by R. Thirucumaran January 11, 2009
Get the deffa 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
shes the most amazing girl youll ever meet, she is not like the rest, always keep things in to make other people feel good.The best bestfriend you can ever have. she keeps your secrets closed. she can always keep a smile on your face. shes the best girlfriend anyone can have, shes trust worthy pulse shes beautiful inside out. has am amazing smile you can get lost in her sparkiling eyes for days. she gives the best hugs ever. loves being around people she loves. but if you hurt her shell cry for days until you have a seriouse talk to her. music is the only thing that can turn off the world and make her happy. shes good at sports isnet very tall nor very short shes just perfect .she loves snuggling in the rain and enjoys having long hugs. daffany was the best thing that ever happend to me. love, DAFF
by johhnyboy1234567 July 17, 2012
Get the daffany mug.a beautiful,kind caring girl who will make u feel like the best guy in the world,will make u laugh til u cry and makes u feel lucky just 2 know her
hey daffany,i love you
by tubbyfuck July 6, 2011
Get the daffany 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.DEFACTOID:- A person, animal or device which is mainly used to commit activities to reduce or demolish the activities of the opposition.
by 1STFABARM May 1, 2019
Get the DEFACTOID mug.An outrageously powerful slap delivered into the ear by the inside of one's bare palm. A loud slap is heard from across the room and the victim is usually left temporarily deaf, hence the name. The slap is preferably delivered after administering a droplet of spit into the palm and without the victim seeing it coming. It can be used as a verb in all tenses.
Noun: Ron Artest just gave that fan a mean deafazz.
Verb: Keep talking that smack and you'll get deafazzed.
smack, thump, slap, bitch-slap, bitchslap
Verb: Keep talking that smack and you'll get deafazzed.
smack, thump, slap, bitch-slap, bitchslap
by Toronto English Teacher March 2, 2011
Get the Deafazz mug.