Word: defaulting
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Dates: during 2000-2009
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...that, by and large, was how the biggest players in the financial-services sector acted in the run-up to the crisis. Taking on risk from instruments like credit-default swaps and collateralized debt obligations (CDOs) was treated as a profit center, often with little oversight of the mathematical models that spit out numbers about what it was all worth. The models proved spectacularly wrong because they precluded the possibility of an outsize event. Once big shocks, like declining home prices, started hitting, the models broke down. According to a report by a group of U.S. and international regulators, while...
...different, that the pain has been so severe and ongoing, the lessons will be remembered. Four exchanges, with encouragement from the Securities and Exchange Commission and the Federal Reserve Bank of New York, have volunteered to create a clearinghouse for the hazily understood concentrations of risk known as credit-default swaps. Investors are also taking more responsibility. Over the past month, the analytics firm RiskMetrics has seen a rush of pension funds, hedge funds and asset managers signing up for tools to analyze counterparty risk. "The only folks who used to ask us about those were banks," says risk-management...
...Remember this day. We now get to imagine, at least for a while, that the election of Obama has not just turned a page in our politics but also tossed out the whole book so we can start over. Whether by design or by default, the past now loses power: for the moment, it feels as if we've left behind the baby-boomer battles of the past 40 years; the culture wars that took us prisoner and cut us off from what we have in common; the tribal warfare between rich and poor, North and South, black and white...
Oddly enough, talk of a possible federal mortgage bailout is slowing deals. "Recently, a lot of the financial institutions have stopped accepting short sales to find out if the government is going to buy their loans that are in default. They're waiting to see what happens with the recent rescue plan to buy back mortgages," says Fred Arnold, president of the California Association of Mortgage Brokers. In Miami, banks can't wait to throw underwater mortgages into the government's pool. Says Zalewski, "I can see the Federal Government giving them a mulligan and allowing them to sort...
...Causes of the Crash Reading about the subprime loan debacle, I am amazed that nobody seems to have asked the simple question: What will happen if a large number of these loans default? [Oct. 20] Or was it only greed that made everybody turn a blind eye to the possibility that the bubble could ever burst. Did no one consider that if the subprime-mortgage market crashed, thousands of families could have their lives turned upside down virtually overnight? Frederik Steenbuch, Oslo...