Month: May 2013

Can someone explain this in an easier way.?

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Question by Arrow: Can someone explain this in an easier way.?
I don’t really get this statement:

Excessive lending under loosened underwriting standards, which was a hallmark of the United States housing bubble, resulted in a very large number of sub prime mortgages. These high risk loans had been perceived to be mitigated by securitization. Rather than mitigating the risk, however, this strategy appears to have had the effect of broadcasting and amplifying it in a domino effect.

Best answer:

Answer by Books
It’s saying that money was loaned to people who couldn’t afford to pay it back. The loans were sold to investors to spread the risk. The amount was so great that spreading the risk by selling the loans to other investors just caused greater damage.

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What does NovaStar have going?

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Question by WOW: What does NovaStar have going?
what is the importance of this 1.3 Billlion asset backed securitization? Help me understand please

Best answer:

Answer by Ichi
THey have considerable backing, but the money is not actually in their own coffers, so to speak!

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Q&A: What happens if a finance company never repossesses a vehicle that has been discharged in bankruptcy?

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Question by lucky: What happens if a finance company never repossesses a vehicle that has been discharged in bankruptcy?
What happens if a finance company never repossesses a vehicle that has been discharged in bankruptcy? No payments have been made in 14 months…Bankruptcy discharged in June of this year. Finance company has our current address and phone number.

Best answer:

Answer by B-Jo
There are different type of bankruptcies. Some bankruptcies give your the option to surrender the articles disclosed in the bankruptcy. Other options are for you to include all articles in the bankruptcy but you keep possession of the merchandise, or You may still have possession of the articles but before the date given on the bankruptcy clause, the companies in which you still have the articles will come and declare them at that given time.

This information should me explained in the forms you signed off on. Read back over everything and you will be able to get a better understanding of what’s expected of you and what you can expect in this bankruptcy.

Hope this helps.

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macroeconomic issues plz help?

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issue by Kenny : the macro-economic issues plz help
When banks bundled and sold securities backed mortgages resulting A. they isolated the banking system of any risk defects paiement.B. They have significantly reduced the overall risk of defects paiement.C. buyers of these securities assumed the entire risk of defects paiement.D. they reduced their direct exposure to default risk mortgages, but were still exposed in the form of loans to investisseursdans securities backed hypothèques.16. In the financial sector, “securitization” refers to: A. increased insurance coverage on deposits bancaires.B. requiring larger down payment on the purchase of housing in order to reduce the risk of loan default hypothécaires.C. clustering groups of loans, bonds, mortgages and other debt into new titres.D. increased collateral requirements on prêts.12. The “shadow banking system” refers to: A. the granting of credit through the underground economy when the financial crisis of 2007 and 2008produite.B. the process by which trade securities provide credit for personal and commercial needs outside Deles traditionnels.C bank loans. the series of illegal financial transactions that precipitated the financial crisis of 2007 and 2008.D. made to buyers who are risk pauvres.19 credit mortgages. Default swaps on A. helped reduce losses due to the crisis loan hypothécaire.B. involve the exchange of high-risk mortgages for securities backed by mortgages low risque.C. are ready to investors in securities backed by hypothèques.D. holders of securities backed by insured loans if they underlying loans were not remboursés.23. Which of the following describes the identity embodied in a balance? A) Assets and reserves Netteb equal value) of a net asset value égalitéC liabilities) assets over liabilities net worth égaleD) Assets Liabilities equal, plus the nette34 value. Banks create money when they: A) money prêt.B) add to their reserves to fédéraleBanque.C reserve) accept deposits of money D) sell government bonds Best answer:

response Abdul Masiih
first ouhttp :/ / en.wikipedia.org/wiki/Collateralized_mortgage_obligation23. D. Net Worth = Assets – Liabilities (btw, you could understand it easily) 34. A (again, easily found in your book) Good reading. You’ll get much more out of it if you find as many answers as possible for you.


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Q&A: A reason for securitizing mortgages is to allow a bank to do what?

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Question by foxtrot: A reason for securitizing mortgages is to allow a bank to do what?

Best answer:

Answer by ThatGuy
Securitizing mortgages allows banks to a) minimize risk exposure b) take advantage of lower capital requirements.

a) When a bank makes a loan, it is exposed to the risk that the borrower may default. However, through the process of securitization the bank sells the loan to what is called a ‘conduit’ (likely for price greater than the principal of the loan, but less then the overall expected value after the loan has been paid), which then packages the loan with others to form a ‘bond.’ In this process the bank has profited from the loan but is not exposed to any risk attributed to the borrower.

b) Banks are held to certain capital requirements, i.e. they have to hold a certain level of capital to support their loans. However, they have to hold less capital to back up investments in securities. Hence, a general strategy is to make a loan, securitize it, then buy into a senior tranche of the new security. Thus the bank has transformed a loan into a less risky asset (the bond pools risk) with which it needs to hold less capital against.

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Q&A: a package of nontraded financial instruments can be transformed into a traded financial instrument through the

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Question by sweetie pie: a package of nontraded financial instruments can be transformed into a traded financial instrument through the
process of?

a. collateralization
b. repurchasing
c. underwriting
d. securitization

Best answer:

Answer by MuaRung
d. securitization.

Securitization is the process of homogenizing and packaging financial instruments into a new fungible one. (Fungible means being of such nature or kind as to be freely exchangeable or replaceable, in whole or in part, for another of like nature or kind.)

http://en.wikipedia.org/wiki/Securitization

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Q&A: Lehman Brothers investment job?

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Question by IvyLeagueBch: Lehman Brothers investment job?
I am currently applying for an internship at Lehman Brothers. I’m not sure what the difference is between “capital markets” and “securitization banking” and “investment banking.”

Any info on that (Yes, I realize I should know the difference, but this is an internship…so I presume training.)

Best answer:

Answer by frank m
They are all part of the same machine. The Capital Markets portion of the bank raises money for firms, and in this case it is likely all debt-based capital; it refers to the sales (call mutual/hedge/pension funds and sell them bonds), trading (price bonds), research/strategy (analyze markets), and banking groups (work with issuers of bonds and structure bonds) that cover that process. Capital Markets generally includes Investment Banking, which at most banks includes securitization banking. Investment Bankers can do anything from work with Toyota to help it raise money to build more cars, to structure the bonds that Toyota is selling to investors in a way that will get the most money for Toyota (and the banker, of course). Securitization Banking is focused on MBS/ABS/CMBS bonds, which derive their cash flows from a pool of assets (for instance car loans originated by Toyota Finance) rather than Corporate Bonds that derive cash flows from the revenue the corporation earns while doing business (i.e. revenue Toyota earns from selling cars). Securitization is definitely where you want to be – it is where all of the real money is flowing around, but the general public is completely unfamiliar with it. CDOs and especially CRE CDOs (Commercial Real Estate Collateralised Debt Obligations) are going to be particularly hot in 2007, although I don’t know about going with them over the long-term. Some Consumer ABS such as Auto Loans/Leases and residential mortgages (especially subprime or HEL) will likely be very interesting this year because both of those markets will likely have the greatest hardships (and you don’t care if they don’t do great since you’re not getting a significant bonus at this point, but you’ll probably have an opportunity to learn a lot). If I could start over, I’d start in structuring, there will be (and already is) big demand in new markets for folks who have some structuring experience to segue into trading, banking, even origination. But I’d also like to start over in Sales – you’re forced to know a little about everything, and all of my co-workers in sales make big coin (they get handed accounts, and get paid whether the trade makes money or not – you can’t beat that). I’ll stop here, but if you want more feel free to send me a message under my profile – if you haven’t interviewed yet, I’ll shoot you some recent Lehman research so you’ll have some good questions to ask.

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Anyone know where I can find conferences addressing structured finance issues?

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Question by rio180: Anyone know where I can find conferences addressing structured finance issues?

Best answer:

Answer by Joe B.
A search on Yahoo! and/or Google for “structured finance” along with the terms conference and sessions should yield some leads. You may want to do a search for “global securitization” instead of “structured finance” but still including the other terms (conference and sessions).

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The last banking collapse in 1989 Conservatives didnt have a fake news network covering their tracks for them?

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Question by Smoking Joe: The last banking collapse in 1989 Conservatives didnt have a fake news network covering their tracks for them?
….and bankers actually went to jail (Keating and Milken, among others).
Do the banks now realize they don’t have to tell the truth anymore because they have Fox News and AM radio lying for them 24/7, confusing and enraging their doltish listeners?

Best answer:

Answer by team
They must have fooled obama too

Do you think obama is so hapless he couldn’t have Eric Holder haul them into court???

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Q&A: Does anyone know what securitization of criminal law is?

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Question by blackholesun: Does anyone know what securitization of criminal law is?

Best answer:

Answer by Mitch
Either consult a lawyer or try Black’s law dictionary. Should be available for you to use in a law library near you.

I am not telling you the answer, I am telling you where YOU can find answer yourself.

Feed a man a fish and you feed him for a day. Teach a man to fish and you feed him for the rest of his life.

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Can someone explain Wall Street, market capitalization, company equity, *stock exchange & more?

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Question by KAI: Can someone explain Wall Street, market capitalization, company equity, *stock exchange & more?
I’m really stupid, and would like to know.

10 POINTS AND APPRECIATION FOR THE PERSON WITH THE BEST ANSWER!
was unsure of what section to put this in, sorry.

Best answer:

Answer by juicebox
wall street: a financial district in New York, home of various stock exchanges, like the New York Stock Exchange. It’s essentially the financial center of the world.
Market Capitalization: the number of shares a company has multiplied by their market price. So if a company had 1,000,000 shares at 5$ each, it’s market capitalization would be $ 5,000,000. A share is basically a security that represents ownership in a company.
Company Equity: the assets of a company minus its liabilities. Assets are anything that generate revenue for a firm or increase its value, like plant equipment, cash, inventory, and accounts receivable (accounts receivable is very simply “money owed to a company by its debtors”. An example would be when you purchase a car. You don’t normally pay the whole thing up front; you enter a plan where you make monthly payments to pay it off). Liabilities are financial obligations a company has. So this means, in the future they will have to spend revenue to meet those obligations. An example would be a company that has financed itself through bonds which are debt instruments.
Stock Exchange: a stock exchange is the market for securities and equity derivatives trading (the trading of company shares, equity derivates: search options and futures).
Search “equity financing investopedia” or “share investopedia” and there will be a more clear and comprehensive definition with articles that will give you a walk through. Investopedia is actually the best site for finance and economics; it has articles and definitions for introductory financial and economic concepts all the way up to the more complex ones like derivatives, securitization and hedging. Sorry if this wasn’t any help

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what does “tranches” mean in a financial environment ?

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Question by Noble Athavan: what does “tranches” mean in a financial environment ?
ex:- tranches in securitization

Best answer:

Answer by j
A piece, portion or slice of a deal or structured financing. This portion is one of several related securities that are offered at the same time but have different risks, rewards and/or maturities.

Tranche is a term often used to describe a specific class of bonds within an offering wherein each tranche offers varying degrees of risk to the investor. For example, a CMO offering a partitioned MBS portfolio might have mortgages (tranches) that have one-year, two- year, five-year and 20-year maturities. It can also refer to segments that are offered domestically and internationally.

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Cool Finance images

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Check out these Finance images:

Sammy Wilson visits Fisher Engineering, Co Fermanagh. Finance Minister Sammy Wilson is welcomed to the company by receptionist Diane McCutcheon.
Finance
Image by Northern Ireland Executive
Finance Minister Sammy Wilson visits Fisher Engineering, Ballinamallard, Co Fermanagh© picture by John McVitty, Enniskillen, Co.Fermanagh, N. Ireland – 07771987378 ©

FINANCE MINISTERS MEETING, DECEMBER 19, 2011, VICTORIA, BRITISH COLUMBIA
Finance
Image by BC Gov Photos
Minister of Finance Jim Flaherty meets with provincial and territorial finance ministers, including British Columbia’s Minister of Finance, Kevin Falcon, on Monday, December 19, 2011.

choosing-car-finance
Finance
Image by natloans
Choosing car finance – How to choose car finance

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securitization and subprime investment?

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Question by hetbh123: securitization and subprime investment?
I don’t really understand this concept and how these two are related are are causing the financial crisis it is today. the ethical issue that is imposing on companies such as AIG….Can someone explain to me? thank you very much.

Best answer:

Answer by Ed Atun
In 2003 bank accounts were paying 1% interest. Many people had their life savings in the bank. Merrill Lynch was investing money in mortgages that paid 6%. Merrill said they would pay people 5% which was great compared to 1% at the bank. Merrill made 1% profit and people got 5% on their life savings. Everyone was happy. So Merrill started loaning to people with bad credit (subprime) at 8%. The people could now get 7% on their money. Much better than 1%. Merrill still made its 1% profit on every mortgage. This worked great. Merrill was not selling mortgages to the citizens of the USA. They were selling investments in a giant pool of mortgages. When a citizen received their 7% interest, they did not own a mortgage. They owned a “security” that was invested in mortgages.
But the people with bad credit did not pay their mortgages. People quickly realized that they might not get their 7% interest. They might not get anything at all. All of a sudden, the old 1% in the bank looked very safe. So everyone pulled out at once. The money disappeared. Merrill Lynch had no money to pay employees; no money to buy new mortgages; no money to do anything. So it all folded…

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Can someone summarize this book for me?

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Question by rmz_usa: Can someone summarize this book for me?
Can someone summarize the book “The business of Investment Banking, A Comprehensive overview” for me in 1 or 2 paragraphs? It is a large textbook, so I would appreciate it very much.

Best answer:

Answer by cactusgene
Synopsis

The business of investment banking has become intensely competitive. With a growing number of clients who prefer to deal with a single financial adviser for all their capital needs, firms must now engage in all major capital-market activities in order to meet this demand. Rapid advances in information technology have closely linked the international capital markets and, as a result, major securities firms have gone global to better serve their clients. To fully understand this changing environment and remain players in the game, new and seasoned professionals alike will require detailed, in-depth information on a broad scope of banking operations.

The Business of Investment Banking: A Comprehensive Overview, 2nd Edition is a complete guide to the major banking activities in today’s global marketplace. This convenient, one-volume reference identifies and analyzes key trends worldwide, allowing banking and finance professionals to effectively manage deals and incorporate trends into operations. In The Business of Investment Banking: A Comprehensive Overview, 2nd Edition, Professor K. Thomas Liaw goes beyond traditional banking topics and includes extensive coverage of rarely discussed subjects that are integral to investment banking, such as emerging markets, proprietary trading, repurchase transactions, operations, money management, and how foreign firms list on Wall Street.

Beginning with an overview, covering everything from underwriting to M&As to global presence, Liaw provides a thorough and rigorous analysis of the current market practices in all relevant business segments. He presents an investment banker’s perspective on the current environment, with a detailed description of the strategic decision-making process that is crucial to successfully managing the investment bank.

This thorough guide is divided into four main sections:

Basic Business-explores venture capital investment, mergers and acquisitions, underwriting, and asset securitization
Global Perspective-detailed information about foreign listing on Wall Street, international capital markets, and emerging markets
Trading and Risk Management-extensive data on proprietary trading, repurchase agreements, financial engineering, and money management
Special Topics-discusses clearing and settlement, securities regulation, ethics, major trends, and Section 20 subsidiaries

Comprehensive, unparalleled coverage of a wide range of topics makes The Business of Investment Banking: A Comprehensive Overview, 2nd Edition an invaluable, one-stop resource for all practicing investment banking professionals and for graduate students interested in a career in capital markets.

Here are 22 more customer reviews of people who have actually used it. Half of them say it is a 5-star book (the best) and give you what they liked or learned from it:

http://www.amazon.com/Business-Investment-Banking-Comprehensive-Overview/product-reviews/0471739642/ref=dp_top_cm_cr_acr_txt?ie=UTF8&showViewpoints=1

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Finance Minister at Young at Heart Exhibition 25 May (L-R) Mary Hall, Ena McKeown and Grace Minnis

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Finance Minister at Young at Heart Exhibition 25 May (L-R) Mary Hall, Ena McKeown and Grace Minnis
Finance
Image by Northern Ireland Executive
25/5/11 Mandatory Credit Darren Kidd/Presseye.com
Over £13million rates assistance provided to lone pensioners in Northern Ireland.

Finance Minister Sammy Wilson pictured at the Young at Heart Exhibition with Holywood ladies (L-R) Mary Hall, Ena McKeown and Grace Minnis. Since 2008 over £13 million has been distributed to pensioners by Land and Property Services through the Lone Pensioner Allowance, which entitles persons aged 70 or over who live alone to a 20% discount on their rate bill.

DEPARTMENT OF FINANCE AND PERSONNEL

25 May 2010

Over £13million rates assistance provided to lone pensioners in Northern Ireland

Finance Minister Sammy Wilson has welcomed the take up of almost £13.5million of assistance to pay rates by lone pensioners across Northern Ireland.

£13,488,820 has been distributed to pensioners since April 2008 by Land & Property Services through the Lone Pensioner Allowance, which entitles persons aged 70 or over who live alone to a 20% discount in their rate bill.

Welcoming this, the Minister said: “The Lone Pensioner Allowance is an example of the tangible help that the Executive is providing to one of our most vulnerable groups in society. It is encouraging that nearly 25,000 people have availed of this assistance which I am sure is of particular use in this current economic climate.”

The Minister, who was attending the Young at Heart Exhibition at St George’s Market for retired people in Northern Ireland, encouraged all those who qualify for the assistance to apply.

The Minister continued: “If you are aged 70 or over and are living alone, I urge you to apply for the Lone Pensioner Allowance. If you are eligible you will receive this help irrespective of income or savings because this allowance is not means tested. Therefore you don’t have to tell us about your savings or income when you apply.

“Older people, who do not live alone, may also be eligible for help with paying their rates. I would encourage all older people to check out what help they are entitled to.”

Getting help to pay your rate bill is not exclusive to older people. People on low incomes may be eligible for a reduction in their rates through the Housing Benefit Scheme or Rate Relief Scheme. The Disabled Persons Allowance scheme entitles a household to a 25% reduction in their rates if the property has been suitably adapted or has additional facilities to meet the special needs of a resident disabled person.

Full details of all these reliefs are available at www.nidirect.gov.uk/rates or by telephoning 101 (028 9151 3101). Calls cost 10p.

Notes to editors:

1. Media enquiries only to DFP Communications Office on 028 9052 7374 or 028 9052 7375. Out of office hours please contact the Duty Press Officer via pager number 076 9971 5440 and your call will be returned.

Ciarrai Conlan
Information Officer
Marketing and Communications
Land & Property Services
Queen’s Court
55-66 Upper Queens Street
Belfast
BT1 6FD

Tel: 028 9054 3988 ext 43988
Mobile: 07879557528

Finance Minister Supports Marie Curie Shop Challenge
Finance
Image by DUP Photos
Finance Minister Sammy Wilson spurs staff from DFP on as they participate in the Marie Curie Shop Challenge on the Lisburn Road. Pictured (L-R) Martine Faloon, DFP, Jenny Burton, Assistant Manager, Marie Curie Finance Minister and Annette Hutton, DFP

The challenge involved generating extra stock, helping to raise the shop’s profile locally, attracting more customers on the day and ultimately increasing sales and money raised.

Picture taken by: Heather Thompson (DFP) – 27/09/2012

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Q&A: Do you agree this is what caused the economic crisis?

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Question by what?: Do you agree this is what caused the economic crisis?
I found this on fact check

The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.

Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.

Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.

Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.

The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.

Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.

Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.

Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.

The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.

An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.

Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.

http://www.factcheck.org/elections-2008/who_caused_the_economic_crisis.html

Best answer:

Answer by new mom
uh, yep that about sums it up

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