Assuming the feds had done right and let AIG go under (its error one of failing to hedge its exposure to CDSs), those in need of credit default insurance could have simply taken their business to other financial companies ready and willing to provide what AIG no longer could.
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Spreads on both investment-grade credit-default swaps (insurance against bond default) and on high-yield indices have increased sharply.
For now, credit default swaps are essentially insurance contracts between two parties.
Credit default swaps are essentially insurance contracts between two parties.
This will not be helpful to US banks which may have insured the European banks through the use of credit default swaps if these insurance contracts have to be unwound upon a Greek bankruptcy.
It could lead to the loss of jobs, primarily, because as the US credit rating goes from AAA to AA which would be the most likely downgrade credit default swaps, or insurance on bonds, would increase for corporate bond issuers.
That is because a default would trigger the bond-insurance contracts called credit-default swaps (CDSs).
Essentially, this money machine used extreme diversity and interlinking of transactions plus the insurance (credit default swaps) to give the appearance of reducing risk such that there could be a AAA rating.
One of the ways the market measures credit risks is by looking at the spreds of credit default swaps, a default insurance derivatives market that measures the risk of buying foreign bonds as compared to buying a comparable maturity from the US Treasury.
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That, too, could trigger pay-outs of insurance, called credit default swaps (CDS).
Prices of credit-default swaps, a form of insurance against default, hit record levels on January 20th.
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Economic growth will help prevent another financial time bomb--credit default swaps, a form of debt insurance--from exploding.
Greenberg superimposed the credit default swap guarantee business on a sound insurance underwriter.
One such monster could be the destruction of credit default swaps (CDS), an insurance for the kind of financial meltdown happening in Greece.
We will endeavour to stop you protecting yourselves against our actions by making it difficult to collect on insurance in the credit-default-swaps market.
Credit-default swaps, a type of insurance against bankruptcy, suggest that the borrowing costs of big emerging-markets firms have spiked along with those of their home countries' governments.
Oh, AIG is a bit more of a problem, but forbidding them from issuing things like credit default swaps to avoid regulation by the insurance regulators and the insurance regulators forbidding them from insuring financial transactions that are not easily understood and rated would go a long way.
Credit-default swaps, or CDS, are insurance-like contracts designed to pay off when creditors aren't paid back.
When someone mentions credit default swaps you start to waver a bit but insurance in all its forms might be considered more worthy.
Second, if Greece unilaterally imposes losses, bondholders who have bought credit-default swaps (CDSs), a form of insurance against default, would get paid.
"The days when a major insurance company could bet the house on credit default swaps with no one watching and no credible backing to protect the company or taxpayers from losses must end, " Mr Geithner told Congress.
Other government policies that have distorted financial markets, thereby undermining the EMH, include shielding credit-rating agencies from lawsuits, government-sanctioned fair-value accounting rules, enforcing credit-default swaps where there is no insurable interest, mispriced deposit insurance, government-sponsored enterprises, and the over-promotion of home ownership.
The cost of buying insurance against default by GM increased by 10% in the credit-default swaps market.
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