Far more worryingly, this sorting of the wheat from the chaff occurred in the credit defaults swap market, which showed the perceived risk of bankruptcy ballooning for Citi and rising sharply for BoA, while JPMorgan remained more secure.
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During the financial crisis, the credit default swap (CDS) market, a part of the OTC derivatives market, took center stage as difficulties in financial markets began to intensify and the counterparty risk involved in a largely bilaterally cleared market became apparent.
Judging by the credit default swap spreads on Italy, Spain, Greece, Portugal and now government bonds in France, the risks to bondholders is growing.
Widening spreads in the credit default swap market indicate heightened concern about default.
Greenberg superimposed the credit default swap guarantee business on a sound insurance underwriter.
More worrisome is the potential for that action to trigger a real problems in the credit default swap market, causing true chaos.
In line with the cash share price tumble the Credit Default Swap on BP broke higher by 20 basis points 10 trade at 103bps over 3 month LIBOR.
You know, New York Attorney General Andrew Cuomo has joined forces with local and federal law enforcement to see if there is something amiss in the credit default swap business.
Cuomo has opened a number of investigations into Wall Street, including the auction-rate probes, which continue, as well as activities in the credit default swap market and other signs of alleged fraud.
The higher the cost of a credit default swap, the higher the implied risk.
He decided to short the mortgage market, using a financial tool known as the credit-default swap, or C.
In recent weeks there has been a rise in both LIBOR (a gauge of banks' borrowing costs) and the credit-default-swap spreads on bank bonds (the cost of insuring against default risk).
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The birth of the credit-default swap has been well-chronicled.
Imagine if rather than developing the next CDO or Credit Default Swap instrument, they developed a model that optimized health rather than devastated the economy with financial instruments few can understand.
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Perhaps those memories are weighing on the minds of credit default swap traders.
The, The cost incurred to buy Credit Default Swap protection on corporate bonds from climbed to the highest level this month.
If Bear had been allowed to go bust, it would have put huge pressure on its counterparties, including the likes of JPMorgan Chase (which is the biggest credit-default swap player, one reason it was keen to do a deal).
The schemes Blago allegedly invented to "monetize" his public authority, while never rising to the sophistication of, say, a credit default swap, still showed a cunning that would command the respect of any Wall Street Ponzi master.
Emails have surfaced in the last few days that show the New York Fed, and its outside counsel, engaged in a concerted effort to keep details about the federal AIG bailout hidden from the public, most controversial of which was the agreement to repay credit default swap counterparties in full without really trying to negotiate.
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This means that it has the price characteristics of a swap, without the two-way credit complexity.
Portugal may be the best bet (no pun intended) based on credit default swap rates, and that certainly is consistent with the current speculation about an official bailout.
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Quite apart from the risk that some crisis in a currency or stock or credit swap market could cause a meltdown on Wall Street, there is the risk that the public could turn against securities firms, especially those that so visibly wear multiple hats.
That's because selling a credit swap is equivalent to buying the corporate bond on margin.
And lowish credit-default-swap spreads on banks such as Deutsche Bank and Credit Suisse partly reflect the assurance of government help if needed.
The problem with America's economy is that the last bubble, the "home-mortgage, derivative, credit default swap bubble" popped, as all economic bubbles eventually do.
The most sweeping intervention of all came from Ireland's government, where concerns about spiking credit-default swap (CDS) spreads, falling share prices and jittery depositors led the finance minister to announce, on September 30th, a blanket guarantee on the deposits and almost all the debts of the country's six biggest banks until September 2010.
My plan was this: Take a zero interest transfer credit offer from a credit card company when the 12 months was up and swap the charge forward to another company.
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In September, when the credit crisis struck, no one wanted to own a credit default swap.
If the government makes the right rules, we can combine them, much like a credit-default swap if done correctly comes with a bond.
This downward spiral may have been exacerbated by Europe's efforts to cut the value of Greek sovereign debt without triggering a payout on credit-default-swap contracts.
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