A mortgage that permits the lender to periodically adjust the interest rate on the basis of changes in a specified index.
Direct debt obligations issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, which are government sponsored enterprises (GSEs).
A non-standard mortgage owed by a borrower characterized by a strong credit history but with less traditional features; for example, reduced documentation, low down payment or non-owner occupier.
Short-term debt that is typically limited to a fixed maturity of between 1 and 270 days. The proceeds of ABCP issuance are used primarily to purchase various assets, such as trade receivables, consumer debt receivables, auto and equipment loan leases, and collateralized debt obligations. (See also: Commercial paper)
A Federal Reserve lending facility that provides funding to U.S. depository institutions and bank holding companies to finance their purchases of high-quality asset-backed commercial paper (ABCP) from money market mutual funds under certain conditions.
In general, a money or capital market instrument, usually marketable (that is, transferable to third-parties in market transactions), that has specific financial assets generating the cash flow from which the instrument will be paid. (See also: Commercial mortgage-backed security and Residential mortgage-backed security.)
A company that owns, or has controlling interest in, one or more banks. The Federal Reserve is responsible for regulating and supervising bank holding companies, even if the bank owned by the holding company is under the primary supervision of a different federal agency.
Central governmental agency of the Federal Reserve System located in Washington, D.C., and composed of seven members appointed by the president and confirmed by the Senate. The Board, with other components of the System, has responsibilities associated with the conduct of monetary policy, the supervision and regulation of certain banking organizations, the operation of much of the nation’s payments system, and the administration of many federal laws that protect consumers in credit transactions. The Board also supervises the Federal Reserve Banks. Also known as Board of Governors and Federal Reserve Board.
The funds invested in a bank that are available to absorb loan losses or other problems and therefore protect depositors. Capital includes all equity and some types of debt. Bank regulators have developed two definitions of capital for supervisory purposes: Tier 1 capital can absorb losses while a bank continues operating. Tier 2 capital may be of limited life and may carry an interest obligation or other characteristics of a debt obligation; therefore it provides less protection to depositors than tier 1 capital. Capital ratio (banking system): Total assets minus total liabilities as a percentage of total assets
A program through which the U.S. Treasury Department purchases senior preferred shares in eligible financial institutions. The program is available to institutions that elected to participate before 5:00 pm (EDT) on November 14, 2008, including qualifying U.S. bank and savings and loan holding companies, U.S. controlled banks, savings associations, and certain bank and savings and loan holding companies engaged only in financial activities. Privately held financial institutions that have filed a bank or thrift holding company application on or before December 8, 2008, may apply to the TARP program through their federal banking regulator.
A time deposit in a financial institution with a specific maturity date. May also refer to large-denomination CDs ("Negotiable CDs") that can be sold but not redeemed before maturity. For accounting and regulatory purposes, these are bank deposits. Typical issue amounts of negotiable CDs are $1 million to $5 million.. The adjective “small” is applied to time deposits of less than $100,000, and “large” to time deposits of $100,000 or more.
The chapter of the Bankruptcy Code providing (generally) for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. Business owners and individuals can also seek relief in chapter 11.
Financial institutions that clear trades in government securities, agency securities, and other money market instruments for nonblank dealers.
An asset that is pledged as security for a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan agreement.
CDO – Collateralized Debt Obligation: A security that represents a claim on cash flows generated by a pool of debt obligations. CLO – Collateralized Loan Obligation: A security that represents a claim on cash flows generated by a pool of loans. CMO – Collateralized Mortgage Obligation: A security that represents a claim on cash flows generated by a pool of mortgages.
A security that relies for payment on cash flows generated by a pool of commercial mortgage debt obligations. (See also: Asset-backed security and Residential mortgage-backed security)
A short-term, unsecured promissory note issued by an industrial or commercial firm, a financial company, or a foreign government. Typically, maturity is 90 to 180 days. (See also: Asset-backed commercial paper)
A Federal Reserve lending facility designed to provide a liquidity backstop to U.S. issuers of commercial paper. The CPFF is intended to improve liquidity in short-term funding markets and thereby contribute to greater availability of credit for businesses and households.
A mortgage loan that qualifies for purchase by one of the housing-related Government Sponsored Enterprises (GSEs), Fannie Mae or Freddie Mac. The maximum size of a single-family conforming mortgage loan effective January 1, 2008 was $417,000. The Economic Stimulus Act of 2008 temporarily raised the maximum to as much as $729,750 in some high-cost areas. This amendment expired December 31, 2008.
A conservatorship is the legal process (for entities that are not eligible for Bankruptcy court reorganization) in which a person or entity is appointed to establish control and oversight of a company to put it in a sound and solvent condition. In a conservatorship, the powers of the company’s directors, officers, and shareholders are transferred to the designated conservator.
A type of derivative that allows a buyer to hedge against default of a counterparty. A CDS buyer agrees to pay a counterparty (the seller) a periodic premium in return for insurance against “credit event” such as a default on a specified, underlying obligation.
Firms that rate the quality of bonds and other financial securities. These ratings are used by investors to assess the probability of default. Well-known rating agencies include Moody’s, Standard & Poors, and Fitch Ratings. Firms in this business must meet standards enforced by the Securities and Exchange Commission.
Federal insurance of deposits received at an insured bank or thrift, including deposits in checking, negotiable order of withdrawal (NOW), and savings accounts; money market deposit accounts; and time deposits such as certificates of deposit (CDs).
Amount of funds held by a depository institution in its account at a Federal Reserve Bank in excess of its required reserve balance and its contractual clearing balance.
A U.S. Treasury Department Fund that typically holds three types of assets: U.S. dollars, foreign currencies, and Special Drawing Rights (SDRs). The ESF can be used to purchase or sell foreign currencies, to hold U.S. foreign exchange and SDR assets, and to provide financing to foreign governments. All operations of the ESF require the explicit authorization of the Secretary of the Treasury.
Fannie Mae is a Government Sponsored Enterprise (GSE), which was established as a federal agency in 1938 and chartered by Congress as a private company in 1968. Fannie Mae's chartered mission is to provide liquidity and stability to the U.S. housing and mortgage markets by operating in the U.S. secondary mortgage market. The full legal name for Fannie Mae is the Federal National Mortgage Association.
Loss sharing is a feature that the Federal Deposit Insurance Corporation (FDIC) first introduced into selected purchase and assumption (P&A) transactions used to resolve failed insured depository institutions in 1991. The original goals of loss sharing were to (1) sell as many assets as possible to the acquiring bank and (2) have the nonperforming assets managed and collected by the acquiring bank in a manner that aligned the interests and incentives of the acquiring bank and the FDIC. Under loss sharing, the FDIC agrees to absorb a significant portion of the loss—typically 80 percent—on a specified pool of assets while offering even greater loss protection in the event of financial catastrophe; the acquiring bank is liable for the remaining portion of the loss.
A U.S. government agency that insures deposits in banks and thrift institutions and supervises state-chartered, non-Federal Reserve member banks.
A system of 12 regional banks with a primary mission to meet credit and financial service needs of local communities. Chartered by Congress in 1932 to promote a healthy mortgage finance system. Home loan banks are privately owned, wholesale banks without publicly traded stock.
An agency within the U.S. Department of Housing and Urban Development (HUD) that insures mortgages and loans made by private lenders.
An independent regulatory agency of the executive branch of the U.S. government that regulates the 12 Federal Home Loan Banks, Fannie Mae, and Freddie Mac.
A Committee created by law that consists of the seven members of the Board of Governors; the president of the Federal Reserve Bank of New York; and, on a rotating basis, the presidents of four other Reserve Banks. Nonvoting Reserve Bank presidents also participate in Committee deliberations and discussion. The FOMC generally meets eight times per year in Washington, D.C., to set the nation’s monetary policy. It also establishes policy relating to System operations in the foreign exchange markets.
The Fed and the Federal Trade Commission (FTC) are the primary rule writers for federal consumer protection legislation, including the Home Mortgage Disclosure Act (HMDA)and the Home Ownership and Equity Protection Act (HOEPA).
Federal legislation, enacted in 1913, that established the Federal Reserve System. Section 13(3): Federal Reserve Banks can be authorized by the Board of Governors to lend to corporations if circumstances arise that are deemed “unusual and exigent” and, moreover, the borrower is unable to obtain funding elsewhere. This statute provides the legal basis for a number of the Fed's recent special lending facilities, including facilitating the JP Morgan Chase acquisition of Bear Stearns, the Fed's loan to AIG, and the Commercial Paper Funding Facility (CPFF). For more information, see: www.federalreserve.gov/aboutthefed/section13.htm
Section 23(A): Restrictions on Transactions with Affiliates: A section of the Federal Reserve Act that limits certain transactions between insured institutions and their affiliates. The limits are designed to protect the assets of the insured institution. For more information, see: www.federalreserve.gov/aboutthefed/section23a.htm
Maiden Lane: On June 26, 2008, the Federal Reserve Bank of New York (FRBNY) extended credit to Maiden Lane LLC under the authority of section 13(3) of the Federal Reserve Act. This limited liability company was formed to acquire certain assets of Bear Stearns and to manage those assets to maximize repayment of the credit extended and to minimize disruption to financial markets. Payments by Maiden Lane LLC from the proceeds of the net portfolio holdings will be made in the following order: operating expenses of the LLC, principal due to the FRBNY, interest due to the FRBNY, principal due to JPMorgan Chase & Co., and interest due to JPMorgan Chase & Co. Any remaining funds will be paid to the FRBNY.
Maiden Lane II: On December 12, 2008, the FRBNY began extending credit to Maiden Lane II LLC under the authority of section 13(3) of the Federal Reserve Act. This limited liability company was formed to purchase residential mortgage-backed securities from the U.S. securities lending reinvestment portfolio of subsidiaries of AIG. Payments by Maiden Lane II LLC from the proceeds of the net portfolio holdings will be made in the following order: operating expenses of Maiden Lane II LLC, principal due to the FRBNY, interest due to the FRBNY, and deferred payment and interest due to AIG subsidiaries. Any remaining funds will be shared by the FRBNY and AIG subsidiaries.
Maiden Lane III: On November 25, 2008, the FRBNY began extending credit to Maiden Lane III LLC under the authority of section 13(3) of the Federal Reserve Act. This limited liability company was formed to purchase multi-sector collateralized debt obligations (CDOs) on which the Financial Products group of American International Group, Inc. (AIG) has written credit default swap (CDS) contracts. In connection with the purchase of CDOs, the CDS counterparties will concurrently unwind the related CDS transactions. Payments by Maiden Lane III LLC from the proceeds of the net portfolio holdings will be made in the following order: operating expenses of Maiden Lane III LLC, principal due to the FRBNY, interest due to the FRBNY, principal due to AIG, and interest due to AIG. Any remaining funds will be shared by the FRBNY and AIG.
The most widely used credit score. FICO stands for Fair Isaac Corp., the company that developed this system of credit evaluation, which is based on information provided by three major credit-reporting agencies: TransUnion, Equifax and Experian. Fair Isaac sells the scores to the credit-reporting agencies. Lenders buy FICO scores from one or all three of the major credit-reporting agencies. FICO scores vary, but generally the scores are between 500 and 850. FICO scores between 700 and 850 indicate that a borrower is very likely to repay loans and other debts. FICO scores lower than 600 indicate that a borrower may not be a good credit risk.
A mortgage loan in which the interest rate does not change during the entire term.
The legal process by which a property that is mortgaged as security for a loan may be sold and the proceeds of the sale applied to the mortgage debt. A foreclosure can occur when the loan becomes delinquent because payments have not been made or when the borrower is in default for a reason other than the failure to make timely mortgage payments.
Freddie Mac is a Government Sponsored Enterprise (GSE) chartered by Congress in 1970 to provide liquidity, stability and affordability to the housing market. Like Fannie Mae, Freddie Mac operates in the secondary mortgage market. The full legal name for Freddie Mac is the Federal Home Loan Mortgage Corporation.
Enterprises that were established and chartered by the federal government for public policy purposes. GSEs include the Federal Home Loan Banks, the Agricultural Credit Bank and Farm Credit Banks, and the Federal Agricultural Mortgage Corporation. With the exception of Fannie Mae and Freddie Mac, which were taken into conservatorship by the federal government on September 7, 2008, GSEs are private companies and their securities are not backed by the full faith and credit of the federal government.
Although there is no precise legal definition, the term “hedge fund” generally refers to a pooled investment vehicle that is privately organized, administered by a professional investment manager, and not widely available to the public. The assets, investment strategies, and risk profiles of funds that meet this broad definition are quite diverse. In no sense are hedge funds an “asset class,” like stocks, bonds, commodities, or real estate. While some hedge funds pursue investment strategies similar to those pursued by private equity funds, the strategies of the sector as a whole are quite varied. Some hedge funds are highly leveraged, while many use little or no leverage.
A 1974 Act of Congress that required certain mortgage lenders to disclose information about mortgages they make. HMDA requires mortgage lenders to report information about both successful and unsuccessful mortgage applications. HMDA applies to all mortgage lenders, with a few exceptions (those not based in MSAs and with no branches or offices in MSAs, and very small lenders).
A 1994 amendment to HMDA that provides certain protections to mortgage borrowers. These include protecting consumers from unfair, abusive, or deceptive mortgage lending and servicing practices, ensuring that mortgage advertisements provide accurate and balanced information, and providing consumers with transaction-specific disclosures early enough to use while shopping for a mortgage.
The owner's interest in a property, calculated as the current fair market value of the property less the amount of existing liens. The appraised, or carrying value, of a property minus the amount of existing liens.
In the United States, the market for bank reserves, which is an overnight loan of federal funds between depository institutions.
A firm that engages in the origination, underwriting, and marketing of new securities that are issued in the credit markets.
Bonds that have been deemed to have a relatively low probability of default. These securities are generally rated Baa (or BBB) and above.
A loan that exceeds the mortgage amount eligible for purchase by Fannie Mae or Freddie Mac. Also called “nonconforming loan.”
An industry term for a low- or no-documentation loan, typically Alt-A or subprime, where there is a suspicion the borrower, mortgage broker or loan officer may have fraudulently overstated the income and/or assets to qualify for a larger loan. These loans are typically “stated income” or “stated asset” loans, where the lender does not verify the income and instead records income based on the borrower’s verbal statement.
An index used to determine interest rate changes for certain ARM plans, based on the average interest rate at which international banks lend to or borrow funds in the London interbank market.
The sale of a debtor's nonexempt property and the distribution of the proceeds to creditors. Chapter 7 of the Bankruptcy code provides for the liquidation of the filer’s assets and distribution of the proceeds to the filer’s creditors.
A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. Liquidity is sometimes defined as a firm’s ability to acquire money whenever it is needed in large and highly variable sums. Indicators that an asset may be highly liquid include historically narrow spreads between bid and ask prices, large daily trading volumes, a large number of market participants, and prices that are insensitive to transactions of modest size.
“Margin” refers to borrowing money using securities or other collateral that fluctuates in value. If the value of the collateral falls below the lender's maintenance requirement, the lender generally will require the deposit of additional collateral.
An accounting rule (FASB 157) that requires companies to value assets at prices determined in the marketplace.
Debt securities issued by corporations, with typical maturities between five and 10 years; however, the maturity may be as short as one year. Usually issued at floating rates.
A mutual fund (SEC-registered investment fund) that invest primarily in money market instruments and/or other short-term debt instruments. All money market mutual funds must hold assets with a weighted average maturity of no more than 90 days.
A financial guaranty (insurance) company that guarantees all scheduled interest and principal payments on the bonds it insures and writes no other line of insurance.
Generally defined to be whole mortgage loans, mortgage-backed securities, collateralized debt obligations that contain MBS, or derivative instruments that refer to any of the above, such as credit default swaps. Many of these assets are held on the balance sheets of financial institutions.
An increase in the balance of a loan caused by adding unpaid interest to the loan balance; this occurs when the payment does not cover the interest due.
A situation in which a borrower’s mortgage principal is greater than the value of the house.
A loan (debt) that is secured by a pledge of collateral (could apply to any type of collateral), for which the lender agrees to rely solely on the collateral if borrower fails to make the required payments of principal and interest.
A United Kingdom bank that was taken into temporary public ownership in February 2008. The Bank concentrated primarily on mortgage lending to individuals for the purpose of home ownership.
A bureau of the U.S. Department of the Treasury, the OCC charters, regulates and supervises all national banks. It also supervises the federal branches and agencies of foreign banks.
The federal regulator and supervisor of savings associations (“thrifts”) and their subsidiaries. The OTS also oversees domestic and international activities of the holding companies and affiliates that own these savings institutions. The OTS is an office within the Department of the Treasury.
An adjustable-rate mortgage that gives the borrower a set of choices of how much interest and principal to pay each month. This may result in negative amortization. The option period is typically limited, for example, to five years.
A business model where lenders intend to securitize or sell loans that they originate. In contrast to portfolio lending, under this model, lender income is generated by fees paid by the buyers of the loans, rather than from payments made by borrowers.
Equity (ownership) shares in a firm that have a senior claim over common shareholders on the assets of a firm in the event of bankruptcy. A firm must pay preferred dividends on these shares, according to a contractually specified schedule at a rate that is either fixed or floating, before it can pay dividends to common shareholders.
The interest rate charged by the Federal Reserve for primary credit loans to depository institutions. Because primary credit is the Federal Reserve's main discount window program, the Federal Reserve at times uses the term “discount rate” to mean the primary credit rate. Discount rates are established by each Reserve Bank's board of directors, subject to the review and determination of the Board of Governors.
An overnight Federal Reserve loan facility that provides funding to primary dealers in exchange for any eligible collateral.
Banks and securities broker-dealers that trade in U.S. government securities with the Federal Reserve Bank of New York.
In the housing-finance business, a mortgage-backed security or other bond created and sold by a company other than a government-sponsored enterprise. Private label securities frequently are collateralized by loans that are ineligible for purchase by Fannie Mae or Freddie Mac.
Short-term reciprocal arrangements between a Federal Reserve Bank and a foreign central bank. By drawing on a swap the foreign central bank obtains dollars that can be used to conduct foreign exchange intervention in support of its currency or to lend to its domestic banking system to satisfy temporary liquidity demands. For the duration of the swap, the Federal Reserve Bank obtains an equivalent amount of foreign currency along with a commitment from the foreign central bank to repurchase the foreign currency at a preset exchange rate.
Funds that a depository institution is required to maintain in the form of vault cash or, if vault cash is insufficient to meet the requirement, in the form of a balance maintained directly with a Reserve Bank or indirectly with a pass-through correspondent bank. The required amount varies according to the required reserve ratios set by the Federal Reserve Board and the amount of reservable liabilities held by the institution.
The period of time that reserve balance requirements and contractual clearing balances need to be met (only on average).
A security that relies for payment on cash flows generated by a pool of residential mortgage debt obligations. (See also: Asset-backed security and Commercial mortgage-backed security)
Financial institutions with a federal or state charter that accept savings deposits and invest the bulk of those deposits in mortgages.
A mortgage that has a lien position subordinate to the first mortgage.
The SEC oversees the key participants in the securities industry, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. The regulatory mission of the SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and guarding against fraud.
A financial transaction in which assets such a mortgage loans are pooled and securities representing interests in the pool are issued.
If the issuer of a debt security goes bankrupt, senior debt must be repaid before other creditors receive any payment. Senior debt is often secured by collateral on which the lender has a first lien.
Generally, refers to borrowing by a financial or nonfinancial firm that is secured by real (physical) assets and has prior claim to incoming cash flows before other debt.
The selling of a stock or other security not owned by the seller. In effect, the seller is betting that the price of the security will fall. A “naked” short sale is an unhedged position.
A legal entity (usually a limited liability company) created to fulfill narrow or temporary objectives. The SPV exists to hold the assets and issue a new set of claims on the assets, making the SPV sponsor remote from any bankruptcy associated with the pool of assets. The SPV typically holds a portfolio of various assets such as mortgages, loans, or corporate bonds. This portfolio is sliced into different components (called tranches).
An assessment of capital adequacy conducted by U.S. Federal bank and thrift supervisors. The purpose of the stress test (formally, a capital assessment) is to determine if the largest U.S. banking organizations have sufficient capital buffers to withstand the impact of an economic environment that is more challenging than is currently anticipated.
A special purpose entity that invests in a variety of financial assets and is funded by short or medium term borrowings, for example, asset backed commercial paper (ABCP).
Any mortgage or other lien with lower priority than the first mortgage.
The classification “subprime” generally is a lender-given designation for loans extended to borrowers with some sort of credit impairment, say, due to missing installment payments on debt or the lack of a credit history. Along with an individual’s credit rating, characteristics of the mortgage loan can contribute to a lender classifying a loan as subprime—features such as limited or no documentation about income or assets, high loan-to-value ratios or high payment-to-income ratios. Subprime loans typically have a FICO credit score of 620 or less.
A temporary U.S. Treasury Department program consisting of a series of sales of Treasury bills, apart from the Treasury’s current borrowing program that provides cash for use in the Federal Reserve initiatives. The value of these bills is listed on the liability side of the Federal Reserve’s balance sheet.
Risk that a disruption at a firm, in a market segment, to a settlement system, or in a similar setting will cause widespread difficulties at other firms, in other market segments, or in the financial system as a whole.
A Federal Reserve funding facility that supports the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA). Under the TALF, the Federal Reserve Bank of New York (FRBNY) lends up to $200 billion on a non-recourse basis to holders of certain AAA-rated ABS backed by newly and recently originated consumer and small business loans. The FRBNY lends an amount equal to the market value of the ABS less a “haircut,” secured at all times by the ABS. The U.S. Treasury Department—under the Troubled Assets Relief Program (TARP) of the Emergency Economic Stabilization Act of 2008—provides $20 billion of credit protection to the FRBNY in connection with the TALF.
A Federal Reserve program that auctions term funds (typically funds of 28- or 84-day maturity) to depository institutions. All depository institutions that are eligible to borrow under the primary credit program are eligible to participate in TAF auctions. All advances must be fully collateralized.
The sale of securities to an investor with an agreement to repurchase them at an agreed upon price and date. The FOMC uses repos of eligible securities to vary the quantity of banking system reserves as part of its implementation of monetary policy.
A Federal Reserve loan facility that promotes liquidity in Treasury and other collateral markets by offering Treasury securities held by the System Open Market Account (SOMA) for loan over a one-month term against other program-eligible general collateral. Securities loans are awarded to primary dealers based on a competitive single-price auction.
A Federal Reserve lending program that offers options to the primary dealers to draw upon short-term, fixed rate Term Securities Lending Facility (TSLF) loans from the System Open Market Account (SOMA) portfolio in exchange for program-eligible collateral. The program is intended to enhance the effectiveness of TSLF by offering added liquidity over periods of heightened collateral market pressures, such as quarter-end dates.
Government practices that protect large banking organizations from the normal discipline of the marketplace because of concerns that such institutions are so important to markets and their positions so intertwined with those of other banks that their failure would be unacceptably disruptive, financially and economically.
When mortgages are securitized, the bonds created are often divided into a number of tranches. Tranches are related bonds offered as part of the same transaction, where each bond is a different slice of the deal's risk. Transaction documentation defines the tranches as different “classes” of notes, each identified by letter (e.g., Class A, Class B and Class C securities). Bonds in the least risky class have first claim on the cash flow from the pool of underlying mortgages, then bonds in the next class are paid, and so on, up to the riskiest bonds, which have the residual claim. Bonds in riskier tranches typically pay higher interest.
A repurchase transaction involving three parties: an investor, a financial institution, and a clearing bank, which acts an intermediary. In these transactions, which usually involve large amounts of cash and securities, the investor deposits money with the clearing bank, which then lends it to another institution. For example, under the TSLF the Federal Reserve Bank of New York arranges the loan of Treasury securities to depository institutions through primary dealers.
The Emergency Economic Stabilization Act of 2008 authorized the Secretary of the Treasury to establish the Troubled Asset Relief Program (TARP) to purchase, and to make and fund commitments to purchase, troubled assets from financial institutions.
Under the Emergency Economic Stabilization Act, Congress authorized the Treasury to use up to $700 billion to purchase “troubled assets”: (1) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary of the Treasury determines promotes financial market stability; and (2) any other financial instrument that the Secretary, after consultation with the chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.
A federal law intended to promote the informed use of consumer credit by requiring disclosure about its terms and costs. Creditors are required to disclose the cost of credit as a dollar amount (the finance charge) and as an annual percentage rate (APR).
A loan that is not backed by collateral.
A security that entitles the holder to buy stock of the issuing company at a specified price on or after a specified date.
A workout is a process where the terms of a loan are modified or the lender agrees to some forbearance in order to avoid, default, foreclosure or bankruptcy.