ECON 2020 Lecture Notes - Lecture 33: International Swaps And Derivatives Association
Document Summary
Financial deregulaion: gramm-beach-bliley act (1999) allowed the combinaion of banking, i-banking, insurance & other inancial insituions, banking fdic guarantee ~ k, low risk, low return, too big to fail ii. I-banking no guarantee on deposits: high risk, potenially high return, commodity futures modernizaion act (2000) i. Isda: deregulaion of inancial derivaives mbs, cdo, cds, aig a. 2001 2007: cdo b . 7t 18% of corporate proits in us. 44% of corporate proits in us: cds. Increases in debt will increase interest expenses & payments, and lowers proits. Taking advantage of deregulaion, the mbs, cdo + cds markets helped to create tremendous amounts of wealth on wall street.
