Posts filed under “Derivatives”

CDS and Synthetic CDOs Explained

Nationally renowned forensic accounting expert, Thomas A. Myers, explains the fundamentals of credit defaults swaps and synthetic CDOs (collateralized debt obligations). These structured finance products were at the heart of the market meltdown, and were the building blocks of numerous allegedly fraudulent transactions, including the Goldman Sachs ABACUS deal, a transaction that caused the SEC to take significant action.

Via The Trader

For more information on the Goldman ABACUS deal, including an overview of the alleged fraud, visit the T.A. Myers & Co. website:

Category: Derivatives, Video

Neil Barofksy on JPMorgan Trading Loss, Regulation


One of the Biggest Trading Losses in History

Category: Derivatives, Regulation, Video

Fill ‘er Up — with Unregulated!

Abstruse Goose: Fill it up with unregulated:   Abstruse Goose

Category: Derivatives, Humor, Regulation

9 Biggest Banks = $228.72 Trillion in Derivative Exposure

Via Demonocracy, we see this basic take on derivatives: A derivative is a legal bet (contract) that derives its value from another asset, such as the future or current value of oil, government bonds or anything else. Ex- A derivative buys you the option (but not obligation) to buy oil in 6 months for today’s…Read More

Category: Derivatives, Digital Media, Regulation

Barry Ritholtz Washington Post March 10 2012 ~~~ Last week, Greece officially defaulted on its debt. (Unofficially, it defaulted long ago.) This formal default on about $100 billion triggered payment of $3 billion in credit-default swaps. These are the non-insurance insurance products that pay off in the event of a default.Let’s take a closer look…Read More

Category: Apprenticed Investor, Derivatives, Regulation

Final Thoughts on GS Controversy

I just did a phoner on Bloomberg TV on Goldie, and I suspect this meme has just about run its viral course. To me, the key takeaways are as follows: • Publicly Traded Banks: When firms shifted from Partnerships to publicly traded banks, their priorities changed. • Profits First: Meeting quarterly profit estimates became job…Read More

Category: Corporate Management, Derivatives, Media

Credit-default swaps are masquerading as financial products

> My Sunday Washington Post Business Section column is out. This morning, we look at CDS — how they became such a dangerous aspect of the financial firmament. The print version had the full headline Credit-default swaps are masquerading as financial products. They should be regulated as insurance products. (The online version is merely Credit…Read More

Category: Apprenticed Investor, Bailouts, Derivatives

When is a Debt Default not a “Credit Event?”

In this week’s Barron’s, Alan Abelson looks askance at the non-default default in Greece. All bombast aside, what makes this issue so fascinating to me is not whether or not Greece has or has not technically defaulted. Rather, it is that there is a committee of conflicted interested parties rendering a verdict on that issue….Read More

Category: Bailouts, Credit, Derivatives

What Are Repercussions If CDS Hedging Fails?

The EU arranged Greek bailout proceeds apace, as everyone else awaits for the official default date (Greece has already defaulted in my book, but I am in the minority). Hedged sovereign debt investors must feel like they are waiting for their wealthy grandfather to die so they can get to the reading of the will….Read More

Category: Bailouts, Derivatives

Dinallo Testimony

Eric Dinallo’s Testimony to Congress, November 2008 on (Naked) Credit Default Swaps

Category: Derivatives, Regulation, Think Tank