Certified Forensic Loan Auditors, LLC

  Upcoming Classes

Search CFLA's Article Archive:

A Wall Street Invention That Almost Blew Up the World Five Years Ago is Falling Out of Fashion

businessinsider.com | February 2, 2014

By Linette Lopez

Going the way of scrunchies and jerry curls, credit default swaps (CDS) are falling out of fashion on Wall Street, reports Bloomberg's Mary Childs.

Outstanding CDS has been cut in about half in the time from 2007 to June 2013. Part of the problem is that new post financial crisis regulation is making it too expensive for banks.

Credit default swaps had a huge hand in financial crisis. Back in the 90s, they were invented at JP Morgan as a mechanism to insure loans. In a nutshell, the buyer of the CDS pays the seller installments with a guarantee that if the borrower of the loan defaults, the buyer is made whole.

Of course, 5 years ago, a whole lot of people defaulted, so a whole lot of CDS had to be paid out, and that had a domino effect on our whole banking system.

And that's another problem with CDS now. Since the Fed has kept rates so low, fewer people are defaulting, and that means fewer payouts.

Since then, though, some really smart people have continued playing in this muck. Guys like Boaz Weinstein od Saba Capital Management and Andrew Fieldstein over at BlueMountain Capital Management made a killing betting against the London Whale (who traded CDS) and even before that, during the Euro debt crisis.

But now those guys are changing their strategies — hiring equity traders and bringing down their CDS assets.

Of course, Wall Street has never had a shortage of toys to play with, so don't lose too much sleep over this.


Back to February 2014 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

SEE BELOW- http://www.certifiedforensicloanauditors.com

Call us toll free at 888-758-2352

Bookmark and Share
Facebook Like us on Facebook
Twitter Follow us on Twitter
YouTube View our YouTube Videos
LinkedIn Connect to us on Linkedin
BBB Logo


Contact us or view our Sample Documents & Audits by completing the form below.

  • Reload
  • Should be Empty:


DVD Sets Only $99


FREE Mortgage Fraud Analysis


Order Cutting-Edge Services Now


Quiet Title Packages from Licensed Attorneys


Affiliate Services


CFLA Sponsored Attorney Links


Take-Home Education Package