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- W2999163600 abstract "<h3>Practical Applications Summary</h3> In <b><i>More Than One Million Reasons to Lie about Structured Finance</i></b>, from the Spring 2019 issue of <b><i>The Journal of Structured Finance</i></b>, <b>Janet Tavakoli</b>, president of <b>Tavakoli Structured Finance</b> in Chicago, describes a set of risks to investors in structured finance instruments that are not captured by mainstream risk analysis. Many of these risks became well known through the exposure of systemic fraud in the sub-prime mortgage market during years immediately preceding the mid-2000s mortgage meltdown. The author argues that these risks are re-emerging now because of the powerful, and highly distorting, incentives in the structured finance market. The risks that Tavakoli identifies include structural hazards of these investments, which are the risks arising from the legal and financial parameters of each investment vehicle. She catalogs many ways in which those parameters can be arranged to bring potential harm to investors. She also sets forth risks from poorly understood or misrepresented collateral in those investments. In those situations, the underlying collateral—the pool of assets whose performance will determine the performance of the instrument with claims on those assets—appears to be stronger and more creditworthy than is in fact the case. Tavakoli also depicts the risks that arise from a failure to correctly and fully specify the security interest in that collateral. In those cases, the bondholders may not have the claim they believe they have on the underlying assets should those assets fail to generate the expected returns. <b>TOPICS:</b>CLOs, CDOs, and other structured credit, credit risk management, portfolio management/multi-asset allocation, quantitative methods, financial crises and financial market history" @default.
- W2999163600 created "2020-01-23" @default.
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- W2999163600 date "2020-01-15" @default.
- W2999163600 modified "2023-09-26" @default.
- W2999163600 title "Practical Applications of More Than One Million Reasons to Lie about Structured Finance" @default.
- W2999163600 doi "https://doi.org/10.3905/pa.7.4.366" @default.
- W2999163600 hasPublicationYear "2020" @default.
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