Quotes & Sayings About Credit Risk

Main Street investors, who cannot trade credit default swaps, should not be tempted to trade an instrument with the same risk profile simply because it has been given a different name. — Daniel L. Doctoroff

The money has to be deferred with what they call "clawback," which means they can get it back if I lose it all. So that guy making ten million a year selling credit default swaps, if we're going to keep five million of it in escrow for ten years, and with the right to go back and get it, if he starts losing money, then we're going to give people the right incentives not too take so much risk. — Richard Thaler

Many people keep deploring the low level of formal education in the United states (as defined by, say, math grades). Yet these fail to realize that the new comes from here and gets imitated elsewhere. And it is not thanks to universities, which obviously claim a lot more credit than their accomplishments warrant. Like Britain in the Industrial Revolution, America's asset is, simply, risk taking and the use of optionality, this remarkable ability to engage in rational forms fo trial and error, with no comparative shame in failing again, starting again, and repeating failure. — Nassim Nicholas Taleb

It was Greenspan who through some excessive deregulation prepared the monetary ground for the rise of the subprime mortgage companies: a lending market that specialises in high-risk mortgages and loans.
'Innovation', said Greenspan in April 2005, 'has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants'.
It is almost touching to find out that Greenspan cares so much about immigrants. — Gilad Atzmon

The most threatened group in human societies as in animal societies is the unmated male: the unmated male is more likely to wind up in prison or in an asylum or dead than his mated counterpart. He is less likely to be promoted at work and he is considered a poor credit risk. — Richard Brinsley Sheridan

When does money run out of time? The countdown begins when investable assets pose too much risk for too little return; when lenders desert credit markets for other alternatives such as cash or real assets. — Bill Gross

Never pretend to have money except when you are in straits. The poor man who pretends to have a bank account betters his credit and takes no risk. But the prosperous individual who counts his money in the street, forthwith will be invited to attend a charity bazaar. — George Ade

In financial services, if you want to be the best in the industry, you first have to be the best in risk management and credit quality. It's the foundation for every other measure of success. There's almost no room for error. — John G. Stumpf

This is the crisis! Difficulty getting credit, slow growth, high unemployment, low consumer confidence-these are challenges entrepreneurs can overcome with hard work, smart risk and tenacious teamwork. This is precisely what entrepreneurs do! — Oliver DeMille

To further encourage flow of credit to what we thought were stressed sectors, we extended regulatory forbearance to banks by relaxing the risk weights and provisioning norms governing bank loans to the stressed sectors. This — Duvvuri Subbarao

I don't believe there's any evidence that credit scoring is a risk factor. What is it about someone having a worse credit score that makes them a worse driver? (Insurers) can't answer that. — Robert Hunter

Well I'm not going to hope that you get hurt, but if you do, remember that you're my damsel in distress, and no one is allowed to carry you."

"I don't remember signing a contract."

"All the more reason to promise me now."

"What if you're not around when I get hurt?"

"Send word, I'll come running."

"How big an injury does it have to be? Because sometimes I do this thing when I stand up too quickly and my ankle kind of twists a little---"

"Sounds serious. You don't want to put any weight on that. I'd better carry you the next time that happens."

"What if I skin my knee?"

"I'll carry you."

"Charley horse?"

"I'll carry you."

"Chipped toenail?"

"Not worth taking a risk. I'll carry you."

I grin at him [...] I have to admit -- he's funnier and smarter than I've given him credit for. — Claire LaZebnik

You want 21 percent risk free? Pay off your credit cards. — Andrew Tobias

Any investment bought via credit always runs the risk of margin calls and, eventually, liquidation. — Barry Ritholtz

I must speak the truth, even at the risk of being ostracized by my fellow scribblers. In fact, anticipating their rage, I have already applied for a place in the Canada Council's witness-protection program. This because, much as it pains me to turn on my kind, I fear the time has come to admit that far too many celebrated writers were outrageous liars, philanderers, drunks, druggies, unsuitable babysitters, plagiarists, psychopaths, parasites, cowards, indifferent dads or moms and bad credit risks. — Mordecai Richler

The full consequences of a default or even the serious prospect of default by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and on the value of the dollar in exchange markets. The Nation can ill afford to allow such a result. The risks, the cost, the disruptions, and the incalculable damage lead me to but one conclusion: the Senate must pass this legislation before the Congress adjourns. — Ronald Reagan

Hedge funds are a very efficient way of managing money. But there are clearly some risks. Hedge funds use credit and credit is a source of instability. Transactions involving credit should be regulated. — George Soros

Now, it has been independently shown that people hate to lose something more than they enjoy gaining it. For example, they don't mind paying for something with a credit card even when told there is a discount for cash, but they hate paying the same amount if they are told there is a surcharge for using credit. As a result, people will often refuse to gamble for an expected profit (they turn down bets such as "Heads, you win $120; tails, you pay $100), but they will gamble to avoid an expected loss (such as "Heads, you no longer owe $120; tails, you now owe an additional $100"). (This kind of behavior drives economists crazy, but is avidly studied by investment firms hoping to turn it to their advantage.) The combination of people's loss aversion with the effects of framing explains the paradoxical result: the "gain" metaphor made the doctors risk-averse; the "loss" metaphor made them gamblers. — Steven Pinker

For my own part, I did not see and did not appreciate what the risks were with securitization, the credit ratings agencies, the shadow banking system, the S.I.V.'s - I didn't see any of that coming until it happened. — Janet Yellen

At the risk bragging, one of the things I'm best at is riding coattails. Behind every successful man is me, smiling and taking partial credit. — Aziz Ansari

I think the credit default swaps can take the place of the rating agencies who really have missed the ball in this procedure and are quite conflicted by the way the ratings are paid for. So, I would like to see credit default swaps become an evermore important way of understanding credit risk in the economy. — Robert F. Engle

I think one lesson we have to learn is that there's a lot more risk than we're giving credit to, a lot more what economist calls systematic risk. — Richard Thaler

I like to foster an atmosphere on set of collaboration and openness and risk taking. The beauty is when you have such brilliantly talented people as I did in my cast, you definitely don't want to fetter them in any sense. You want them to be able to go out there and do their thing and feel confident in doing their thing, because ultimately I'm the person who gets the credit which is great. — Dan Mazer

When the Goldman Sachs saleswoman called Mike Burry and told him that her firm would be happy to sell him credit default swaps in $100 million chunks, Burry guessed, rightly, that Goldman wasn't ultimately on the other side of his bets. Goldman would never be so stupid as to make huge naked bets that millions of insolvent Americans would repay their home loans. He didn't know who, or why, or how much, but he knew that some giant corporate entity with a triple-A rating was out there selling credit default swaps on subprime mortgage bonds. Only a triple-A-rated corporation could assume such risk, no money down, and no questions asked. Burry was right about this, too, but it would be three years before he knew it. The party on the other side of his bet against subprime mortgage bonds was the triple-A-rated insurance company AIG - American International Group, Inc. — Michael Lewis

To be sure, the provision of liquidity alone can by no means solve the problems of credit risk and credit losses; but it can reduce liquidity premiums, help restore the confidence of investors, and thus promote stability. — Ben Bernanke

Goldman Sachs itself - and so Goldman was in the position of selling bonds to its customers created by its own traders, so they might bet against them. Secondly, there was a crude, messy, slow, but acceptable substitute for Mike Burry's credit default swaps: the actual cash bonds. According to a former Goldman derivatives trader, Goldman would buy the triple-A tranche of some CDO, pair it off with the credit default swaps AIG sold Goldman that insured the tranche (at a cost well below the yield on the tranche), declare the entire package risk-free, and hold it off its balance sheet. Of course, the whole thing wasn't risk-free: If AIG went bust, the insurance was worthless, and Goldman could lose everything. Today Goldman Sachs is, to put it mildly, unhelpful when asked to explain exactly what it did, and this lack of transparency extends to its own shareholders. If a team of forensic accountants went over Goldman's books, they'd be shocked at just how good Goldman is at hiding things, — Michael Lewis

The credit crunch was based on a climate (the post-Cold War victory party of free-market capitalism), a problem (the sub-prime mortgages), a mistake (the mathematical models of risk) and a failure, that of the regulators. — John Lanchester

Personal responsibility matters. There are no excuses for those who spend money on things they cannot afford. But it's a whole lot harder to act responsibly when consumer credit contracts are designed to be incomprehensible, when prices are obscure and risks are hidden. — Elizabeth Warren

Credit ratings and risk weightings must undergo a thorough process of review and revision. No security or instrument on the planet should have a zero risk weighting. — Paul Singer

If you fail to pay your minimums for any debt on time, your credit score will take a major hit and you run the risk of seeing the interest rate on all of your cards go up. An easy way to remind yourself to pay, is to sign up to receive your statements via e-mail. — Alexa Von Tobel

The banks, because of mismanagement, because of huge risk taking, are now in very vulnerable positions. We can expect that we're gonna have to do more to shore up the financial system. We also are gonna have to make sure that we set up financial regulations so that not only does this never happen again, but you start having some sort of - trust in how the credit markets work again. — Barack Obama

This immoral system, how do you get outside it? Option one, you drop out, sever the connections. They got that far in '68, okay? People went as far with that as they could, to say, I'm free, you're free, kumbaya and barbaric yawp and yadda yadda, and look what happened. The problem with the whole Rousseau trip is that man is primordially a social animal, in the sense of clan or tribe. Marx says this somewhere. You detach completely, you not only find yourself way out on a limb, against your nature, but you've lost any power for group resistance. And eventually, you come crawling back, clutching credit-card applications, begging to be let in. — Garth Risk Hallberg