But we remain absolutely confident that the United States will not for the first time default on its obligations or risk default on its obligations, that Congress will act appropriately.
In stepped the investment bank industry with another solution: We'll take your mortgages, securitize them, slice them into categories based on default risk, use computer models to match default risk with yield and sell them to buyers around the world.
The higher the risk of default on a promised stream of payments, the higher the lease or interest rate.
Because the risk of default on these bonds is small, their prices are driven by the same economic forces as government bonds.
What I have said, what everyone has said, is that once we lose our borrowing authority we become at risk of default on our obligations.
And since there is no capital at risk for the GP if a fund loses money, the risk of default on the debt is borne solely by the LPs.
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The Fed, not the banks, bears the risk of any default on the paper.
Taxpayers already bear the default risk on these loans, which are made without regard to credit history.
Because lenders expected to be able to sell on the risk of default to someone else, they lent too easily.
Gary Jenkins of Deutsche Bank points out that, historically, investors have been overpaid for the default risk on high-quality corporate bonds.
The Government Accountability Office has also cast doubt on a proposal--supported by Democrats and the administration--to lower the down payment requirement for FHA-insured loans, given the greater default risk on those loans.
You may think of Singapore as a relatively safe haven, but KMV says the default risk on the debt of publicly traded companies there has shot up -- from a negligible 0.1% almost two years ago to 4.2% now.
That mood was tempered Friday by comments from the Greek prime minister, who reiterated his view that there was "absolutely no risk" of default on Greece's government debt and added that there was no possibility of Greece leaving the European Monetary Union.
Despite the high jinks and copious drinking (or perhaps because of it), their large brains came up with a way of reducing risks for bond buyers: a bilateral contract that, for a fee, enabled investors to pass on the risk of default to another party.
Although the investments resembled bonds, paying buyers a fixed interest rate for taking on the default risk of corporate debt, the products invested in synthetic collateralized debt obligations held by Lehman.
And others may judge that an interest rate big enough to compensate for the risk of default would only add to the pressure on Greece, making default more likely.
Since the last week of September the apparent risk of a Commerzbank default, on the basis of derivative prices, has nearly trebled (see chart).
Spanish banks like Santander and BBVA hold more than 40% of the outstanding sovereign debt of Portugal (valued at about 60 billion euros), which carries an eye-wateringly high interest rate reflective of the risk that the county will default on some of its payments.
In addition, third parties with no exposure to the particular credit risk can bet on whether the Greeks will default.
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Banks paid insurers such as AIG to take on the risk that their assets would default, which saved them having to put capital aside as the regulations required.
In recent weeks there has been a rise in both LIBOR (a gauge of banks' borrowing costs) and the credit-default-swap spreads on bank bonds (the cost of insuring against default risk).
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Essentially, banks rate all of their assets based on the likelihood of their default and keep a proscribed amount of capital based on the risk weighting of the asset.
Not only does America earn interest on its contribution, but the risk of default is almost negligible.
Nearly 2 million households will risk default when the "teaser" rates on their adjustable rate mortgages expire within the next year.
Sustained deflation, Credit Suisse says, would put strains on public finances, increasing the risk of sovereign default, and making longer-term bonds less attractive.
Remember, the higher the yield on any debt product, the higher the risk of default.
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And the longer such a default went on, the greater the risk of provoking a genuine bond crisis would become.
This may be a sign that some consumers are again taking on too much debt and are a higher risk of default in the future.
Anyone who has watched TV or picked up a newspaper in the past few months has heard of the furor over the U.S. debt limit and the risk that the U.S. government would default on its financial obligations.
It's peace in our time on Capitol Hill, but the risk of a formal US default was always tiny.
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