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"If you wanted to do some credit default swaps, there are definitely many places to do that. There are areas such as the internet. There are also places where you can do it, like the bank."

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โˆ™ 2011-12-08 12:14:30
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Q: Where can one do some credit default swaps?
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What is a mortgage default swap?

I believe you are asking about credit default swap. Say I have a bank, and I have a certain risk or exposure of losing money on bad home loans, I may look for someone I can pay, to guarantee the repayment. I'm the buyer of "credit protection" and the seller now has assume the risk of the bad loans. Now, the insurance analogy is quite clear. It may appear that since I bought credit protection, the loans I hold are worth more. This works so long as the seller of the swap has the cash to make good in case of non-payment (default). The swap seller has to consider the percent of loans he might have to pay out on. He sets the swap price for the "credit protection" accordingly. But, here's the rub- he may have a lot of statistics on the percent of bad loans, and the number will be very low, say 0.5%, but that's in the housing boom times. In good times, home owners without the income to pay simply re-finance with the added equity in their homes. They tap into their credit cards for quick cash. Obviously, in bad times, the swap seller runs short of money to guarantee the loans. The buyer of the swap is now in the hole too. His credit rating drops as the swaps no longer offer same protection. There is also the concept from statistics that if there are many loans involved, then the risk should be more accurately factored into the price, as averages tend toward the population mean as the sample size increases. Unfortunately, the population mean (strictly just a concept) in this situation is not stationary (fixed in time). As one economist put it, you can't make a bad loan into a good loan with insurance or swaps. The swap moved the credit risk exposure from one institution to another. In good times, it was win-win for buyer and seller. In bad times, we have lose-lose. While the swaps have similarity to insurance, it's not like fire or theft insurance as all the fraction of houses on fire or being broken into does not suddenly rise. This is referred to as systemic risk in the credit default swaps. See more: http://www.investopedia.com/terms/c/creditdefaultswap.asp Also, Wikipedia has a good description of credit default swaps. It's a complicated area and I would appreciate anyone with experience in this area who can add to this. Some extra points to add on to this: 1. With CDS the banks expected the risk of loan defaults to be transferred to the Insurance Provider. When a default would occur they would go to the Insurance provider and get the loan default amount 2. The Insurance provider did not expect a whole group of population to surrender their homes and close their mortgage loans. When the default rate on the loans in the bank increases, the collateral or the security amount the Insurer has to place as amount for credit protection increases. When the defaults increased many fold the swap providers were unable to increase the credit protection amount. This is why AIG went broke and the US government had to pitch in to help it...


Why would someone want to check your credit score?

The credit score is needed by companies in order to evaluate the risk of a possible credit default, for example if one applies for a consumer credit or a bank account.


What happens does when your name is not on the deed but it is on the mortgage and the one on the deed dies?

For some reason only known to you, you promised to pay for property you do not own. Since the primary borrower, the owner, has died you will be responsible for paying off the mortgage or your own credit will be affected and the default and foreclosure will be reported to your personal credit record.For some reason only known to you, you promised to pay for property you do not own. Since the primary borrower, the owner, has died you will be responsible for paying off the mortgage or your own credit will be affected and the default and foreclosure will be reported to your personal credit record.For some reason only known to you, you promised to pay for property you do not own. Since the primary borrower, the owner, has died you will be responsible for paying off the mortgage or your own credit will be affected and the default and foreclosure will be reported to your personal credit record.For some reason only known to you, you promised to pay for property you do not own. Since the primary borrower, the owner, has died you will be responsible for paying off the mortgage or your own credit will be affected and the default and foreclosure will be reported to your personal credit record.


Where can one find a loan for people with poor credit?

There are several places that you may go to receive a loan if you have bad credit. Most of the places you go to will need to verify your employment, ability to pay, and you will also need to have some collateral in the case of default.


Where can one find information about high risk credit card processing?

High risk credit card processing is the generation of a credit card for someone with poor, or bad credit, and are likely to default on the debt. The site, highriskpay, has information about it.


What is a credit risk when entering into a derivative contract?

Credit Risk. Credit risk or default risk evolves from the possibility that one of the parties to a derivative contract will not satisfy its financial obligations under the derivative contract.


What are the advantages of a sub prime loan?

The advantage of a sub prime loan is that it can be obtained by people with very poor credit ratings. If one intends to default on the loan, one should ensure that one is in possession of little or no confiscable property at the time of default.


What are some of the financial products offered by Credit One Bank?

Some of the financial products offered by Credit One Bank include partially and fully secured credit cards. The Credit One Bank is known as a limited purpose bank.


How does a CPDO work?

A CPDO (Constant Proportion Debt Obligation) is a structure investing in riskless assets (like government bonds and bills) and selling credit protection via Credit Default Swaps. The fees generated by selling credit protection are used to pay CPDO investors an interest rate above the risk-free one. The amount of protection sold is dynamically adjusted in order to keep the credit exposure constant. So, for example, when credit spreads rise (and the value of the outstanding CDS position drops), more credit protection is sold, in order to keep constant the value of the CDS position as a proportion of the portfolio . When the risky position generates enough returns to cover all future payments to CPDO investors, it is closed and all CPDO funds are invested in risk-free assets.


What does set as default mean on your mobile phone?

Set as default means that the settings will be set back to how they were when the phone was bought.


How do engine swaps work?

You take one engine out of a car and put another one in. Done.


What are some advantages to a capital one credit card?

"Some advantages to a capital one credit card are fundraising credit cards, the card building lab, rewards with no hassles, and online guide to your finances."


Where can one get a credit card with no credit?

It is often difficult for one to get credit card with no credit. Some banks offer MasterCard and Visa credit cards to those who are trying to establish a credit history. One can apply for these cards through a bank and see if there is an approval. If not one might wish to try to get a department store or gas company credit card to establish credit.


Who get credit on Joint car loan how get credit score?

On a joint car loan, no one is increasing their credit score. This is usually the case when one signer is weak to get approved and require a co-signer. Co-signer is financially responsible for the car loan if signer default on the loan. For more information you can try this web site at http://www.autocreditfinancial.ca


Does renting an apartment build your credit?

To have your credit rating affected by any creditor, they must report monthly to the credit agency. Landlords seldom, if ever, report regularly. They might check your credit before you move in, but usually, the only time you are affected by a rental agreement, is if you default on the rent, AND you get sued for it, AND the landlord gets a judgment against you AND he registers the judgment with the credit reporting bureau. Then, you have an ugly black mark on your credit score. In order to bypass the legal process and go directly to screwing up your credit, the landlord must be a member of a credit reporting agency, and must report to them about you and all his other tenants monthly. Then, if you are in default, it would show the month following the default, or the second month following. Usually, you get one month grace. But if you are 2 months in arrears, and the landlord is sophisticated enough to be reporting monthly, you would have been kicked out already!


What is a CDS?

The acronym CDS is a credit default swap. A financial term for a derivative contract whereby one party buys protection against the default of a reference credit and the other counterpary sells the protection, i.e. agrees to receive periodic payments in exchange for providing insurance against the default of an obligor.The acronym CDs is the plural form for compact disk and certificate of deposit.


Can your dad cosign for auto loan?

Yes, if he's willing and his credit will support it. But don't let Dad down . It's a one-time thing if you default on the payments.


Where can one get a home mortgage if one has bad credit?

One can get a home mortgage if one has bad credit from several different places. Some of the places that one can get a home mortgage with bad credit are: banks, and mortgage companies.


What is some credit score advice?

Here are some tips to fast fix your credit scores, if you dont have a credit card, get one. Get an installment loan, lower your credit cards and use your cards lightly


How can people with bad credit buy cars?

It is almost no way in order for one person with bad credit to purchase cars. However, in some cases, it is still possible for some one to buy cars with bad credit.


Where can one shop with bad credit cards?

When you have bad credit scores, it is difficult obtaining a credit card but when you do manage to get one, there are some stores that will still accept credit cards of people with bad credit scores, like Macy's.


Where can one find instant approval credit card applications?

There are a few credit cards that give instant approval. Some are Discover, Capital One, Chase and Care Credit. Some take a week or so to get back to the applicant.


Where can one compare credit cards in Australia?

One can compare credit cards in Australia online. Some of the useful websites are Info Choice, Credit Card Finder, Canstar, Bankwest and Super Credit Cards.


What are some tips for negotiating with credit card companies?

There are some tips for negotiating with credit card companies. One is never to take the number on one's bill for granted, the bills can be lowered with some tact.


Where can one do a free credit search?

There are many websites where one can do a free credit search. Some of these sites include Money Matchmaker, Equifax, Privacy Guard and Credit Worries.