Date: October 16, 1999
Question: "How Does Greenspan: Credit, Market, Interest Rate, and Equity Risks - Impact You"
Answer: Fed Chairman Alan Greenspan told the markets that there signs of trouble in the credit quality of some asset backed securities (ABS).
Previous flare ups in the asset backed markets were triggered by events in the Mortgage Backed Securities (MBS)area. This time it seems that there is sub-surface turbulence in the credit card and speciality loan sectors.
Credit quality deterioration in the underlying borrowers will adversely impact these securities.
Further deterioration here will strain market values of asset backed securities, the underlying collateral, and weaken capital requirements and reserve positions of financial institutions such as banks, broker/dealers, and insurance companies.
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