Excessive Leverage
When the I-banks were levering up 30:1 in the past few years, who was providing all these loans and demand?
To what extend did CDSs get applied to CDOs during the financial crisis? Did banks only buy the insurance on the "safest" traunches in order to obtain AAA ratings from the credit agencies or did CDSs also get applied to other traunches of CDOs?
Finally, which instutions besides AIG have the largest supply and exposure to credit default swaps?
Thanks for your input guys
i'm also the reason bear and lehman went down.
The world has changed. And we must change with it.
Did most of the leverage come from the REPO market?
What about the leverage for Hedge Funds?
Considering so many banks and hedge funs were levered 30:1 and 40:1, I'm just trying to figure out where all this leverage came from.
A variety of sources. You're certainly right a lot came from repo financing (re BSC). A lot also came from the commercial paper market, some from interbank lending, a fair bit from more long term debt
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