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re: Why are banks hoarding so much $$$?
Posted on 6/19/14 at 8:13 pm to Mr.Perfect
Posted on 6/19/14 at 8:13 pm to Mr.Perfect
A credit default swap is an instrument that can be used to insure a bank's loan portfolio. This is one use, they are also traded like a future's contract.
When it all went down, AIG, the largest issuer could pay on the polices they issued. The CDS are regulated as a financial instrument, not an insurance policy.
This is an oversimplification. The CDS serve a very useful purpose, but in my opinion, need to be regulated and the issuers required to reserve for losses.
When it all went down, AIG, the largest issuer could pay on the polices they issued. The CDS are regulated as a financial instrument, not an insurance policy.
This is an oversimplification. The CDS serve a very useful purpose, but in my opinion, need to be regulated and the issuers required to reserve for losses.
1
Posted on 6/19/14 at 8:15 pm to Iowa Golfer
quote:
When it all went down, AIG, the largest issuer could pay on the polices they issued.
You might need to insert the word "not" between "could" and "pay."
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