CASE STUDY: HVB ASSET MANAGEMENT ASIA (HVBAM) • CDO in Subprime Mortgage Crisis Introduction to Collateralized Debt Obligations (CDOs) A CDO is an asset-backed security whose underlying collateral is typically a portfolio of bonds (corporate or sovereign) or bank loans. A CDO cash-flow structure allocates interest income and principal repayments from a collateral pool of different debt instruments to a prioritized collection of CDO securities‚ called as tranches. While there are many variations
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administration quickly shut it down. Perhaps the most startling practice on Wall Street is the creation of CDOs – “collateralized debt obligations” and the false ratings they were given. First‚ home buyers took out loans. Lenders then sold these mortgages to investment banks. Investment banks combined these mortgages with other loans and debts (such as car loans‚ student loans‚ and credit card debt) into CDOs and sold them to investors. As a result homeowners ended up owing investors. The problem was that
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End of Studies Thesis What is the role of the credit rating agencies‚ which part did they play in the recent Financial Crisis and how can their efficiency be improved? Thesis Supervisor – David Menival Emmeline Beauchamp – Cycle Franco- US – March 2013 Acknowledgments I would first like to thank RMS and especially the CESEM to have taught me a lot‚ helped me to grow and open up and gave me this incredible opportunity of studying two years in the United States. None of this phenomenal
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out an idea which the lenders sell their mortgage from the borrowers to investment banks like Morgan Stanley‚ Lehman Brothers‚ and Goldman Sachs‚ then the investment bank combine those mortgage to create a complex derivatives called a Collateralized Debt Obligation (CDO) and sell the CDO to investors around the world. Investment bank pay rating agency to evaluate CDO and many of them are given a triple A rating so that the CDO is pretty popular among the investors. However‚ problems emerge when the
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Federal Reserve Bank of New York‚ March‚ 2010 The Traditional Banking System Traditional Bank Liabilities Assets Loans Cash Flows Bonds Equity Deposits Loans Equity Discount Window Loan Collateral Agency Debt Purchases Agency Debt Reserves Equity Agency MBS Purchases Agency MBS Reserves 11/25/2008 Loans Depositors Deposit Funding Commercial Banks Borrowers Loans Assets Traditional Banks’ Funding Sources Short-Term Funding Deposits
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06/12/2012 FICO and Rating Agencies Current Issues in Business by Jeen Filz FICO 3 How does FICO work? 3 Criticism 4 rating agencies 6 history 6 Quick reminder of the financial crisis 7 Role of the rating agencies 8 Their impact 10 Perspectives 11 FICO How does FICO work? FICO is a public company that was found in the year 1956 with the aim to help financial services companies by measuring credit risk in a score which is called the FICO score. This stands for
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enterprises. Shadow banks are interconnected along a vertically integrated‚ long intermediation chain‚ which intermediates credit through a wide range of securitization and secured funding techniques such as ABCP‚ asset-backed securities‚ collateralized debt obligations‚ and repo. This intermediation chain binds shadow banks into a network‚ which is the shadow banking system. The shadow banking system rivals the traditional banking system in the intermediation of credit to households and businesses. Over
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Abstract AIG traces its root to 1919‚ when American Cornelius Vander Starr established a general insurance agency‚ American Asiatic Underwriters‚ in Shanghai‚ China. Since then‚ an enterprising spirit‚ ingenuity‚ and tenacity have built the company into one of the world’s leading insurers. Today‚ AIG is focused on what it has been known for since the beginning: the willingness and ability to provide insurance coverage to meet the diverse needs of its clients. American International Group‚ Inc
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development of the money and capital markets and enhancement of transparency of financial information and credibility of the corporate sector in Bangladesh for helping in the growth of investment. Objectives : ▪ To perform the credit rating of various debt instruments as Commercial papers‚ Bonds and Debentures‚ Islamic bonds‚ Preference shares‚ Equity instruments‚ Rights issue‚ Mutual fund units etc. ▪ To perform grading of various institutions as banks‚ non banking financial institutions‚ insurance
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Draft- Confidential Khan‚ Iliasu‚ Chowdhry 1 Preventing Residential Mortgage Crises: An Islamic Finance Perspective By Waleed Khan a ‚ Dr. Fatimah B. M. Iliasu b & Sajjad Chowdhry c Abstract The 2008 Financial Crisis has compelled the international financial industry‚ politicians and homeowners to search their souls for the root causes of the problem. Many point to insufficient regulatory supervision‚ others to a culture addicted to credit and sheer greed. While these issues certainly exist‚ we
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