Word: cdos
(lookup in dictionary)
(lookup stats)
Dates: all
Sort By: most recent first
(reverse)
...Johnson, of the Roosevelt Institute, says the single most important reform would be to force unregulated financial products, such as credit-default swaps (CDSs) and collateralized-debt obligations (CDOs), onto government-watched public exchanges. CDS contracts are widely blamed for the demise of insurer AIG. Johnson says that making the CDS, CDO and other markets like them more transparent would limit the ability of financial executives to take the extreme risks that can cause their firms to fail when markets go awry...
...Similarly, the boom times of the late 1990s and 2000s—first the technology bubble, then the real estate bubble—were driven by over-leveraging and willful ignorance. Like PEDs of baseball’s elite, the acronyms of the financial world—CDOs, CDSs, LBOs, etc.—were not skills or products in and of themselves. Rather, like PEDs, they were once-exotic, unregulated tools that allowed really smart people to make a ton of money and marginally smart people to come along for the ride, eventually becoming common and insidiously far-reaching...
...responsibility lies with the lenders themselves. "Banks need to know their business," said John McFall, chairman of Britain's Treasury Select Committee, during a recent debate on trust and financial markets organized by the Fabian Society, a left-leaning London think tank. In future, bosses ought to know their CDOs from the CDSs, McFall said, and not leave such understanding to the banks' "35-year-old Ph.D.s." Reining in sky-high bonuses, boosting capital reserves and sharpening risk management won't do any harm to public trust, either...
...creating financial products - especially the complex ones - by assigning ratings that are more favorable than justified in order to hold on to the business. At the beginning of 2008, there were just 12 top-rated companies in the world, but some 64,000 structured finance instruments, like mortgage-related CDOs, won that seal of approval...
...With its high credit rating, AIG FP wasn't required to stockpile reserves, or collateral, as traditional insurers must to cover potential losses. As the CDOs that AIG insured began to crater, the counterparties began asking for more collateral to back their policies, which was written into the contracts. Cassano said in August 2007 that he couldn't imagine a situation in which AIG would "lose one dollar in any of these transactions." He was right. AIG didn't lose a dollar; it lost billions of them...