Tag: bank

Lewis Ranieri definition explanation

What is Lewis Ranieri?
Former bond trader and former vice chairman of Salomon Brothers who is credited with introducing securitization to the financial world. Initially, mortgage-backed securities (MBS) were only acknowledged by a handful of states as legitimate investments, but Ranieri’s actions eventually led to federal government measures that supported these securities as a valid investment asset class, leading to the development of the bond market. Read more for examples and further explanation including related video clips and also comments
Continue reading “Lewis Ranieri definition explanation”

Certificate Of Deposit – CD definition explanation

What is Certificate Of Deposit – CD?
A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and are insured by the FDIC. The term of a CD generally ranges from one month to five years. Read more for examples and further explanation including related video clips and also comments
Continue reading “Certificate Of Deposit – CD definition explanation”

Wholesale Money definition explanation

What is Wholesale Money?
Funds borrowed by corporations, in high amounts, through financial institutions. Wholesale money is a way for large institutions to obtain capital without having to issue shares or bonds. These loans will usually be issued by large financial institutions and banks to long-standing, financially secure companies and have a lower-than-average interest rate. Read more for examples and further explanation including related video clips and also comments
Continue reading “Wholesale Money definition explanation”

Texas Ratio definition explanation

What is Texas Ratio?
A ratio developed by Gerald Cassidy and other analysts at RDC Capital Markets to measure the credit problems of particular banks or regions of banks. The Texas ratio takes the amount of a bank’s non-performing assets and loans, as well as loans delinquent for more than 90 days, and divides this number by the firm’s tangible capital equity plus its loan loss reserve. A ratio of more than 100 (or 1:1) is considered a warning sign. Read more for examples and further explanation including related video clips and also comments
Continue reading “Texas Ratio definition explanation”

Standby Letter of Credit – SLOC definition explanation

What is Standby Letter of Credit – SLOC?
A guarantee of payment issued by a bank on behalf of a client that is used as “”payment of last resort”” should the client fail to fulfill a contractual commitment with a third party. Standby letters of credit are created as a sign of good faith in business transactions, and are proof of a buyer’s credit quality and repayment abilities. The bank issuing the SLOC will perform brief underwriting duties to ensure the credit quality of the party seeking the letter of credit, then send notification to the bank of the party requesting the letter of credit (typically a seller or creditor).

Also known as a “”non-performing letter of credit””. Read more for examples and further explanation including related video clips and also comments
Continue reading “Standby Letter of Credit – SLOC definition explanation”

Revolving Credit definition explanation

What is Revolving Credit?
A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customer’s current cash flow needs.

Often referred to as “”revolver””. Read more for examples and further explanation including related video clips and also comments
Continue reading “Revolving Credit definition explanation”

Mortgage Broker definition explanation

What is Mortgage Broker?
An intermediary who brings mortgage borrowers and mortgage lenders together, but does not use its own funds to originate mortgages. A mortgage broker gathers paperwork from a borrower, and passes that paperwork along to a mortgage lender for underwriting and approval. The mortgage funds are then lent in the name of the mortgage lender. A mortgage broker collects an origination fee and/or a yield spread premium from the lender as compensation for its services. Read more for examples and further explanation including related video clips and also comments
Continue reading “Mortgage Broker definition explanation”