Good Morning Everyone,
I thought I would take a moment and pass this youtube video along. This is the best explanation in common laymen terms to explain the current credit crisis. It is hard for main street to understand high finance in regards to the current banking crisis that we face. There is a lot of misinformation out there that is being distributed by the media, who by the way, are merely main street consumers who dont even understand what they are reporting on. There are also Mark to Market accounting issues that were created out of the Sarbanes Oxley bill which single handedly was one of the worst pieces of legislation brought to the market as a response to the Enron situation. Repeal Mark to Market and Raise the FDIC limits even if only temporarily until we can bring a reform bill that we can all live with.
I am not promoting any political bias. We are all to blame. What I am trying to do is educate people on what really happened with these so called Sub-Prime loans. We as lenders were put under tremendous pressure to make loans more available to people we knew were a risk. I am frankly tired of being blamed for something that we were mandated to do, and when say that lenders should be thrown in Jail, it is congress that made this happen.
Please take a moment to view the video and the facts so we can stop the mis-information media machine. Make your own political decisions based around facts. We will all be better for it.
Thanks
http://www.youtube.com/watch?v=GIVvvoDbCV0
Tell me what you know?
credit default swap
Definition
A specific kind of counterparty agreement which allows the transfer of third party credit risk from one party to the other. One party in the swap is a lender and faces credit risk from a third party, and the
counterparty in the credit default swap agrees to insure this risk in exchange of regular periodic payments (essentially an insurance premium). If the third party defaults, the party providing insurance will have to purchase from the insured party the defaulted asset. In turn, the insurer pays the insured the remaining interest on the debt, as well as the principal.
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http://www.investorwords.com/cgi-bin/getword.cgi?id=5876&term=credit%20default%20swap
Former AIG CEOs back credit default swap regulation
http://www.reuters.com/article/governmentFilingsNews/idUSWBT00995420081007
WASHINGTON, Oct 7 (Reuters) - Two former chief executives of American International Group (AIG.N: Quote, Profile, Research, Stock Buzz) said they would back regulation of the credit default swaps market in testimony at the U.S. House Oversight and Government Reform hearing on Tuesday.
* Robert Willumstad, CEO from June through mid-September 2008, said that if the right regulation was put in place he would support it.
* Martin Sullivan, who stepped down as CEO after 3 years in June 2008, also said he backed regulation.
* Investments in this market contributed to the company’s cash crisis and eventual rescue by the government.