They ignored their own self-interest in not buying more homes they could afford out of ignorance, and the bank did nothing to deter them because the bank was cushioned from risk in the world of credit default swaps.
Credit default swaps transfer the risk of lending money to other economic entities. Credit default swaps are the main reason for the failure of the insurance behemoth AIG that was otherwise financially sound, except for its purchase of the risks of too many bad 'NINJA' loans. In these swaps, "the insurer (which could be a bank, an investment bank or a hedge fund) is required to post collateral to support its payment obligation, but in the insane credit environment that preceded the credit crisis, this collateral deposit was generally too small," giving banks an incentive to extend bad loans and then sell the risk ("Credit default swaps," Times Topics, 2008). Then, when the "mortgage-backed securities that many swaps were supporting began to lose value in 2007, investors began to fear that the swaps, originally meant as a hedge against risk, could suddenly become huge liabilities" and tried to sell them on the open market, which of course no for-profit organization wanted ("Credit default swaps," Times Topics, 2008). Buying up bad loans, which may or may not be repaid at some point, was one of the cornerstones of the proposed economic bailout -- only the federal government will buy up the loans which are worth, most economists believe, next to nothing given the likelihood they cannot be repaid.
The new financial innovations like credit default swaps essentially neutered the moral hazard that is supposed to be a built-in check into...
9/11 and the IRTPA Under the National Security Act of 1947, the Director of Central Intelligence (DCI) was charged with the task of coordinating all national intelligence activities within the U.S. government. One major reason for this change was the failure of coordination and analysis across the intelligence agencies in predicting the attack on Pearl Harbor in 1941. Indeed, so glaring were the failures to 'connect the dots' in determining the
Very senior executive-branch employees are restricted from so much as advising or aiding official foreign entities in matters where they intend to influence officers, employees, and/or other agents acting on behalf of the United States. Bank examiners and inspectors are prohibited for one year following their term with s Federal Reserve bank or Federal banking agency from receiving any compensation as an "employee, officer, director, or consultant" of institutions intertwined with
NAFTA Historical Beginning of NAFTA (with specific bibliography) NAFTA Objectives What is NAFTA The Promise of NAFTA NAFTA Provisions Structure of NAFTA Years of NAFTA (NAFTA not enough, other plus and minuses).. Environmental Issues Comparative Statements (Debate) NAFTA - Broken Promises NAFTA - Fact Sheet Based Assessment NAFTA & Food Regulation NAFTA - The Road Ahead NAFTA in Numbers Goal Fulfillment Major Milestones Consolidated Bibliography This study set out to examine the inner workings of the North American Free Trade Agreement. The aim of this study is
The shift toward standardized testing has failed to result in a meaningful reduction of high school dropout rates, and students with disabilities continue to be marginalized by the culture of testing in public education (Dynarski et al., 2008). With that said, the needs of students with specific educational challenges are diverse and complex, and the solutions to their needs are not revealed in the results of standardized testing (Crawford &
military deployment affects military families. The writer explores the many differences between deployed and non-deployed families and examines some of the things being done to ease the stress and problems that deployment presents. There were 10 sources used to complete this paper. Americans are waiting with anxious anticipation as the federal government attempts to convince the United Nations that a war with Iraq is in order. President Bush as well
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now