youtube army of the "Elite" trolls who fancy themselves the V.I.P.s of Youtube. There's the original deftalulz, a wannabe pimp who speaks spanish,Deftalulz4, a failtroll/dramawhore, MechDefta, Deftalulz4's robo body, EthcingAcid, an angry boy, letmegiveyoucrabs, a non-registered sex offender, and some other losers.
The supposed leader of the clan is MechaDefta, who admits he was "defeated" by the Youtube staff and is reincarnated as a cyber-android-troll.
The supposed leader of the clan is MechaDefta, who admits he was "defeated" by the Youtube staff and is reincarnated as a cyber-android-troll.
Guy: *Minds own business*
deftalulz: I have 9 girlfriends.
MechDefta: Let's talk about meeeeeee!!!!!
EtchingAcid: Fuck baby penis shit.
letmegiveyoucrabs: I'm a giant pedo.
B.) Defta Force = Ginyu Force minus gay poses, but with more queers.
deftalulz: I have 9 girlfriends.
MechDefta: Let's talk about meeeeeee!!!!!
EtchingAcid: Fuck baby penis shit.
letmegiveyoucrabs: I'm a giant pedo.
B.) Defta Force = Ginyu Force minus gay poses, but with more queers.
by Trollsarelosers April 19, 2009
Get the Defta mug.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.
by msdee January 5, 2017
Get the default dinner mug.by HRH,Queenof Washington Heights July 7, 2008
Get the Defunkify mug.