Collateralized Debt Conditions
Also called CDOs. These are securities backed by a variety of fixed income assets, usually packages of mortgages.
When the subprime crisis broke out, many mortgage-backed CDOs became toxic.
refers to a situation where banks reduce the availability of loans or credits to customers due to the fear of not being repaid.
The credit crunch has laid banks to tighten the conditions required to get a credit.
a severe and often sudden deterioration of financial institutions and assets resulting in huge financial loss.
This economic metldown is the worst economic crisis since the stock market crash in 1929.
financial assistance to business institution to avoid their collapse
The US government has decided to fund a bailout of the banking industry.
Banks have been bailed out by the government
It is a loan secured by real property.
Banks usually give mortgage loans under certain conditions.
It refers to a rise in the general level of prices of goods and services in an economy over a period of time, leading to an erosion in the purchasing power of money.
Because of the inflation prices went up.
to regulate the market means to control and supervise it.
Many people think that governments should regulate markets so that markets would be free of fraud, manipulation, and illegal speculations.
to buy or sell securities, property, etc., in the hope of deriving considerable capital gains
Investors become speculators when they purchase a stock with the sole purpose of selling it to someone else at a higher price.
refers to two or more consecutive quarters of negative economic growth
The current recession has created an increase in unemployment.
They are certificates of ownership of stock, bonds, or other financial assets.
Two examples of securities in the stock market are stocks and bonds.
This refers to the process of transforming assets into securities, assigning them a value and being traded.
The securitization of subprime mortgages led to the credit crunch.
a housing loan given to people with poor credit histories.
They are really poor. Because of their low credit rating, they can only qualify for a subprime mortgage.
these refer to a kind of high-risk debts that are unlikely to be paid back to lenders.
The banks that owned toxic assets were unable to resist their collapse.
Troubled Assets Relief Program
Also referred to as TARP. It is a plan devised by the US government to buy toxic assets to strengthen the financial sector.
TARP has been criticized by many people because of the massive cost and the behavior of the banks.