A bailout is an effort by the government to provide sufficient financial assistance to prevent the failure of a specific private or quasi-private entity. The program may consist of loans or grants to satisfy outstanding debts or may involve government purchase of an equity position in the firm.
A period during which lenders are unwilling to extend credit to borrowers. The term is particularly associated with the period beginning in late 2007, when the previous era of 'easy credit' came to a sudden end in the wake of the subprime lending fiasco.
A credit default swap (CDS) is a financial derivative that allows an investor to swap or offset their credit risk with that of another investor. The buyer of a CDS makes periodic payments to the seller and, in return, receives a payoff if the underlying financial instrument defaults.
Deleveraging is the process by which an entity reduces its level of debt by rapidly selling off assets or paying down loans, often in response to financial stress or in pursuit of a stronger balance sheet.
The removal of controls imposed by governments on the operation of markets, aiming to enhance efficiency and competition but potentially contributing to economic instability under certain conditions.
The Federal Crisis Inquiry Commission (FCIC) was a ten-member panel created by President Barack Obama in 2009 to investigate the causes of the financial and economic crisis in the United States.
The Great Depression was a severe worldwide economic depression that took place during the 1930s, starting in the United States. The timing of the Great Depression varied across nations; in most countries, it started in 1929 and lasted until the late 1930s or early 1940s.
A Liar Loan is a type of mortgage loan in which the borrower is allowed to take out the loan without providing standard documentation to prove income, employment, or assets. These loans were quite prevalent during the housing bubble of the mid-2000s and significantly contributed to the subsequent financial crisis due to their risky nature.
Monoline insurers provide guarantees to bond issuers to enhance their creditworthiness. After being highly active in the mid-2000s, particularly in complex structured finance instruments, they faced significant losses due to the subprime lending disaster of 2007.
A moratorium provides critical financial relief in situations where debt repayment is hindered by economic or market crises, offering time for debtor recovery and maintaining market stability.
A comprehensive guide on the multifaceted usage and implications of the term 'run' across different domains such as banking and computers.
Structured finance refers to the creation of complex debt instruments through methods such as securitization or the incorporation of derivatives to existing instruments. It involves asset pooling, tranching of liabilities, and the creation of special purpose vehicles to mitigate risk.
A type of arbitrage fund that finances its operations through the sale of asset-backed commercial paper and medium-term notes, investing primarily in asset-backed securities.
An exploration of subprime lending: providing loans to borrowers with poor credit ratings. Discussing the risks, costs, and historical implications—especially the role in the 2007-08 financial crisis.
The term 'Too Big to Fail' (TBTF) refers to organizations, particularly financial institutions, whose failure would pose a systemic risk to the economy. This concept gained prominence during the 2008-2009 financial crisis.
Toxic assets are financial instruments for which there is no longer a functioning market, making their value highly uncertain and leading to difficulties in selling them at reasonable prices. The term gained prominence during the financial crisis following the 2008 subprime lending debacle.
The Troubled Asset Relief Program (TARP) was a U.S. government initiative aimed at stabilizing the financial system and restoring bank lending during the subprime mortgage crisis by purchasing up to $700 billion in troubled assets from financial institutions.
A U.S. government program created to stabilize the financial system during the 2008 financial crisis by purchasing distressed assets and injecting capital into banks.
The Troubled Assets Relief Program (TARP) was a U.S. Treasury program established under the Emergency Economic Stabilization Act (EESA) of 2008 to stabilize the financial system during the financial crisis by purchasing troubled assets and providing capital to financial institutions.
UKFI was a limited company established by the UK government to manage its shareholding in banks that received state investment during the financial crisis of 2008.
