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According to the report, the agencies helped banks disguise the risks of the investments they marketed, selling high risk securities with low risk labels.
This avoidance of the middle ground would avoid the "risk of total ruin" in putting 100 percent in "the so-called 'medium' risk securities".
Standard economic theory says they should be measured with a very low discount rate — something much closer to the rate on Treasury bonds than to the higher risk securities in most pension investment portfolios.
A broad range of legal implications and technical issues remains challenging aside from ownership and netting, including creating uniform standards, data security, and assignment of liability and risk, securities lending, foreign exchange, allocations and confirmations, fractional ownership and handling physical securities.
Bear Sterns goes crazy purchasing high risk securities, gets excited when the dollars begin to roll in, and forgets all about the basic Finance 101 principles of asset allocation and diversification.
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Which Is The Greater Risk: Security Or Lack Of Innovation?
He has been a partner in numerous projects funded by the European Commission involving privacy, surveillance, risk, security and ethics.
In 1985, Ted Turner, the cable television entrepreneur, tried unsuccessfully to acquire CBS with a package of high-risk securities.
Yet FPK is "in no doubt that a deep and active market in insurance-risk securities will ultimately develop".
Hence the development of "insurance-risk securities", the best example of the convergence between insurance and the capital markets.
Scott A. Shay, chairman of Signature Bank, which holds no high-risk securities, called a limit on executive pay for firms participating in the bailout only fair.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com